Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Meridian Bancorp, Inc. | d431230d8k.htm |
Exhibit 99
Meridian Bancorp, Inc. Reports Record Net Income for the Second Quarter
And Six Months Ended June 30, 2017
Contact: Richard J. Gavegnano, Chairman, President and Chief Executive Officer
(978) 977-2211
Boston, Massachusetts (July 25, 2017): Meridian Bancorp, Inc. (the “Company” or “Meridian”) (NASDAQ: EBSB), the holding company for East Boston Savings Bank (the “Bank”), announced net income of $11.3 million, or $0.22 per diluted share, for the quarter ended June 30, 2017, compared to $9.2 million, or $0.18 per diluted share, for the quarter ended March 31, 2017 and $5.9 million, or $0.11 per diluted share, for the quarter ended June 30, 2016. For the six months ended June 30, 2017, net income was $20.6 million, or $0.39 per diluted share, up from $13.4 million, or $0.26 per diluted share, for the six months ended June 30, 2016. The Company’s return on average assets was 0.97% for the quarter ended June 30, 2017, up from 0.82% for the quarter ended March 31, 2017 and 0.62% for the quarter ended June 30, 2016. For the six months ended June 30, 2017, the Company’s return on average assets was 0.90%, up from 0.72% for the six months ended June 30, 2016. The Company’s return on average equity was 7.28% for the quarter ended June 30, 2017, up from 6.03% for the quarter ended March 31, 2017 and 4.03% for the quarter ended June 30, 2016. For the six months ended June 30, 2017, the Company’s return on average equity was 6.66%, up from 4.57% for the six months ended June 30, 2016.
Richard J. Gavegnano, Chairman, President and Chief Executive Officer, said, “I am proud to report record net income of $11.3 million for the second quarter of 2017, up 23% from the first quarter of 2017 and up 92% from the second quarter of 2016. Our net income was also up 54% to $20.6 million for the first half of 2017 from the first half of 2016. These record earnings were driven by increases in net interest income and loan swap fees earned from strong organic commercial loan portfolio growth, along with lower loan loss provisions resulting from outstanding credit quality.”
Mr. Gavegnano added, “As announced in June, our core banking franchise will be enhanced following the anticipated completion in the fourth quarter of our acquisition of Meetinghouse Bancorp, Inc. and Meetinghouse Bank, with approximately $118 million in assets, $80 million in loans, $99 million in deposits and two branches in Dorchester and Roslindale. Our expanding presence in the lucrative Boston market area and the continuing strength of our organic loan growth remain as vital elements of our strategic plan to gain market share and enhance stockholder value.”
The Company’s net interest income was $35.5 million for the quarter ended June 30, 2017, up $2.1 million or 6.3%, from the quarter ended March 31, 2017 and $6.0 million, or 20.4%, from the quarter ended June 30, 2016. The interest rate spread and net interest margin on a tax-equivalent basis were 3.01% and 3.24%, respectively, for the quarter ended June 30, 2017 compared to 2.99% and 3.20%, respectively, for the quarter ended March 31, 2017 and 3.15% and 3.36%, respectively, for the quarter ended June 30, 2016. For the six months ended June 30, 2017, net interest income increased $11.0 million, or 19.0%, to $68.8 million from the six months ended June 30, 2016. The net interest rate spread and net interest margin on a tax-equivalent basis were 3.01% and 3.22%, respectively, for the six months ended June 30, 2017 compared to 3.17% and 3.37%, respectively, for the six months ended June 30, 2016. The increases in net interest income were primarily due to loan growth, partially offset by increases in the average balances and costs of total deposits and borrowings for the quarter and six months ended June 30, 2017 compared to the respective prior periods.
Total interest and dividend income increased to $44.5 million for the quarter ended June 30, 2017, up $2.8 million, or 6.6%, from the quarter ended March 31, 2017 and $8.7 million, or 24.2%, from the quarter ended June 30, 2016, primarily due to growth in the Company’s average loan balances to $4.181 billion and a three basis point increase in the yield on loans to 4.26% on a tax-equivalent basis. The Company’s yield on interest-earning assets on a tax-equivalent basis was 4.03% for the quarter ended June 30, 2017, up five basis points from the quarter ended March 31, 2017 and down two basis points from the quarter ended June 30, 2016. For the six months ended June 30, 2017, the Company’s total interest and dividend income increased $16.2 million, or 23.2%, to $86.3 million from the six months ended June 30, 2016 primarily due to growth in the average loan balances of $806.9 million, or 24.6%, to $4.091 billion, partially offset by a decrease in the yield on loans on a tax-equivalent basis of five basis points to 4.24% for the six months ended June 30, 2017 compared to the six months ended June 30, 2016. The Company’s yield on interest-earning assets on a tax-equivalent basis decreased five basis points to 4.01% for the six months ended June 30, 2017 compared to 4.06% for the six months ended June 30, 2016.
