Meridian Bancorp, Inc. Reports Net Income For The Second Quarter And Six Months Ended June 30, 2016

BOSTON, July 26, 2016 (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 $5.9 million, or $0.11 per diluted share, for the quarter ended June 30, 2016 compared to $7.5 million, or $0.14 per diluted share, for the quarter ended March 31, 2016 and $5.6 million, or $0.11 per diluted share, for the quarter ended June 30, 2015. For the six months ended June 30, 2016, net income was $13.4 million, or $0.26 per diluted share, up from $12.0 million, or $0.23 per diluted share, for the six months ended June 30, 2015. The Company’s return on average assets was 0.62% for the quarter ended June 30, 2016 compared to 0.83% for the quarter ended March 31, 2016 and 0.68% for the quarter ended June 30, 2015. For the six months ended June 30, 2016, the Company’s return on average assets was 0.72% compared to 0.73% for the six months ended June 30, 2015. The Company’s return on average equity was 4.03% for the quarter ended June 30, 2016 compared to 5.11% for the quarter ended March 31, 2016 and 3.80% for the quarter ended June 30, 2015. For the six months ended June 30, 2016, the Company’s return on average equity was 4.57% compared to 4.10% for the six months ended June 30, 2015. 

Richard J. Gavegnano, Chairman, President and Chief Executive Officer, said, “I am pleased to report net income of $5.9 million, or $0.11 per share, for the second quarter and $13.4 million, or $0.26 per share, for the first half of 2016. Our loan portfolio grew to $3.5 billion at June 30, 2016, reflecting record quarterly net loan growth of $299 million, or 37% on an annualized basis, during the second quarter and $461 million, or 30% on an annualized basis, during the first half of 2016. Due to our exceptionally strong organic growth across all our commercial loan categories, we recorded a $4.0 million loan loss provision in the second quarter. Even with the large loan loss provision, our core pre-tax income, which excludes gains on sales of securities, increased $2.0 million, or 29%, to $8.7 million for the second quarter and $4.1 million, or 27%, to $19.4 million for the first half of 2016 compared to the same periods last year, reflecting rising net interest income and improving operating efficiency. Although our core pre-tax income declined from $10.7 million for the first quarter, such income excluding the loan loss provision rose $866,000, or 7%, to $12.6 million in the second quarter.”

The Company’s net interest income was $29.5 million for the quarter ended June 30, 2016, up $1.1 million, or 3.8%, from the quarter ended March 31, 2016 and $4.5 million, or 18.1%, from the quarter ended June 30, 2015. The interest rate spread and net interest margin on a tax-equivalent basis were 3.15% and 3.36%, respectively, for the quarter ended June 30, 2016 compared to 3.18% and 3.39%, respectively, for the quarter ended March 31, 2016 and 3.07% and 3.29%, respectively, for the quarter ended June 30, 2015. For the six months ended June 30, 2016, net interest income increased $8.5 million, or 17.2%, to $57.8 million from the six months ended June 30, 2015. The net interest rate spread and net interest margin on a tax-equivalent basis were 3.17% and 3.37%, respectively, for the six months ended June 30, 2016 compared to 3.04% and 3.26%, respectively, for the six months ended June 30, 2015. The increases in net interest income were due primarily to loan growth, partially offset by growth in total deposits and borrowings for the quarter and six months ended June 30, 2016 compared to the respective prior periods.

Total interest and dividend income increased to $35.8 million for the quarter ended June 30, 2016, up $1.7 million, or 4.8%, from the quarter ended March 31, 2016 and $6.1 million, or 20.3%, from the quarter ended June 30, 2015, primarily due to growth in the Company’s average loan balances to $3.422 billion, partially offset by the decline in the yield on loans on a tax-equivalent basis to 4.23%. The Company’s yield on interest-earning assets on a tax-equivalent basis was 4.05% for the quarter ended June 30, 2016, down one basis point from the quarter ended March 31, 2016 and up 15 basis points from the quarter ended June 30, 2015.

Total interest expense increased to $6.4 million for the quarter ended June 30, 2016, up $579,000, or 10.0%, from the quarter ended March 31, 2016 and $1.5 million, or 31.9%, from the quarter ended June 30, 2015. Interest expense on deposits increased to $5.7 million for the quarter ended June 30, 2016, up $433,000, or 8.3%, from the quarter ended March 31, 2016 and $1.3 million, or 29.9%, from the quarter ended June 30, 2015 primarily due to the growth in average total deposits to $2.943 billion and increases in the cost of average total deposits to 0.77%. Interest expense on borrowings increased to $723,000 for the quarter ended June 30, 2016, up $146,000, or 25.3%, from the quarter ended March 31, 2016 and $241,000, or 50.0%, from the quarter ended June 30, 2015 primarily due to the growth in average total borrowings to $264.1 million, partially offset by decreases in the cost of average total borrowings to 1.10%. The Company’s cost of funds was 0.80% for the quarter ended June 30, 2016, up two basis points from the quarter ended March 31, 2016 and seven basis points from the quarter ended June 30, 2015.

For the six months ended June 30, 2016, the Company’s total interest and dividend income increased $10.7 million, or 18.0%, to $70.0 from the six months ended June 30, 2015 primarily due to growth in the average loan balances of $586.7 million, or 21.8%, to $3.284 billion, partially offset by a decrease in the yield on loans on a tax-equivalent basis of eight basis points to 4.29% for the six months ended June 30, 2016 compared to the six months ended June 30, 2015. The Company’s yield on interest-earning assets on a tax-equivalent basis increased 17 basis points to 4.06% for the six months ended June 30, 2016 compared to 3.89% for the six months ended June 30, 2015.

Total interest expense increased $2.2 million, or 21.6%, to $12.2 million for the six months ended June 30, 2016 compared to $10.0 million for the six months ended June 30, 2015. Interest expense on deposits increased $1.9 million, or 20.5%, to $10.9 million for the six months ended June 30, 2016 from the six months ended June 30, 2015 primarily due to the growth in average total deposits of $341.5 million, or 13.5%, to $2.875 billion and an increase in the cost of average total deposits of four basis points to 0.76%. Interest expense on borrowings increased $310,000, or 31.3%, to $1.3 million for the six months ended June 30, 2016 from the six months ended June 30, 2015 primarily due to the growth in average total borrowings of $85.0 million, or 57.9%, to $231.9 million, partially offset by a decrease in the cost of average total borrowings of 23 basis points to 1.13%. The Company’ cost of funds increased four basis points to 0.79% for the six months ended June 30, 2016 compared to the six months ended June 30, 2015.

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