Attached files
file | filename |
---|---|
8-K - FORM 8-K - MERIDIAN INTERSTATE BANCORP INC | c16005e8vk.htm |
Exhibit 99
Meridian Interstate Bancorp, Inc. Reports Results for the Quarter Ended March 31, 2011
Contact: Richard J. Gavegnano, Chairman and Chief Executive Officer
(978) 977-2211
(978) 977-2211
Boston, Massachusetts (April 26, 2011): Meridian Interstate Bancorp, Inc. (the Company or
Meridian) (NASDAQ: EBSB), the holding company for East Boston Savings Bank (the Bank), which
also operates under the name Mt. Washington Bank, a Division of East Boston Savings Bank (Mt.
Washington), announced net income of $3.2 million, or $0.15 per share (basic and diluted), for the
quarter ended March 31, 2011, compared to $2.9 million, or $0.13 per share (basic and diluted), for
the quarter ended March 31, 2010. The Companys return on average assets was 0.69% for each of the
quarters ended March 31, 2011 and March 31, 2010. For the quarter ended March 31, 2011, the
Companys return on average equity increased to 5.89% from 5.62% for the quarter ended March 31,
2010.
Richard J. Gavegnano, Chairman and Chief Executive Officer, noted, I am pleased to report net
income of $3.2 million, earnings per share of $0.15, a return on assets of 0.69% and a return on
equity of 5.89% for the first quarter of 2011. Following our successful merger and integration of
Mt. Washington Co-operative Bank last year, we are taking additional steps this year to build our
market share and future earnings potential. During January, we opened an East Boston Savings Bank
branch in the City of Revere and a Mt. Washington branch in Bostons West Roxbury area. Another new
Mt. Washington branch is scheduled to open in Bostons South End by early summer with a new East
Boston Savings Bank branch planned for Cambridge later in the year. At the same time, we are
continuing our efforts to expand residential and commercial lending capacity in both divisions of
the Bank.
Net interest income decreased $336,000, or 2.3%, to $14.4 million for the quarter ended March 31,
2011 from $14.8 million for the quarter ended March 31, 2010. The net interest rate spread and net
interest margin were 3.23% and 3.40%, respectively, for the quarter ended March 31, 2011, compared
to 3.75% and 3.92%, respectively, for the quarter ended March 31, 2010. The decrease in net
interest income was due primarily to deposit growth that was in excess of loan growth along with
declines in yields on loans and securities for the quarter ended March 31, 2011 compared to the
quarter ended March 31, 2010. The average balance of the Companys loan portfolio increased $42.8
million, or 3.7%, to $1.194 billion, which was partially offset by a decline in the yield on loans
of 12 basis points to 5.59% for the quarter ended March 31, 2011 compared to the quarter ended
March 31, 2010. The average balance of the Companys interest-bearing deposits increased $157.4
million, or 13.1%, to $1.357 billion, which was partially offset by a decline in the cost of
deposits of five basis points to 1.37% for the quarter ended March 31, 2011 compared to the quarter
ended March 31, 2010. The Companys yield on interest-earning assets declined by 59 basis points
to 4.69% for the quarter ended March 31, 2011 compared to 5.28% for the quarter ended March 31,
2010, while the cost of interest-bearing liabilities declined seven basis points to 1.46% for the
quarter ended March 31, 2011 compared to 1.53% for the quarter ended March 31, 2010.
The Companys provision for loan losses was $342,000 for the quarter ended March 31, 2011 compared
to $1.4 million for the quarter ended March 31, 2010. This change was based primarily on
managements assessment of loan portfolio growth and composition changes, and an ongoing evaluation
of credit quality and current economic conditions. The reduction in the provision for loan losses
was primarily due to lower provision expense related to specific reserves recorded for impaired
loans for the quarter ended March 31, 2011 compared to the quarter ended March 31, 2010. The
allowance for loan losses was $10.3 million or 0.87% of total loans outstanding at March 31, 2011,
compared to $10.2 million or 0.86% of total loans outstanding at December 31, 2010. Non-performing
loans increased to $50.8 million, or 4.27% of total loans outstanding at March 31, 2011, from $43.1
million, or 3.64% of total loans outstanding at December 31, 2010. Non-performing assets increased
to $55.8 million, or 2.93% of total assets, at March 31, 2011, from $47.2 million, or 2.57% of
total assets, at December 31, 2010. Non-performing assets at March 31, 2011 were comprised of
$22.9 million of construction loans, $9.5 million of commercial real estate loans, $11.7 million of
one-to four-family mortgage loans, $4.2 million of multi-family mortgage loans, $2.5 million of
home equity loans and foreclosed real estate of $5.0 million. Non-performing assets at March 31,
2011 included $16.2 million acquired in the Mt. Washington merger, comprised of $13.2 million of
non-performing loans and $3.0 million of foreclosed real estate.