Total interest expense increased to $9.1 million for the quarter ended June 30, 2017, up $654,000, or 7.8%, from the quarter ended March 31, 2017 and $2.7 million, or 41.8%, from the quarter ended June 30, 2016. Interest expense on deposits increased to $7.9 million for the quarter ended June 30, 2017, up $516,000, or 7.0%, from the quarter ended March 31, 2017 and $2.3 million, or 40.2%, from the quarter ended June 30, 2016 primarily due to growth in average total deposits to $3.668 billion and increases in the cost of average total deposits to 0.87%. Interest expense on borrowings increased to $1.1 million for the quarter ended June 30, 2017, up $138,000, or 14.1%, from the quarter ended March 31, 2017 and $395,000, or 54.6%, from the quarter ended June 30, 2016 primarily due to growth in average total borrowings to $356.3 million, and increases in the cost of average total borrowings to 1.26%. The Company’s cost of funds was 0.90% for the quarter ended June 30, 2017, up two basis points from the quarter ended March 31, 2017 and 10 basis points from the quarter ended June 30, 2016. Total interest expense increased $5.3 million, or 43.2%, to $17.5 million for the six months ended June 30, 2017 from the six months ended June 30, 2016. Interest expense on deposits increased $4.5 million, or 41.0%, to $15.4 million for the six months ended June 30, 2017 from the six months ended June 30, 2016 primarily due to the growth in average total deposits of $724.6 million, or 25.2%, to $3.600 billion and an increase in the cost of average total deposits of 10 basis points to 0.86%. Interest expense on borrowings increased $798,000, or 61.4%, to $2.1 million for the six months ended June 30, 2017 from the six months ended June 30, 2016 primarily due to the growth in average total borrowings of $111.6 million, or 48.1%, to $343.5 million and an increase in the cost of average total borrowings of 10 basis points to 1.23%. The Company’s cost of funds increased 10 basis points to 0.89% for the six months ended June 30, 2017 compared to the six months ended June 30, 2016.
Mr. Gavegnano noted, “Rising net interest income remains the most significant contributor to our increased profitability, reflecting growth in total loans of $755 million, or 21%, on total loan originations of $1.7 billion since June 30, 2016. Total loans and net interest income both rose 6% in the second quarter from the first quarter of 2017, while our net interest margin also rose four basis points, reflecting increases in asset yields and a stable cost of funds achieved by utilizing selective wholesale funding opportunities during the quarter. Our net interest margin has remained relatively stable over the last several years through proactive pricing management of loans, deposits and borrowings.”
The Company’s provision for loan losses was $1.5 million for the quarter ended June 30, 2017, down $122,000 from the quarter ended March 31, 2017 and $2.5 million from the quarter ended June 30, 2016. The allowance for loan losses was $43.2 million or 1.00% of total loans at June 30, 2017, compared to $41.8 million or 1.03% of total loans at March 31, 2017, $40.1 million or 1.02% of total loans at December 31, 2016, and $38.3 million or 1.08% of total loans at June 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 $32,000 for the quarter ended June 30, 2017, or 0.00% of average loans outstanding on an annualized basis compared to net charge-offs of $4,000 for the quarter ended March 31, 2017, and net charge-offs of $25,000 for the quarter ended June 30, 2016. For the six months ended June 30, 2017, net charge-offs totaled $36,000, or 0.00% of average loans outstanding on an annualized basis compared to net charge-offs of $106,000 for the six months ended June 30, 2016, or 0.01% of average loans outstanding on an annualized basis.
Non-accrual loans were $11.5 million, or 0.27% of total loans outstanding, at June 30, 2017, down $2.2 million, or 16.1%, from March 31, 2017 and down $17.9 million, or 61.0%, from June 30, 2016. The reductions in non-accrual loans from June 30, 2016 were primarily due to the sale at foreclosure during the third quarter of 2016 of an $11.5 million multi-family construction loan in Boston that was originally placed on non-accrual status during the second quarter of 2015, along with reductions across all categories of non-accrual loans. Non-performing assets were $11.5 million, or 0.24% of total assets, at June 30, 2017, compared to $13.7 million, or 0.30% of total assets, at March 31, 2017 and $29.6 million, or 0.75% of total assets, at June 30, 2016.
Mr. Gavegnano commented, “Our outstanding asset quality improved further during the second quarter of 2017 with delinquent and non-performing loans declining to new historic lows and only insignificant loan charge-off activity. Even as we benefit from the favorable economic conditions in our metropolitan Boston market area, we continue to be highly disciplined in our loan underwriting, credit monitoring and loan collection processes.”
