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Meridian Bancorp, Inc. Reports Record First Quarter Net Income; Rise in Total Deposits to $5 Billion on Growth in Core Deposits

BOSTON, April 23, 2019 (GLOBE NEWSWIRE) -- Meridian Bancorp, Inc. (the “Company” or “Meridian”) (EBSB), the holding company for East Boston Savings Bank (the “Bank”), announced net income of $15.1 million, or $0.29 per diluted share, for the quarter ended March 31, 2019, up from $12.4 million, or $0.24 per diluted share, for the quarter ended December 31, 2018 and $12.0 million, or $0.23 per diluted share, for the quarter ended March 31, 2018. The Company’s return on average assets was 0.97% for the quarter ended March 31, 2019, up from 0.83% for the quarter ended December 31, 2018 and 0.90% for the quarter ended March 31, 2018. The Company’s return on average equity was 8.84% for the quarter ended March 31, 2019, up from 7.28% for the quarter ended December 31, 2018 and 7.35% for the quarter ended March 31, 2018. 

Richard J. Gavegnano, Chairman, President and Chief Executive Officer, said, “I am pleased to report record first quarter net income of $15.1 million for 2019, up $3.1 million, or 26%, from the prior first quarter record set in 2018, and up $2.7 million, or 22%, from the fourth quarter of 2018. Following our growth records in the fourth quarter of 2018, we grew at a more moderate pace in the first quarter of 2019, with net loan growth of $115 million, or 2%, to $5.7 billion, while we reached the $5 billion milestone in total deposits with growth of $139 million, or 3%. We were especially gratified to see growth in core deposits of $160 million, or 5%, during the first quarter and $577 million, or 21%, over the past year to $3.4 billion at March 31, 2019 as we have expanded our Boston area retail banking network to 38 branches.”

The Company’s net interest income was $42.6 million for the quarter ended March 31, 2019, up $424,000, or 1.0%, from the quarter ended December 31, 2018 and $2.7 million, or 6.9%, from the quarter ended March 31, 2018. The interest rate spread and net interest margin on a tax-equivalent basis were 2.57% and 2.89%, respectively, for the quarter ended March 31, 2019 compared to 2.62% and 2.93%, respectively, for the quarter ended December 31, 2018 and 2.92% and 3.16%, respectively, for the quarter ended March 31, 2018. The increases in net interest income were primarily due to growth in average loan balances and yields on interest-earning assets, partially offset by increases in the average balances of total deposits and borrowings and the cost of funds for the quarter ended March 31, 2019 compared to the respective prior periods.

Total interest and dividend income increased to $64.5 million for the quarter ended March 31, 2019, up $2.8 million, or 4.5%, from the quarter ended December 31, 2018 and $12.5 million, or 24.0%, from the quarter ended March 31, 2018, primarily due to growth in the Company’s average loan balances to $5.695 billion. The Company’s yield on loans on a tax-equivalent basis was 4.44% for the quarter ended March 31, 2019, up five basis points from the quarter ended December 31, 2018 and up 15 basis points from the quarter ended March 31, 2018. The Company’s yield on interest-earning assets on a tax-equivalent basis was 4.34% for the quarter ended March 31, 2019, up eight basis points from the quarter ended December 31, 2018 and up 23 basis points from the quarter ended March 31, 2018.

Total interest expense increased to $21.9 million for the quarter ended March 31, 2019, up $2.3 million, or 12.0%, from the quarter ended December 31, 2018 and $9.7 million, or 80.0%, from the quarter ended March 31, 2018. Interest expense on deposits increased to $19.2 million for the quarter ended March 31, 2019, up $2.1 million, or 12.1%, from the quarter ended December 31, 2018 and $8.6 million, or 82.2%, from the quarter ended March 31, 2018 primarily due to growth in average total deposits to $4.914 billion and increases in the cost of average total deposits to 1.58% from 1.46% for the quarter ended December 31, 2018, and 1.04% for the quarter ended March 31, 2018. Interest expense on borrowings increased to $2.7 million for the quarter ended March 31, 2019, up $276,000, or 11.3%, from the quarter ended December 31, 2018 and $1.1 million, or 66.0%, from the quarter ended March 31, 2018 primarily due to increases in the average cost of borrowings to 1.91% from 1.67% for the quarter ended December 31, 2018, and 1.28% for the quarter ended March 31, 2018. The Company’s total cost of funds was 1.62% for the quarter ended March 31, 2019, up 13 basis points from the quarter ended December 31, 2018 and 56 basis points from the quarter ended March 31, 2018.