Non-interest income increased $1.1 million, or 45.3%, to $3.6 million for the quarter ended March
31, 2011 from $2.5 million for the quarter ended March 31, 2010, primarily due to increases of
$867,000 in gain on sales of securities and $415,000 in equity income on investment from the
Companys Hampshire First Bank affiliate, partially offset by decreases of $118,000 in customer
service fees and $129,000 in gain on sales of loans.
Non-interest expense increased $1.3 million, or 11.2%, to $12.6 million for the quarter ended March
31, 2011 from $11.3 million for the quarter ended March 31, 2010. This increase was due primarily
to increases of $934,000 in salaries and employee benefits, $433,000 in occupancy and equipment
expenses, and $110,000 in deposit insurance premiums, partially offset by decreases of $117,000 in
foreclosed real estate expenses and $139,000 in other general and administrative expenses. The
increases in non-interest expenses include employee, occupancy and equipment expenses associated
with two new branches opened during the quarter ended March 31, 2011. The Companys efficiency
ratio was 73.40% for the quarter ended March 31, 2011 as compared to 65.72% for the quarter ended
March 31, 2010.
Mr. Gavegnano noted, The increase in our efficiency ratio for the first quarter of 2011 reflects
the costs of additional staffing, facilities and other overhead expenses associated with our new
branches and other business expansion efforts.
The Company recorded a provision for income taxes of $1.9 million for the quarter ended March 31,
2011, reflecting an effective tax rate of 37.1%, compared to $1.7 million, or 37.1%, for the
quarter ended March 31, 2010.
Total assets increased $64.9 million, or 3.5%, to $1.901 billion at March 31, 2011 from $1.836
billion at December 31, 2010. Cash and cash equivalents increased $31.8 million, or 20.4%, to
$187.3 million at March 31, 2011 from $155.5 million at December 31, 2010. Securities available
for sale increased $34.4 million, or 9.5%, to $395.0 million at March 31, 2011 from $360.6 million
at December 31, 2010. Net loans increased $6.6 million, or 0.6%, to $1.180 billion at March 31,
2011 from $1.174 billion at December 31, 2010.
Total deposits increased $43.5 million, or 3.0%, to $1.499 billion at March 31, 2011 from $1.455
billion at December 31, 2010, including growth of $38.1 million in core deposits. This growth also
reflects $18.2 million of new deposits in the two branches opened in January 2011. Total borrowings
increased $9.2 million, or 6.2%, to $157.8 million at March 31, 2011 from $148.7 million at
December 31, 2010, reflecting a $9.5 million increase in short-term borrowings.
Total stockholders equity increased $2.7 million, or 1.3%, to $218.3 million at March 31, 2011,
from $215.6 million at December 31, 2010. The increase was due primarily to $3.2 million in net
income partially offset by a $596,000 decrease in accumulated other comprehensive income reflecting
a decrease in the fair value of available for sale securities, net of tax. Stockholders equity to
assets was 11.49% at March 31, 2011, compared to 11.74% at December 31, 2010. Book value per share
increased to $9.72 at March 31, 2011 from $9.59 at December 31, 2010. Tangible book value per
share increased to $9.11 at March 31, 2011 from $8.98 at December 31, 2010. Market price per share
increased $2.26, or 19.2%, to $14.05 at March 31, 2011 from $11.79 at December 31, 2010. At March
31, 2011, the Company and the Bank continued to exceed all regulatory capital requirements.