Non-interest income was $5.0 million for the quarter ended June 30, 2017, up from $4.1 million for the quarter ended March 31, 2017 and up from $2.6 million for the quarter ended June 30, 2016. Non-interest income increased $958,000, or 23.5%, as compared to the quarter ended March 31, 2017, primarily due to increases of $1.6 million in loan fees, partially offset by a decrease of $766,000 in gain on sales of securities, net. As compared to the quarter ended June 30, 2016, non-interest income increased $2.4 million, or 94.7%, primarily due to increases of $1.7 million in loan fees and $740,000 in gain on sales of securities, net. For the six months ended June 30, 2017, non-interest income increased $3.8 million, or 72.5%, to $9.1 million from $5.3 million for the six months ended June 30, 2016, primarily due to a $2.3 million increase in gain on sale of securities, net and a $1.4 million increase in loan fees. The increases in loan fees are primarily due to $1.3 million of loan swap fee income recognized in the second quarter of 2017.
2
Non-interest expenses were $21.4 million, or 1.83% of average assets for the quarter ended June 30, 2017, compared to $21.9 million, or 1.94% of average assets for the quarter ended March 31, 2017 and $19.3 million, or 2.03% of average assets for the quarter ended June 30, 2016. Non-interest expenses increased $2.1 million, or 10.8%, compared to the quarter ended June 30, 2016, due to increases of $773,000 in salaries and employee benefits, $386,000 in professional services, $281,000 in deposit insurance premiums, $254,000 in marketing and advertising, $220,000 in data processing, and $169,000 in occupancy and equipment expenses. For the six months ended June 30, 2017, non-interest expenses increased $4.7 million, or 12.3%, to $43.3 million from $38.6 million for the six months ended June 30, 2016, primarily due to increases of $1.9 million in salaries and employee benefits, $908,000 in professional services, $708,000 in occupancy and equipment expenses, $520,000 in deposit insurance premiums, $395,000 in marketing and advertising, and $342,000 in data processing 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 53.95% for the quarter ended June 30, 2017 compared to 61.02% for the quarter ended March 31, 2017 and 60.44% for the quarter ended June 30, 2016. For the six months ended June 30, 2017, the efficiency ratio was 57.31% compared to 61.21% for the six months ended June 30, 2016.
Mr. Gavegnano said, “Our efficiency ratio significantly improved in the second quarter of 2017 as a result of the increases in net interest income and loan swap fee income along with virtually flat overhead expense levels. We have successfully implemented many enhancements to our regulatory compliance infrastructure since late last year, with progress continuing. We also expect our non-interest expenses to normalize over the next several quarters, with further improvement in our operating efficiency.”
The Company recorded a provision for income taxes of $6.2 million for the quarter ended June 30, 2017, reflecting an effective tax rate of 35.5%, compared to $4.7 million, or an effective tax rate of 33.6%, for the quarter ended March 31, 2017, and $2.9 million, or an effective tax rate of 32.6%, for the quarter ended June 30, 2016. For the six months ended June 30, 2017, the provision for income taxes was $10.9 million, reflecting an effective tax rate of 34.7%, compared to $6.2 million, or an effective tax rate of 31.5%, for the six months ended June 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 $4.787 billion at June 30, 2017, up $148.7 million, or 3.2%, from $4.639 billion at March 31, 2017 and $351.4 million, or 7.9%, from $4.436 billion at December 31, 2016. Net loans were $4.256 billion at June 30, 2017, up $235.1 million, or 5.8%, from March 31, 2017, and $357.2 million, or 9.2%, from December 31, 2016. Loan originations totaled $400.7 million during the quarter ended June 30, 2017 and $826.7 million during the six months ended June 30, 2017. The net increase in loans for the six months ended June 30, 2017 was primarily due to increases of $151.0 million in commercial real estate loans, $132.7 million in multi-family loans, $42.0 million in commercial and industrial loans, $20.3 million in one- to four-family loans, and $14.7 million in construction loans. Cash and due from banks was $234.8 million at June 30, 2017, a decrease of $1.6 million, or 0.7% from December 31, 2016. Securities available for sale were $52.4 million at June 30, 2017, a decrease of $15.3 million, or 22.6%, from $67.7 million at December 31, 2016.
Total deposits were $3.660 billion at June 30, 2017, an increase of $3.3 million, or 0.1%, from $3.657 billion at March 31, 2017 and an increase of $184.1 million, or 5.3%, from $3.476 billion at December 31, 2016. Core deposits, which exclude certificate of deposits, increased $183.0 million, or 7.8%, during the six months ended June 30, 2017 to $2.531 billion, or 69.1% of total deposits. Total borrowings were $474.0 million, up $139.2 million, or 41.6%, from March 31, 2017 and $151.5 million, or 47.0%, from December 31, 2016.
