Australia markets open in 9 hours 35 minutes
  • ALL ORDS

    7,331.60
    -88.20 (-1.19%)
     
  • AUD/USD

    0.7843
    +0.0009 (+0.12%)
     
  • ASX 200

    7,097.00
    -75.80 (-1.06%)
     
  • OIL

    65.20
    +0.28 (+0.43%)
     
  • GOLD

    1,832.80
    -4.80 (-0.26%)
     
  • BTC-AUD

    71,154.07
    -2,429.99 (-3.30%)
     
  • CMC Crypto 200

    1,582.92
    +1,340.24 (+552.27%)
     

Meridian Bancorp, Inc. Announces Record Quarterly Net Income of $24 Million

  • Oops!
    Something went wrong.
    Please try again later.
Meridian Bancorp, Inc.
·19-min read
  • Oops!
    Something went wrong.
    Please try again later.

BOSTON, April 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 $24.3 million, or $0.48 per diluted share, for the quarter ended March 31, 2021, compared to $18.1 million, or $0.36 per diluted share for the quarter ended December 31, 2020, and $13.0 million, or $0.25 per diluted share, for the quarter ended March 31, 2020. The Company’s return on average assets was 1.46% for the quarter ended March 31, 2021, compared to 1.10% for the quarter ended December 31, 2020, and 0.82% for the quarter ended March 31, 2020. The Company’s return on average equity was 12.45% for the quarter ended March 31, 2021, compared to 9.51% for the quarter ended December 31, 2020, and 7.09% for the quarter ended March 31, 2020.

Richard J. Gavegnano, Chairman, President and Chief Executive Officer, said, “I am pleased to report record quarterly net income of $24.3 million for the first quarter of 2021, representing increases of $6.2 million, or 34.2% compared to the fourth quarter of 2020, and $11.3 million, or 87.4%, compared to the first quarter of 2020. These earnings reflect a 7.3% increase in net interest income for the first quarter of 2021 compared to the first quarter of 2020, improving the net interest margin to 3.07% from 2.99% over the same period, a result of management’s focus on maintaining loan yields while aggressively decreasing our cost of funds. Also, strong asset quality and changes in the volume and mix of our loan portfolio resulted in a decrease in our percentage of allowance to total loans to 1.20% at March 31, 2021, from 1.25% at December 31, 2020, due to a provision reversal of $5.2 million during the first quarter of 2021.”

The Company’s net interest income was $48.4 million for the quarter ended March 31, 2021, an increase of $3.3 million, or 7.3%, from the quarter ended March 31, 2020. The interest rate spread and net interest margin on a tax-equivalent basis were 2.91% and 3.07%, respectively, for the quarter ended March 31, 2021 compared to 2.67% and 2.99%, respectively, for the quarter ended March 31, 2020. Total interest and dividend income totaled $57.7 million for the quarter ended March 31, 2021, a decrease of $8.3 million, or 12.6% from the quarter ended March 31, 2020. The Company’s yield on interest-earning assets on a tax-equivalent basis was 3.65% for the quarter ended March 31, 2021, down 70 basis points from the quarter ended March 31, 2020. Total interest expense totaled $9.3 million for the quarter ended March 31, 2021, a decrease of $11.6 million, or 55.4%, from the quarter ended March 31, 2020. Interest expense on deposits decreased to $5.7 million for the quarter ended March 31, 2021, a decrease of $11.0 million, or 65.8%, from the quarter ended March 31, 2020 primarily due to a decrease in the cost of average total deposits to 0.45% from 1.38% for the quarter ended March 31, 2020. The Company’s total cost of funds was 0.65% for the quarter ended March 31, 2021, a decrease of 87 basis points from 1.52% for the quarter ended March 31, 2020.

The Company recognized a reversal of $5.2 million in its provision for credit losses for the quarter ended March 31, 2021, compared to a provision of $8.9 million for the quarter ended December 31, 2020 and $725,000 for the quarter ended March 31, 2020. The allowance for credit losses on loans was $63.4 million or 1.20% of total loans at March 31, 2021, compared to $68.8 million or 1.25% of total loans at December 31, 2020, and $50.9 million or 0.89% of total loans at March 31, 2020. Net charge-offs totaled $152,000 for the quarter ended March 31, 2021 and non-performing assets were $3.1 million, or 0.05% of total assets, at March 31, 2021, compared to $3.2 million, or 0.05% of total assets, at March 31, 2020.