As of March 31, 2011, the Company had repurchased 212,163 shares of its stock at an average price
of $11.29 per share as included in treasury stock, or 44.9% of the 472,428 shares authorized for
repurchase under the Companys third stock repurchase program announced on April 9, 2010.
Mr. Gavegnano added, Since December 2008, we have repurchased a total of 1,143,663 shares. Along
with additional stock repurchases, we continue to evaluate various other opportunities to enhance
shareholder value, including new business lines, potential mergers, strategic alliances and
partnerships.
Meridian Interstate 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 21 full
service locations in the greater Boston metropolitan area including seven full service locations in
its Mt. Washington Bank Division. 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.
2
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
Interstate 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 Companys filings with the Securities and
Exchange Commission. Should one or more of these risks materialize or should underlying beliefs or
assumptions prove incorrect, Meridian Interstate 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.
3
MERIDIAN INTERSTATE BANCORP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
Consolidated Balance Sheets
(Unaudited)
March 31, | December 31, | |||||||
(Dollars in thousands) | 2011 | 2010 | ||||||
ASSETS |
||||||||
Cash and due from banks |
$ | 187,197 | $ | 155,430 | ||||
Federal funds sold |
63 | 63 | ||||||
Total cash and cash equivalents |
187,260 | 155,493 | ||||||
Certificates of deposit affiliate bank |
2,508 | | ||||||
Securities available for sale, at fair value |
395,034 | 360,602 | ||||||
Federal Home Loan Bank stock, at cost |
12,538 | 12,538 | ||||||
Loans held for sale |
2,815 | 13,013 | ||||||
Loans |
1,190,510 | 1,183,717 | ||||||
Less allowance for loan losses |
(10,323 | ) | (10,155 | ) | ||||
Loans, net |
1,180,187 | 1,173,562 | ||||||
Bank-owned life insurance |
34,146 | 33,829 | ||||||
Foreclosed real estate, net |
4,966 | 4,080 | ||||||
Investment in affiliate bank |
11,982 | 11,497 | ||||||
Premises and equipment, net |
35,260 | 34,425 | ||||||
Accrued interest receivable |
7,164 | 7,543 | ||||||
Prepaid deposit insurance |
2,439 | 3,026 | ||||||
Deferred tax asset, net |
5,792 | 5,441 | ||||||
Goodwill |
13,687 | 13,687 | ||||||
Other assets |
4,902 | 7,094 | ||||||
Total assets |
$ | 1,900,680 | $ | 1,835,830 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||
Deposits: |
||||||||
Non interest-bearing |
$ | 115,988 | $ | 111,423 | ||||
Interest-bearing |
1,382,699 | 1,343,792 | ||||||
Total deposits |
1,498,687 | 1,455,215 | ||||||
Short-term borrowings affiliate bank |
11,455 | 1,949 | ||||||
Short-term borrowings other |
10,042 | 10,037 | ||||||
Long-term debt |
136,350 | 136,697 | ||||||
Accrued expenses and other liabilities |
25,830 | 16,321 | ||||||
Total liabilities |
1,682,364 | 1,620,219 | ||||||
Stockholders equity: |
||||||||
Common stock, no par value, 50,000,000 shares
authorized; 23,000,000 shares issued |
| | ||||||
Additional paid-in capital |
97,165 | 97,005 | ||||||
Retained earnings |
125,774 | 122,563 | ||||||
Accumulated other comprehensive income |
7,442 | 8,038 | ||||||
Treasury stock, at cost, 215,554 and 192,218 shares
at March 31, 2011 and December 31, 2010, respectively |
(2,425 | ) | (2,121 | ) | ||||
Unearned compensation ESOP, 693,450 and 703,800 shares
at March 31, 2011 and December 31, 2010, respectively |
(6,934 | ) | (7,038 | ) | ||||