Total stockholders’ equity increased $10.5 million, or 1.7%, to $626.7 million at June 30, 2017 from $616.2 million at March 31, 2017, and $19.4 million, or 3.2%, from $607.3 million at December 31, 2016. The increase for the six months ended June 30, 2017 was primarily due to net income of $20.6 million, $2.8 million related to stock-based compensation plans and $99,000 in accumulated other comprehensive income, reflecting an increase in the fair value of available-for-sale securities, partially offset by dividends of $0.08 per share totaling $4.1 million. Stockholders’ equity to assets was 13.09% at June 30, 2017, compared to 13.28% at March 31, 2017 and 13.69% at December 31, 2016. Book value per share increased to $11.68 at June 30, 2017 from $11.33 at December 31, 2016. Tangible book value per share increased to $11.43 at June 30, 2017 from $11.08 at December 31, 2016. Market price per share decreased $2.00, or 10.6%, to $16.90 at June 30, 2017 from $18.90 at December 31, 2016. At June 30, 2017, the Company and the Bank continued to exceed all regulatory capital requirements.
As of the quarter ended June 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 six months ended June 30, 2017.
3
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.
4
MERIDIAN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| June 30, 2017 | March 31, 2017 | December 31, 2016 | June 30, 2016 | |||||||||||||
| (Dollars in thousands) | ||||||||||||||||
| ASSETS |
||||||||||||||||
| Cash and due from banks |
$ | 234,776 | $ | 327,663 | $ | 236,423 | $ | 101,735 | ||||||||
| Certificates of deposit |
85,323 | 80,323 | 80,323 | 35,342 | ||||||||||||
| Securities available for sale, at fair value |
52,362 | 59,058 | 67,663 | 131,942 | ||||||||||||
| Federal Home Loan Bank stock, at cost |
22,579 | 18,629 | 18,175 | 17,818 | ||||||||||||
| Loans held for sale |
2,257 | 1,022 | 3,944 | 2,397 | ||||||||||||
| Loans: |
||||||||||||||||
| One- to four-family |
552,762 | 544,025 | 532,450 | 447,131 | ||||||||||||
| Home equity lines of credit |
42,599 | 42,642 | 42,913 | 47,412 | ||||||||||||
| Multi-family |
695,602 | 587,180 | 562,948 | 490,724 | ||||||||||||
| Commercial real estate |
1,927,572 | 1,791,468 | 1,776,601 | 1,568,224 | ||||||||||||
| Construction |
517,471 | 567,352 | 502,753 | 484,858 | ||||||||||||
| Commercial and industrial |
557,443 | 524,723 | 515,430 | 500,897 | ||||||||||||
| Consumer |
10,058 | 9,710 | 9,712 | 9,568 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total loans |
4,303,507 | 4,067,100 | 3,942,807 | 3,548,814 | ||||||||||||
| Allowance for loan losses |
(43,229 | ) | (41,764 | ) | (40,149 | ) | (38,317 | ) | ||||||||
| Net deferred loan origination fees |
(4,443 | ) | (4,593 | ) | (3,990 | ) | (3,902 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Loans, net |
4,255,835 | 4,020,743 | 3,898,668 | 3,506,595 | ||||||||||||
| Bank-owned life insurance |
41,325 | 41,033 | 40,745 | 40,155 | ||||||||||||
| Foreclosed real estate, net |
— | — | — | 183 | ||||||||||||
| Premises and equipment, net |
40,621 | 41,099 | 41,427 | 40,821 | ||||||||||||
| Accrued interest receivable |
11,068 | 10,070 | 10,381 | 9,246 | ||||||||||||
| Deferred tax asset, net |
21,728 | 21,471 | 21,461 | 20,232 | ||||||||||||
| Goodwill |
13,687 | 13,687 | 13,687 | 13,687 | ||||||||||||
| Other assets |
5,853 | 3,914 | 3,105 | 8,923 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total assets |
$ | 4,787,414 | $ | 4,638,712 | $ | 4,436,002 | $ | 3,929,076 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||||||||||
| Deposits: |
||||||||||||||||
| Non interest-bearing demand deposits |
$ | 457,009 | $ | 439,315 | $ | 431,222 | $ | 373,561 | ||||||||
| NOW deposits |
779,208 | 748,465 | 630,413 | 452,451 | ||||||||||||
| Money market deposits |
972,720 | 1,005,534 | 980,344 | 812,315 | ||||||||||||
| Regular savings and other deposits |
321,674 | 323,136 | 305,632 | 300,522 | ||||||||||||
| Certificates of deposit |
1,129,306 | 1,140,183 | 1,128,226 | 1,059,188 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total deposits |
3,659,917 | 3,656,633 | 3,475,837 | 2,998,037 | ||||||||||||
| Short-term borrowings |
40,000 | — | — | — | ||||||||||||
| Long-term debt |
434,015 | 334,827 | 322,512 | 320,624 | ||||||||||||
