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

Thursday, 22. April 2021 22:15

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 deposit20,839 208  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 assets6,507,414 58,532  3.65  6,416,996 63,172  3.92  6,171,457 66,755  4.35 
Noninterest-earning assets155,169       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 deposits877,613 780  0.36  839,992 1,026  0.49  691,897 2,055  1.19 
Regular savings and other deposits861,439 536  0.25  851,711 729  0.34  906,100 2,531  1.12 
Certificates of deposit1,223,333 3,005  1.00  1,221,585 3,401  1.11  1,475,016 7,686  2.10 
Total interest-bearing deposits4,424,624 5,729  0.53  4,275,974 6,883  0.64  4,353,016 16,769  1.55 
Borrowings666,856 3,591  2.18  787,406 4,001  2.02  654,740 4,151  2.55 
Total interest-bearing liabilities5,091,480 9,320  0.74  5,063,380 10,884  0.86  5,007,756 20,920  1.68 
Noninterest-bearing demand deposits734,316       700,341       535,182      
Other noninterest-bearing liabilities55,337       55,742       53,688      
Total liabilities5,881,133       5,819,463       5,596,626      
Total stockholders' equity781,450       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 outstanding52,430,554  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


Primary Logo

Related Links: 
Author:
Copyright GlobeNewswire, Inc. 2016. All rights reserved.
You can register yourself on the website to receive press releases directly via e-mail to your own e-mail account.