Mr. Gavegnano noted, “Our net interest income continues to rise on the strength of our recent organic loan and deposit growth. Since the end of 2015, our net loans have grown $2.7 billion for a compounded annual growth rate of 21%, while total deposits grew $2.3 billion for a compounded annual growth rate of 20%. Our yields on loans and other interest-earning assets have also steadily risen over the past year, minimizing the effect of the rise in our cost of funds on our net interest margin, which declined only four basis points to 2.89% for the first quarter of 2019 from the fourth quarter of 2018. We experienced a reversal of the margin compression within the first quarter and we believe there is significant potential for the margin to expand as the year goes on.”

The Company's provision for loan losses was $843,000 for the quarter ended March 31, 2019, down $2.7 million from the quarter ended December 31, 2018 and $1.3 million from the quarter ended March 31, 2018. The allowance for loan losses was $54.0 million or 0.94% of total loans at March 31, 2019, compared to $53.2 million or 0.94% of total loans at December 31, 2018, and $47.5 million or 0.96% of total loans at March 31, 2018. The changes in the allowance for loan losses coverage ratio 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 improvements in asset quality trends.

Net charge-offs totaled $77,000 for the quarter ended March 31, 2019 compared to net recoveries of $59,000 for the quarter ended December 31, 2018 and net recoveries of $114,000 for the quarter ended March 31, 2018.

Non-accrual loans were $7.5 million, or 0.13% of total loans outstanding, at March 31, 2019; up $638,000, or 9.2%, from December 31, 2018; and down $487,000, or 6.1%, from March 31, 2018. Non-performing assets were $7.5 million, or 0.12% of total assets, at March 31, 2019, compared to $6.9 million, or 0.11% of total assets, at December 31, 2018, and $8.0 million, or 0.15% of total assets, at March 31, 2018.

Non-interest income was $3.8 million for the quarter ended March 31, 2019, up from $135,000 for the quarter ended December 31, 2018 and $2.3 million for the quarter ended March 31, 2018. Non-interest income increased $3.7 million compared to the quarter ended December 31, 2018, primarily due to a $1.3 million gain on marketable equity securities, net, reflecting increases in market valuations in the first quarter of 2019 compared to a $2.7 million loss on marketable equity securities, net, in the fourth quarter of 2018. Compared to the quarter ended March 31, 2018, non-interest income increased $1.5 million, or 64.1%, primarily due to a $1.3 million gain on marketable equity securities, net, in the first quarter of 2019 compared to a $537,000 loss on marketable equity securities, net, in the first quarter of 2018.

Non-interest expenses were $25.8 million, or 1.66% of average assets for the quarter ended March 31, 2019, compared to $23.6 million, or 1.59% of average assets for the quarter ended December 31, 2018 and $24.7 million, or 1.86% of average assets for the quarter ended March 31, 2018.  Non-interest expenses increased $2.2 million, or 9.1%, compared to the quarter ended December 31, 2018, due primarily to increases of $984,000 in salaries and employee benefits, $436,000 in deposit insurance and $382,000 in occupancy and equipment. Non-interest expenses increased $1.1 million, or 4.5%, compared to the quarter ended March 31, 2018, due primarily to increases of $287,000 in data processing, $238,000 in salaries and employee benefits, and $215,000 in deposit insurance.  The increases in salaries and employee benefits expenses reflect annual increases in employee compensation, payroll taxes and employee benefits during the first quarter of 2019.  In addition, the increases in salaries and employee benefits, occupancy and equipment expenses and data processing include costs associated with the expansion of our branch network, including one new branch that opened late in the first quarter of 2018, and three new branch openings in the fourth quarter of 2018. The Company’s efficiency ratio was 57.20% for the quarter ended March 31, 2019 compared to 52.52% for the quarter ended December 31, 2018 and 57.62% for the quarter ended March 31, 2018.