| Accrued expenses and other liabilities |
26,753 | 31,074 | 30,356 | 23,763 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total liabilities |
4,160,685 | 4,022,534 | 3,828,705 | 3,342,424 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 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; 53,649,946, 53,630,841, 53,596,105 and 53,688,566 shares issued at June 30, 2017, March 31, 2017, December 31, 2016 and June 30, 2016, respectively |
537 | 536 | 536 | 537 | ||||||||||||
| Additional paid-in capital |
392,446 | 391,316 | 390,065 | 389,318 | ||||||||||||
| Retained earnings |
250,800 | 241,472 | 234,290 | 216,539 | ||||||||||||
| Accumulated other comprehensive income |
1,905 | 2,034 | 1,806 | 99 | ||||||||||||
| Unearned compensation - ESOP, 2,617,198, 2,648,359, 2,678,800 and 2,739,682 at June 30, 2017, March 31, 2017, December 31, 2016 and June 30, 2016, respectively |
(18,959 | ) | (19,180 | ) | (19,400 | ) | (19,841 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total stockholders’ equity |
626,729 | 616,178 | 607,297 | 586,652 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total liabilities and stockholders’ equity |
$ | 4,787,414 | $ | 4,638,712 | $ | 4,436,002 | $ | 3,929,076 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
5
MERIDIAN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF NET INCOME
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| June 30, 2017 | March 31, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | ||||||||||||||||
| (Dollars in thousands, except per share amounts) | ||||||||||||||||||||
| Interest and dividend income: |
||||||||||||||||||||
| Interest and fees on loans |
$ | 43,195 | $ | 40,489 | $ | 34,828 | $ | 83,684 | $ | 67,925 | ||||||||||
| Interest on debt securities: |
||||||||||||||||||||
| Taxable |
83 | 119 | 238 | 202 | 504 | |||||||||||||||
| Tax-exempt |
8 | 10 | 32 | 18 | 65 | |||||||||||||||
| Dividends on equity securities |
291 | 277 | 418 | 568 | 818 | |||||||||||||||
| Interest on certificates of deposit |
196 | 212 | 135 | 408 | 305 | |||||||||||||||
| Other interest and dividend income |
736 | 645 | 188 | 1,381 | 406 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total interest and dividend income |
44,509 | 41,752 | 35,839 | 86,261 | 70,023 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Interest expense: |
||||||||||||||||||||
| Interest on deposits |
7,935 | 7,419 | 5,661 | 15,354 | 10,889 | |||||||||||||||
| Interest on short-term borrowings |
4 | — | — | 4 | 6 | |||||||||||||||
| Interest on long-term debt |
1,114 | 980 | 723 | 2,094 | 1,294 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total interest expense |
9,053 | 8,399 | 6,384 | 17,452 | 12,189 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net interest income |
35,456 | 33,353 | 29,455 | 68,809 | 57,834 | |||||||||||||||
| Provision for loan losses |
1,497 | 1,619 | 3,952 | 3,116 | 5,018 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net interest income, after provision for loan losses |
33,959 | 31,734 | 25,503 | 65,693 | 52,816 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Non-interest income: |
||||||||||||||||||||
| Customer service fees |
2,214 | 2,052 | 2,137 | 4,266 | 4,086 | |||||||||||||||
| Loan fees |
1,634 | 68 | (22 | ) | 1,702 | 290 | ||||||||||||||
| Mortgage banking gains, net |
82 | 90 | 104 | 172 | 174 | |||||||||||||||
| Gain on sales of securities, net |
808 | 1,574 | 68 | 2,382 | 127 | |||||||||||||||
| Income from bank-owned life insurance |
292 | 288 | 296 | 580 | 598 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total non-interest income |
5,030 | 4,072 | 2,583 | 9,102 | 5,275 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Non-interest expenses: |
||||||||||||||||||||
| Salaries and employee benefits |
12,752 | 13,675 | 11,979 | 26,427 | 24,492 | |||||||||||||||
| Occupancy and equipment |
3,036 | 3,023 | 2,867 | 6,059 | 5,351 | |||||||||||||||
| Data processing |
1,474 | 1,379 | 1,254 | 2,853 | 2,511 | |||||||||||||||
| Marketing and advertising |
953 | 854 | 699 | 1,807 | 1,412 | |||||||||||||||
| Professional services |
1,106 | 1,135 | 720 | 2,241 | 1,333 | |||||||||||||||
| Deposit insurance |
813 | 691 | 532 | 1,504 | 984 | |||||||||||||||
| Other general and administrative |