Unearned compensation restricted shares, 321,645 and 326,905
at March 31, 2011 and December 31, 2010, respectively |
(2,706 | ) | (2,836 | ) | ||||
Total stockholders equity |
218,316 | 215,611 | ||||||
Total liabilities and stockholders equity |
$ | 1,900,680 | $ | 1,835,830 | ||||
4
MERIDIAN INTERSTATE BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
Consolidated Statements of Income
(Unaudited)
Three Months Ended March 31, | ||||||||
(Dollars in thousands, except per share amounts) | 2011 | 2010 | ||||||
Interest and dividend income: |
||||||||
Interest and fees on loans |
$ | 16,446 | $ | 16,210 | ||||
Interest on debt securities |
3,105 | 3,441 | ||||||
Dividends on equity securities |
253 | 205 | ||||||
Interest on certificates of deposit |
8 | 17 | ||||||
Interest on other interest-earning assets |
85 | 12 | ||||||
Total interest and dividend income |
19,897 | 19,885 | ||||||
Interest expense: |
||||||||
Interest on deposits |
4,573 | 4,199 | ||||||
Interest on short-term borrowings |
10 | 29 | ||||||
Interest on long-term debt |
879 | 886 | ||||||
Total interest expense |
5,462 | 5,114 | ||||||
Net interest income |
14,435 | 14,771 | ||||||
Provision for loan losses |
342 | 1,374 | ||||||
Net interest income, after provision
for loan losses |
14,093 | 13,397 | ||||||
Non-interest income: |
||||||||
Customer service fees |
1,296 | 1,414 | ||||||
Loan fees |
231 | 158 | ||||||
Gain on sales of loans, net |
436 | 565 | ||||||
Gain on sales of securities, net |
867 | | ||||||
Income from bank-owned life insurance |
317 | 292 | ||||||
Equity income on investment in affiliate bank |
485 | 70 | ||||||
Total non-interest income |
3,632 | 2,499 | ||||||
Non-interest expenses: |
||||||||
Salaries and employee benefits |
7,101 | 6,167 | ||||||
Occupancy and equipment |
2,216 | 1,783 | ||||||
Data processing |
809 | 754 | ||||||
Marketing and advertising |
541 | 466 | ||||||
Professional services |
644 | 720 | ||||||
Foreclosed real estate |
37 | 154 | ||||||
Deposit insurance |
625 | 515 | ||||||
Other general and administrative |
651 | 790 | ||||||
Total non-interest expenses |
12,624 | 11,349 | ||||||
Income before income taxes |
5,101 | 4,547 | ||||||
Provision for income taxes |
1,890 | 1,687 | ||||||
Net income |
$ | 3,211 | $ | 2,860 | ||||
Income per share: |
||||||||
Basic |
$ | 0.15 | $ | 0.13 | ||||
Diluted |
$ | 0.15 | $ | 0.13 | ||||
Weighted average shares: |
||||||||
Basic |
21,982,714 | 22,133,155 | ||||||
Diluted |
22,095,617 | 22,133,155 |
5
MERIDIAN INTERSTATE BANCORP, INC. AND SUBSIDIARIES
Net Interest Income Analysis
(Unaudited)
Net Interest Income Analysis
(Unaudited)
For the Three Months Ended March 31, | ||||||||||||||||||||||||
2011 | 2010 | |||||||||||||||||||||||
Average | Yield/ | Average | Yield/ | |||||||||||||||||||||
(Dollars in thousands) | Balance | Interest | Cost | Balance | Interest | Cost | ||||||||||||||||||
Assets: |
||||||||||||||||||||||||
Interest-earning assets: |
||||||||||||||||||||||||
Loans |
$ | 1,194,169 | $ | 16,446 | 5.59 | % | $ | 1,151,328 | $ | 16,210 | 5.71 | % | ||||||||||||
Securities and certificates of deposits |
372,945 | 3,366 | 3.66 | 341,330 | 3,663 | 4.35 | ||||||||||||||||||
Other interest-earning assets |
154,304 | 85 | 0.22 | 35,279 | 12 | 0.14 | ||||||||||||||||||
Total interest-earning assets |
1,721,418 | 19,897 | 4.69 | 1,527,937 | 19,885 | 5.28 | ||||||||||||||||||
Noninterest-earning assets |
137,038 | 138,229 | ||||||||||||||||||||||
Total assets |
$ | 1,858,456 | $ | 1,666,166 | ||||||||||||||||||||
Liabilities and stockholders equity: |