Non-interest income was $4.9 million for the quarter ended March 31, 2021, an increase of $5.8 million from an $831,000 loss for the quarter ended March 31, 2020, due primarily to a $4.8 million in valuation increase on marketable equity securities, net, and $1.3 million in gains realized on marketable equity securities, net, sold during the period, partially offset by a decrease of $579,000 in loan fees. Non-interest expenses were $25.5 million, or 1.53% of average assets for the quarter ended March 31, 2021, compared to $26.3 million, or 1.66% of average assets for the quarter ended March 31, 2020, a decrease of $777,000, or 3.0%. The Company’s efficiency ratio was 49.55% for the quarter ended March 31, 2021 compared to 54.18% for the quarter ended March 31, 2020. The Company recorded a provision for income taxes of $8.7 million for the quarter ended March 31, 2021, reflecting an effective tax rate of 26.4%, compared to $4.2 million, or an effective tax rate of 24.6%, for the quarter ended March 31, 2020.

Total assets were $6.504 billion at March 31, 2021, down $115.6 million, or 1.8%, from $6.620 billion at December 31, 2020. Net loans were $5.224 billion at March 31, 2021 down $219.8 million, or 4.0%, from December 31, 2020, despite loan originations of $271.9 million during the quarter ended March 31, 2021. The net decrease in loans for the three months ended March 31, 2021 was primarily due to decreases of $105.5 million in construction loans, $79.9 million in commercial real estate loans and $46.7 million in one- to four-family loans, partially offset by a net increase of $14.4 million in commercial and industrial loans, which includes the origination of $52.4 million in PPP loans during the quarter ended March 31, 2021. The allowance for credit losses on loans decreased $5.4 million, or 7.8%, to $63.4 million during the quarter ended March 31, 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 $5.097 billion at March 31, 2021, up $16.2 million, or 0.3%, from $5.081 billion at December 31, 2020. Core deposits, which exclude certificates of deposit, increased $74.8 million, or 1.9%, during the quarter ended March 31, 2021 to $3.937 billion, or 77.2% of total deposits, compared to 76.0% at December 31, 2020. Certificates of deposit decreased $58.6 million during the quarter ended March 31, 2021, inclusive of a $59.9 million decrease in brokered deposits. Total borrowings were $560.6 million at March 31, 2021, down $147.6 million, or 20.8%, from December 31, 2020, primarily due to the payoffs of $50.0 million in matured advances from the FHLB and all remaining funds from the Federal Reserve’s PPPLF program.

Total stockholders’ equity increased $20.2 million, or 2.6%, to $789.1 million at March 31, 2021 from $768.9 million at December 31, 2020. The increase for the quarter ended March 31, 2021 was primarily due to net income of $24.3 million, partially offset by dividends of $0.10 per share totaling $5.0 million. Stockholders’ equity to assets was 12.13% at March 31, 2021, compared to 11.61% at December 31, 2020. Tangible book value per share increased to $14.63 at March 31, 2021 from $14.25 at December 31, 2020. Market price per share increased 23.5% to $18.42 at March 31, 2021 from $14.91 at December 31, 2020. The Company and the Bank exceeded the minimum requirement to be considered well capitalized at March 31, 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)

March 31,
2021

December 31,
2020

March 31,
2020

(Dollars in thousands)

ASSETS

Cash and due from banks

$

1,034,107

$

914,586

$

457,048

Certificates of deposit

247

Securities available for sale, at fair value

10,518

11,326

13,820

Marketable equity securities, at fair value

8,900

12,189

13,130

Federal Home Loan Bank stock, at cost

28,447

30,658

33,278

Loans held for sale

7,422

8,224

3,403

Loans:

One- to four-family

517,442

564,146

657,245

Home equity lines of credit

64,370

68,721

78,016

Multi-family

878,331

880,552

972,122

Commercial real estate

2,419,715

2,499,660

2,622,379

Construction

625,961

731,432

716,477

Commercial and industrial

779,603

765,195

638,695

Consumer

10,307

10,707

11,888

Total loans

5,295,729

5,520,413

5,696,822

Allowance for credit losses on loans

(63,436

)

(68,824

)

(50,946

)

Net deferred loan origination fees

(8,298

)

(7,784

)

(6,021

)

Loans, net

5,223,995

5,443,805

5,639,855

Bank-owned life insurance

42,138

41,877

41,061

Premises and equipment, net

65,394

66,850

67,527

Accrued interest receivable

22,498

23,173

13,868

Deferred tax asset, net

21,418

21,355

16,782

Goodwill

20,378

20,378

20,378

Core deposit intangible

1,548

1,651

2,005

Other assets

17,162

23,776

26,152

Total assets

$

6,503,925

$

6,619,848

$

6,348,554

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:

Non interest-bearing demand deposits

$

751,809

$

711,573

$

572,847

Interest-bearing demand deposits

1,461,236

1,364,548

1,292,384

Money market deposits

852,747

930,507

699,026

Regular savings and other deposits

870,961

855,329

867,536

Certificates of deposit

1,160,616

1,219,210

1,390,156

Total deposits

5,097,369

5,081,167

4,821,949

Short-term borrowings

25,000

Long-term debt

560,625

708,245

720,873

Accrued expenses and other liabilities

56,847

61,551

61,111

Total liabilities

5,714,841

5,850,963

5,628,933

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; 52,430,554, 52,415,061 and 52,402,395 shares issued at March 31, 2021, December 31, 2020 and March 31, 2020, respectively

524

524

524

Additional paid-in capital

364,751

363,995

360,901

Retained earnings

439,593

420,297

374,712

Accumulated other comprehensive income (loss)

(131

)

(58

)

19

Unearned compensation - ESOP; 2,161,304, 2,191,745 and 2,283,068 shares at March 31, 2021, December 31, 2020 and March 31, 2020, respectively

(15,653

)

(15,873

)

(16,535

)

Total stockholders' equity

789,084

768,885

719,621

Total liabilities and stockholders' equity

$

6,503,925

$

6,619,848

$

6,348,554

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

Three Months Ended

March 31,
2021

December 31,
2020

March 31,
2020

(Dollars in thousands, except per share amounts)

Interest and dividend income:

Interest and fees on loans

$

57,162

$

61,599

$

64,037

Interest on debt securities

65

68

100

Dividends on marketable equity securities

124

158

94

Interest on certificates of deposit

1

Other interest and dividend income

370

514

1,786

Total interest and dividend income

57,721

62,339

66,018

Interest expense:

Interest on deposits

5,729

6,883

16,769

Interest on borrowings

3,591

4,001

4,151

Total interest expense

9,320

10,884

20,920

Net interest income

48,401

51,455

45,098

Provision (reversal) for credit losses

(5,236

)

8,927

725

Net interest income, after provision (reversal) for credit losses

53,637

42,528

44,373

Non-interest income:

Customer service fees

2,199

2,355

2,097

Loan fees (costs)

95

(422

)

674

Mortgage banking gains, net

582

728

411

Gain (loss) on marketable equity securities, net

1,785

2,853

(4,344

)

Income from bank-owned life insurance

261

271

297

Other income

9

82

34

Total non-interest income

4,931

5,867

(831

)

Non-interest expenses:

Salaries and employee benefits

15,516

14,704

15,914

Occupancy and equipment

4,231

3,833

3,924

Data processing

2,241

2,205

2,137

Marketing and advertising

896

1,165

1,230

Professional services

730

594

997

Deposit insurance

513

404

669

Other general and administrative

1,416

1,189

1,449

Total non-interest expenses

25,543

24,094

26,320

Income before income taxes

33,025

24,301

17,222

Provision for income taxes

8,705

6,180

4,245

Net income

$

24,320

$

18,121

$

12,977

Earnings per share:

Basic

$

0.48

$

0.36

$

0.26

Diluted

$

0.48

$

0.36

$

0.25

Weighted average shares outstanding:

Basic

50,239,611

50,201,720

50,634,983

Diluted

50,565,459

50,295,295

50,920,259

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

Three Months Ended

March 31, 2021

December 31, 2020

March 31, 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)

$

5,429,311

$

57,954

4.33

%

$

5,613,834

$

62,400

4.42

%

$

5,741,852

$

64,758

4.54

%

Securities and certificates of deposit

20,839

208

4.05

25,855

258

3.97

29,290

211

2.90

Other interest-earning assets (3)

1,057,264

370

0.14

777,307

514

0.26

400,315

1,786

1.79

Total interest-earning assets

6,507,414

58,532

3.65

6,416,996

63,172

3.92

6,171,457

66,755

4.35

Noninterest-earning assets

155,169

164,339

157,398

Total assets

$

6,662,583

$

6,581,335

$

6,328,855

Liabilities and stockholders' equity:

Interest-bearing liabilities:

Interest-bearing demand deposits

$

1,462,239

$

1,408

0.39

$

1,362,686

$

1,727

0.50

$

1,280,003

$

4,497

1.41

Money market deposits

877,613

780

0.36

839,992

1,026

0.49

691,897

2,055

1.19

Regular savings and other deposits

861,439

536

0.25

851,711

729

0.34

906,100

2,531

1.12

Certificates of deposit

1,223,333

3,005

1.00

1,221,585

3,401

1.11

1,475,016

7,686

2.10

Total interest-bearing deposits

4,424,624

5,729

0.53

4,275,974

6,883

0.64

4,353,016

16,769

1.55

Borrowings

666,856

3,591

2.18

787,406

4,001

2.02

654,740

4,151

2.55

Total interest-bearing liabilities

5,091,480

9,320

0.74

5,063,380

10,884

0.86

5,007,756

20,920

1.68

Noninterest-bearing demand deposits

734,316

700,341

535,182

Other noninterest-bearing liabilities

55,337

55,742

53,688

Total liabilities

5,881,133

5,819,463

5,596,626

Total stockholders' equity

781,450

761,872

732,229

Total liabilities and stockholders' equity

$

6,662,583

$

6,581,335

$

6,328,855

Net interest-earning assets

$

1,415,934

$

1,353,616

$

1,163,701

Fully tax-equivalent net interest income

49,212

52,288

45,835

Less: tax-equivalent adjustments

(811

)

(833

)

(737

)

Net interest income

$

48,401

$

51,455

$

45,098

Interest rate spread (1)(4)

2.91

%

3.06

%

2.67

%

Net interest margin (1)(5)

3.07

%

3.24

%

2.99

%

Average interest-earning assets to average

interest-bearing liabilities

127.81

%

126.73

%

123.24

%

Supplemental Information:

Total deposits, including noninterest-bearing

demand deposits

$

5,158,940

$

5,729

0.45

%

$

4,976,315

$

6,883

0.55

%

$

4,888,198

$

16,769

1.38

%

Total deposits and borrowings, including

noninterest-bearing demand deposits

$

5,825,796

$

9,320

0.65

%

$

5,763,721

$

10,884

0.75

%

$

5,542,938

$

20,920

1.52

%


(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 quarters ended March 31, 2021, December 31, 2020 and March 31, 2020, yields on loans before tax-equivalent adjustments were 4.27%, 4.37% and 4.49%, respectively, yields on securities and certificates of deposit before tax-equivalent adjustments were 3.68%, 3.48% and 2.68%, respectively, and yield on total interest-earning assets before tax-equivalent adjustments were 3.60%, 3.86% and 4.30%, respectively. Interest rate spread before tax-equivalent adjustments for the quarters ended March 31, 2021, December 31, 2020 and March 31, 2020 was 2.86%, 3.00% and 2.62%, respectively, while net interest margin before tax-equivalent adjustments for the three months ended March 31, 2021, December 31, 2020 and March 31, 2020 was 3.02%, 3.19% and 2.94%, 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

March 31,
2021

December 31,
2020

March 31,
2020

Key Performance Ratios

Return on average assets (1)

1.46

%

1.10

%

0.82

%

Return on average equity (1)

12.45

9.51

7.09

Interest rate spread (1) (2)

2.91

3.06

2.67

Net interest margin (1) (3)

3.07

3.24

2.99

Non-interest expense to average assets (1)

1.53

1.46

1.66

Efficiency ratio (4)

49.55

44.23

54.18


March 31,
2021

December 31,
2020

March 31,
2020

(Dollars in thousands)

Asset Quality

Non-accrual loans:

One- to four-family

$

2,466

$

2,617

$

2,846

Home equity lines of credit

20

20

20

Commercial and industrial

635

527

323

Total non-accrual loans

3,121

3,164

3,189

Foreclosed assets

Total non-performing assets

$

3,121

$

3,164

$

3,189

Allowance for credit losses on loans/total loans

1.20

%

1.25

%

0.89

%

Allowance for credit losses on loans/non-accrual loans

2,032.55

2,175.22

1,597.55

Non-accrual loans/total loans

0.06

0.06

0.06

Non-accrual loans/total assets

0.05

0.05

0.05

Non-performing assets/total assets

0.05

0.05

0.05

Capital and Share Related

Stockholders' equity to total assets

12.13

%

11.61

%

11.34

%

Book value per share

$

15.05

$

14.67

$

13.73

Tangible book value per share (5)

$

14.63

$

14.25

$

13.31

Market value per share

$

18.42

$

14.91

$

11.22

Shares outstanding

52,430,554

52,415,061

52,402,395


(1)

Quarterly amounts are 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 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 and gains and losses on sale of assets the efficiency ratio was 47.89%, 42.03% and 59.46% for the quarters ended March 31, 2021, December 31, 2020, and March 31, 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