1,271 | 1,120 | 1,271 | 2,391 | 2,469 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total non-interest expenses |
21,405 | 21,877 | 19,322 | 43,282 | 38,552 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Income before income taxes |
17,584 | 13,929 | 8,764 | 31,513 | 19,539 | |||||||||||||||
| Provision for income taxes |
6,237 | 4,685 | 2,857 | 10,922 | 6,155 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net income |
$ | 11,347 | $ | 9,244 | $ | 5,907 | $ | 20,591 | $ | 13,384 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Earnings per share: |
||||||||||||||||||||
| Basic |
$ | 0.22 | $ | 0.18 | $ | 0.12 | $ | 0.40 | $ | 0.26 | ||||||||||
| Diluted |
$ | 0.22 | $ | 0.18 | $ | 0.11 | $ | 0.39 | $ | 0.26 | ||||||||||
| Weighted average shares: |
||||||||||||||||||||
| Basic |
51,003,967 | 50,949,634 | 51,026,985 | 50,976,950 | 51,298,334 | |||||||||||||||
| Diluted |
52,422,486 | 52,526,737 | 52,137,475 | 52,474,761 | 52,400,698 | |||||||||||||||
6
MERIDIAN BANCORP, INC. AND SUBSIDIARIES
NET INTEREST INCOME ANALYSIS
(Unaudited)
| For the Three Months Ended | ||||||||||||||||||||||||||||||||||||
| June 30, 2017 | March 31, 2017 | June 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) |
$ | 4,180,602 | $ | 44,431 | 4.26 | % | $ | 4,000,857 | $ | 41,689 | 4.23 | % | $ | 3,422,193 | $ | 36,000 | 4.23 | % | ||||||||||||||||||
| Securities and certificates of deposit |
142,159 | 691 | 1.95 | 145,841 | 726 | 2.02 | 199,596 | 995 | 2.00 | |||||||||||||||||||||||||||
| Other interest-earning assets (3) |
239,590 | 736 | 1.23 | 243,478 | 645 | 1.08 | 69,914 | 188 | 1.08 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
| Total interest-earning assets |
4,562,351 | 45,858 | 4.03 | 4,390,176 | 43,060 | 3.98 | 3,691,703 | 37,183 | 4.05 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Noninterest-earning assets |
110,509 | 111,757 | 124,147 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Total assets |
$ | 4,672,860 | $ | 4,501,933 | $ | 3,815,850 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Liabilities and stockholders’ equity: |
||||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: |
||||||||||||||||||||||||||||||||||||
| NOW deposits |
$ | 753,839 | $ | 1,598 | 0.85 | $ | 654,977 | $ | 1,219 | 0.75 | $ | 462,543 | $ | 646 | 0.56 | |||||||||||||||||||||
| Money market deposits |
992,382 | 2,219 | 0.90 | 1,008,392 | 2,230 | 0.90 | 813,625 | 1,609 | 0.80 | |||||||||||||||||||||||||||
| Regular savings and other deposits |
317,656 | 114 | 0.14 | 307,940 | 108 | 0.14 | 296,638 | 106 | 0.14 | |||||||||||||||||||||||||||
| Certificates of deposit |
1,147,440 | 4,004 | 1.40 | 1,134,329 | 3,862 | 1.38 | 1,005,764 | 3,300 | 1.32 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
| Total interest-bearing deposits |
3,211,317 | 7,935 | 0.99 | 3,105,638 | 7,419 | 0.97 | 2,578,570 | 5,661 | 0.88 | |||||||||||||||||||||||||||
| Borrowings |
356,325 | 1,118 | 1.26 | 330,604 | 980 | 1.20 | 264,060 | 723 | 1.10 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
| Total interest-bearing liabilities |
3,567,642 | 9,053 | 1.02 | 3,436,242 | 8,399 | 0.99 | 2,842,630 | 6,384 | 0.90 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Noninterest-bearing demand deposits |
456,447 | 425,353 | 364,327 | |||||||||||||||||||||||||||||||||
| Other noninterest-bearing liabilities |
25,732 | 27,312 | 22,909 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Total liabilities |
4,049,821 | 3,888,907 | 3,229,866 | |||||||||||||||||||||||||||||||||
| Total stockholders’ equity |
623,039 | 613,026 | 585,984 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Total liabilities and stockholders’ equity |
$ | 4,672,860 | $ | 4,501,933 | $ | 3,815,850 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Net interest-earning assets |
$ | 994,709 | $ | 953,934 | $ | 849,073 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Fully tax-equivalent net interest income |
36,805 | 34,661 | 30,799 | |||||||||||||||||||||||||||||||||
| Less: tax-equivalent adjustments |
(1,349 | ) | (1,308 | ) | (1,344 | ) | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Net interest income |
$ | 35,456 | $ | 33,353 | $ | 29,455 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
| Interest rate spread (1)(4) |