||||||||||||||||||||||||
Interest-bearing liabilities: |
||||||||||||||||||||||||
NOW deposits |
$ | 129,029 | 148 | 0.47 | $ | 107,768 | 128 | 0.48 | ||||||||||||||||
Money market deposits |
336,768 | 867 | 1.04 | 300,778 | 893 | 1.20 | ||||||||||||||||||
Regular and other deposits |
191,668 | 260 | 0.55 | 178,937 | 246 | 0.56 | ||||||||||||||||||
Certificates of deposit |
699,128 | 3,298 | 1.91 | 611,717 | 2,932 | 1.94 | ||||||||||||||||||
Total interest-bearing deposits |
1,356,593 | 4,573 | 1.37 | 1,199,200 | 4,199 | 1.42 | ||||||||||||||||||
Borrowings |
156,151 | 889 | 2.31 | 156,537 | 915 | 2.37 | ||||||||||||||||||
Total interest-bearing liabilities |
1,512,744 | 5,462 | 1.46 | 1,355,737 | 5,114 | 1.53 | ||||||||||||||||||
Noninterest-bearing demand deposits |
113,209 | 95,943 | ||||||||||||||||||||||
Other noninterest-bearing liabilities |
14,399 | 10,970 | ||||||||||||||||||||||
Total liabilities |
1,640,352 | 1,462,650 | ||||||||||||||||||||||
Total stockholders equity |
218,104 | 203,516 | ||||||||||||||||||||||
Total liabilities and stockholders equity |
$ | 1,858,456 | $ | 1,666,166 | ||||||||||||||||||||
Net interest-earning assets |
$ | 208,674 | $ | 172,200 | ||||||||||||||||||||
Net interest income |
$ | 14,435 | $ | 14,771 | ||||||||||||||||||||
Interest rate spread |
3.23 | % | 3.75 | % | ||||||||||||||||||||
Net interest margin |
3.40 | % | 3.92 | % | ||||||||||||||||||||
Average interest-earning assets to average interest-bearing liabilities |
113.79 | % | 112.70 | % |
(1) | Loans on non-accrual status are included in average balances. | |
(2) | Interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities. | |
(3) | Net interest margin represents net interest income divided by average interest-earning assets. | |
(4) | Annualized. |
6
MERIDIAN INTERSTATE BANCORP, INC. AND SUBSIDIARIES
Selected Financial Highlights
(Unaudited)
Selected Financial Highlights
(Unaudited)
At or For the Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Key Performance Ratios |
||||||||
Return on average assets (1) |
0.69 | % | 0.69 | % | ||||
Return on average equity (1) |
5.89 | 5.62 | ||||||
Stockholders equity to total assets |
11.49 | 11.95 | ||||||
Interest rate spread (1) (2) |
3.23 | 3.75 | ||||||
Net interest margin (1) (3) |
3.40 | 3.92 | ||||||
Non-interest expense to average assets (1) |
2.72 | 2.72 | ||||||
Efficiency ratio (4) |
73.40 | 65.72 |
March 31, | December 31, | March 31, | ||||||||||
2011 | 2010 | 2010 | ||||||||||
Asset Quality Ratios |
||||||||||||
Allowance for loan losses/total loans |
0.87 | % | 0.86 | % | 0.92 | % | ||||||
Allowance for loan
losses/non-performing loans |
20.32 | 23.54 | 31.45 | |||||||||
Non-performing loans/total loans |
4.27 | 3.64 | 2.93 | |||||||||
Non-performing loans/total assets |
2.67 | 2.35 | 1.97 | |||||||||
Non-performing assets/total assets |
2.93 | 2.57 | 2.26 | |||||||||
Share Related |
||||||||||||
Book value per share |
$ | 9.72 | $ | 9.59 | $ | 9.08 | ||||||
Tangible book value per share |
$ | 9.11 | $ | 8.98 | $ | 8.54 | ||||||
Market value per share |
$ | 14.05 | $ | 11.79 | $ | 10.40 | ||||||
Shares outstanding |
22,462,801 | 22,480,877 | 22,615,294 |
(1) | Annualized. | |
(2) | Interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities. | |
(3) | Net interest margin represents net interest income divided by average interest-earning assets. | |
(4) | The efficiency ratio represents non-interest expense divided by the sum of net interest income and non-interest income excluding gains or losses on securities. |
7