3.01 | % | 2.99 | % | 3.15 | % | ||||||||||||||||||||||||||||||
| Net interest margin (1)(5) |
3.24 | % | 3.20 | % | 3.36 | % | ||||||||||||||||||||||||||||||
| Average interest-earning assets to average |
||||||||||||||||||||||||||||||||||||
| interest-bearing liabilities |
127.88 | % | 127.76 | % | 129.87 | % | ||||||||||||||||||||||||||||||
| Supplemental Information: |
||||||||||||||||||||||||||||||||||||
| Total deposits, including noninterest-bearing |
||||||||||||||||||||||||||||||||||||
| demand deposits |
$ | 3,667,764 | $ | 7,935 | 0.87 | % | $ | 3,530,991 | $ | 7,419 | 0.85 | % | $ | 2,942,897 | $ | 5,661 | 0.77 | % | ||||||||||||||||||
| Total deposits and borrowings, including |
||||||||||||||||||||||||||||||||||||
| noninterest-bearing demand deposits |
$ | 4,024,089 | $ | 9,053 | 0.90 | % | $ | 3,861,595 | $ | 8,399 | 0.88 | % | $ | 3,206,957 | $ | 6,384 | 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 three months ended June 30, 2017, March 31, 2017 and June 30, 2016, yields on loans before tax-equivalent adjustments were 4.14%, 4.10% and 4.09%, respectively, yields on securities and certificates of deposit before tax-equivalent adjustments were 1.63%, 1.71% and 1.66%, respectively, and yield on total interest-earning assets before tax-equivalent adjustments were 3.91%, 3.86% and 3.90%, respectively. Interest rate spread before tax-equivalent adjustments for the three months ended June 30, 2017, March 31, 2017 and June 30, 2016 was 2.89%, 2.87% and 3.00%, respectively, while net interest margin before tax-equivalent adjustments for the three months ended June 30, 2017, March 31, 2017 and June 30, 2016 was 3.12%, 3.08% 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. |
7
MERIDIAN BANCORP, INC. AND SUBSIDIARIES
NET INTEREST INCOME ANALYSIS
(Unaudited)
| For the Six Months Ended | ||||||||||||||||||||||||
| June 30, 2017 | June 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) |
$ | 4,091,226 | $ | 86,121 | 4.24 | % | $ | 3,284,321 | $ | 70,104 | 4.29 | % | ||||||||||||
| Securities and certificates of deposit |
143,990 | 1,418 | 1.99 | 215,600 | 2,028 | 1.89 | ||||||||||||||||||
| Other interest-earning assets (3) |
241,523 | 1,381 | 1.15 | 96,695 | 406 | 0.84 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total interest-earning assets |
4,476,739 | 88,920 | 4.01 | 3,596,616 | 72,538 | 4.06 | ||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Noninterest-earning assets |
111,130 | 118,614 | ||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Total assets |
$ | 4,587,869 | $ | 3,715,230 | ||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Liabilities and stockholders’ equity: |
||||||||||||||||||||||||
| Interest-bearing liabilities: |
||||||||||||||||||||||||
| NOW deposits |
$ | 704,681 | $ | 2,817 | 0.81 | $ | 401,952 | $ | 1,146 | 0.57 | ||||||||||||||
| Money market deposits |
1,000,343 | 4,449 | 0.90 | 843,700 | 3,355 | 0.80 | ||||||||||||||||||
| Regular savings and other deposits |
312,825 | 222 | 0.14 | 293,550 | 209 | 0.14 | ||||||||||||||||||
| Certificates of deposit |
1,140,921 | 7,866 | 1.39 | 971,219 | 6,179 | 1.28 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total interest-bearing deposits |
3,158,770 | 15,354 | 0.98 | 2,510,421 | 10,889 | 0.87 | ||||||||||||||||||
| Borrowings |
343,536 | 2,098 | 1.23 | 231,920 | 1,300 | 1.13 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||
| Total interest-bearing liabilities |
3,502,306 | 17,452 | 1.00 | 2,742,341 | 12,189 | 0.89 | ||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Noninterest-bearing demand deposits |
440,986 | 364,760 | ||||||||||||||||||||||
| Other noninterest-bearing liabilities |
26,517 | 22,413 | ||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Total liabilities |
3,969,809 | 3,129,514 | ||||||||||||||||||||||
| Total stockholders’ equity |
618,060 | 585,716 | ||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Total liabilities and stockholders’ equity |
$ | 4,587,869 | $ | 3,715,230 | ||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Net interest-earning assets |
$ | 974,433 | $ | 854,275 | ||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Fully tax-equivalent net interest income |
71,468 | 60,349 | ||||||||||||||||||||||
| Less: tax-equivalent adjustments |
(2,659 | ) | (2,515 | ) | ||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Net interest income |
$ | 68,809 | $ | 57,834 | ||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||
| Interest rate spread (1)(4) |
3.01 | % | 3.17 | % | ||||||||||||||||||||
| Net interest margin (1)(5) |
3.22 | % | 3.37 | % | ||||||||||||||||||||
| Average interest-earning assets to average |
||||||||||||||||||||||||
| interest-bearing liabilities |
127.82 | % | 131.15 | % | ||||||||||||||||||||
| Supplemental Information: |
||||||||||||||||||||||||
| Total deposits, including noninterest-bearing |
||||||||||||||||||||||||
| demand deposits |
$ | 3,599,756 | $ | 15,354 | 0.86 | % | $ | 2,875,181 | $ | 10,889 | 0.76 | % | ||||||||||||
| Total deposits and borrowings, including |
||||||||||||||||||||||||
| noninterest-bearing demand deposits |
$ | 3,943,292 | $ | 17,452 | 0.89 | % | $ | 3,107,101 | $ | 12,189 | 0.79 | % | ||||||||||||
| (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 June 30, 2017, and 2016, yields on loans before tax-equivalent adjustments were 4.12% and 4.16%, respectively, yields on securities and certificates of deposit before tax-equivalent adjustments were 1.67% and 1.58%, respectively, and yield on total interest-earning assets before tax-equivalent adjustments were 3.89% and 3.92%, respectively. Interest rate spread before tax-equivalent adjustments for the six months ended June 30, 2017, and 2016 was 2.89% and 3.03%, respectively, while net interest margin before tax-equivalent adjustments for the six months ended June 30, 2017, and 2016 was 3.10% and 3.23%, 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. |
8
MERIDIAN BANCORP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL HIGHLIGHTS
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| June 30, 2017 | March 31, 2017 | June 30, 2016 | June 30, 2017 | June 30, 2016 | ||||||||||||||||
| Key Performance Ratios |
||||||||||||||||||||
| Return on average assets (1) |
0.97 | % | 0.82 | % | 0.62 | % | 0.90 | % | 0.72 | % | ||||||||||
| Return on average equity (1) |
7.28 | 6.03 | 4.03 | 6.66 | 4.57 | |||||||||||||||
| Interest rate spread (1) (2) |
3.01 | 2.99 | 3.15 | 3.01 | 3.17 | |||||||||||||||
| Net interest margin (1) (3) |
3.24 | 3.20 | 3.36 | 3.22 | 3.37 | |||||||||||||||
| Non-interest expense to average assets (1) |
1.83 | 1.94 | 2.03 | 1.89 | 2.08 | |||||||||||||||
| Efficiency ratio (4) |
53.95 | 61.02 | 60.44 | 57.31 | 61.21 | |||||||||||||||
| June 30, 2017 | March 31, 2017 | December 31, 2016 | June 30, 2016 | |||||||||||||
| (Dollars in thousands) | ||||||||||||||||
| Asset Quality |
||||||||||||||||
| Non-accrual loans: |
||||||||||||||||
| One- to four-family |
$ | 7,667 | $ | 8,761 | $ | 8,487 | $ | 9,552 | ||||||||
| Home equity lines of credit |
619 | 672 | 674 | 1,609 | ||||||||||||
| Commercial real estate |
2,666 | 2,792 | 2,807 | 3,829 | ||||||||||||
| Construction |
— | 815 | 815 | 13,698 | ||||||||||||
| Commercial and industrial |
529 | 646 | 653 | 737 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total non-accrual loans |
11,481 | 13,686 | 13,436 | 29,425 | ||||||||||||
| Foreclosed assets |
— | — | — | 183 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total non-performing assets |
$ | 11,481 | $ | 13,686 | $ | 13,436 | $ | 29,608 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Allowance for loan losses/total loans |
1.00 | % | 1.03 | % | 1.02 | % | 1.08 | % | ||||||||
| Allowance for loan losses/non-accrual loans |
376.53 | 305.16 | 298.82 | 130.22 | ||||||||||||
| Non-accrual loans/total loans |
0.27 | 0.34 | 0.34 | 0.83 | ||||||||||||
| Non-accrual loans/total assets |
0.24 | 0.30 | 0.30 | 0.75 | ||||||||||||
| Non-performing assets/total assets |
0.24 | 0.30 | 0.30 | 0.75 | ||||||||||||
| Capital and Share Related |
||||||||||||||||
| Stockholders’ equity to total assets |
13.09 | % | 13.28 | % | 13.69 | % | 14.93 | % | ||||||||
| Book value per share |
$ | 11.68 | $ | 11.49 | $ | 11.33 | $ | 10.93 | ||||||||
| Tangible book value per share |
$ | 11.43 | $ | 11.23 | $ | 11.08 | $ | 10.67 | ||||||||
| Market value per share |
$ | 16.90 | $ | 18.30 | $ | 18.90 | $ | 14.78 | ||||||||
| Shares outstanding |
53,649,946 | 53,630,841 | 53,596,105 | 53,688,566 | ||||||||||||
| (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. |
9