Mr. Gavegnano added, “Our non-interest expenses increased only 4% for the first quarter of 2019 from the first quarter of 2018 despite the expansion of our branch network, with an increase of 9% compared to the fourth quarter reflecting annual increases to employee compensation and benefits and the seasonal nature of certain occupancy expenses. As a result, our efficiency ratio for the first quarter of 2019 improved slightly to 57.2% from 57.6% for the first quarter of 2018, with an increase from 52.5% for the fourth quarter of 2018. As we move forward with plans to open two new branches in Cambridge and Boston’s Brighton neighborhood in 2019 that will expand our branch network to 40 branches, we expect our entry into these attractive communities will lead to new business and consumer relationships and increase our market share in the Boston metropolitan area, with only minor increases to our operating expenses.”

The Company recorded a provision for income taxes of $4.7 million for the quarter ended March 31, 2019, reflecting an effective tax rate of 23.8%, compared to $2.7 million, or an effective tax rate of 18.2%, for the quarter ended December 31, 2018, and $3.3 million, or an effective tax rate of 21.6%, for the quarter ended March 31, 2018.

Total assets were $6.281 billion at March 31, 2019, up $102.7 million, or 1.7%, from $6.179 billion at December 31, 2018 and $820.7 million, or 15.0%, from $5.461 billion at March 31, 2018.  Net loans were $5.708 billion at March 31, 2019, up $114.6 million, or 2.0%, from December 31, 2018, and $807.7 million, or 16.5%, from March 31, 2018. Loan originations totaled $268.2 million during the quarter ended March 31, 2019. The net increase in loans for the quarter ended March 31, 2019 was primarily due to increases of $39.1 million in construction loans, $38.9 million in commercial real estate loans, $25.8 million in multi-family loans, and $13.2 million in one- to four-family loans.  Cash and due from banks was $344.3 million at March 31, 2019, a decrease of $27.7 million, or 7.5% from December 31, 2018. Securities, at fair value, were $31.7 million at March 31, 2019, an increase of $1.1 million, or 3.5%, from $30.6 million at December 31, 2018.

Effective January 1, 2019, the Company adopted Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842). During the quarter ended March 31, 2019, premises and equipment, net increased $17.1 million to $62.3 million and accrued expenses and other liabilities increased $15.3 million to $45.2 million at March 31, 2019, reflecting the recognition of operating lease assets and liabilities totaling $14.9 million based on the present value of future minimum lease payments as required by ASU No. 2016-02.

Total deposits were $5.023 billion at March 31, 2019, up $138.8 million, or 2.8%, from $4.884 billion at December 31, 2018 and $833.6 million, or 19.9%, from $4.189 billion at March 31, 2018.  Core deposits, which exclude certificates of deposit, increased $160.0 million, or 5.0%, during the three months ended March 31, 2019 to $3.358 billion, or 66.9% of total deposits. Total borrowings were $526.0 million, down $60.9 million, or 10.4%, from December 31, 2018 and $56.6 million, or 9.7%, from March 31, 2018.

Total stockholders’ equity increased $11.7 million, or 1.7%, to $686.4 million at March 31, 2019 from $674.7 million at December 31, 2018, and $30.8 million, or 4.7%, from $655.6 million at March 31, 2018. The increase for the three months ended March 31, 2019 was primarily due to net income of $15.1 million and $1.8 million related to stock-based compensation plans, partially offset by the repurchase of 104,177 shares of the Company’s common stock related to the stock repurchase program at a total cost of $1.6 million and dividends of $0.07 per share totaling $3.6 million. Stockholders’ equity to assets was 10.93% at March 31, 2019, compared to 10.92% at December 31, 2018 and 12.01% at March 31, 2018. Book value per share increased to $12.82 at March 31, 2019 from $12.60 at December 31, 2018. Tangible book value per share increased to $12.39 at March 31, 2019 from $12.17 at December 31, 2018. Market price per share increased $1.37 or 9.6%, to $15.69 at March 31, 2019 from $14.32 at December 31, 2018. At March 31, 2019, the Company and the Bank continued to exceed all regulatory capital requirements.

The Company repurchased 104,177 shares of its stock at an average price of $15.81 during the quarter ended March 31, 2019, completing the repurchases of the 3,373,621 shares of its stock, at an average price of $14.90 per share, as authorized under the Company’s repurchase program adopted in August 2015 and amended in November 2018. On April 11, 2019, the Company announced that it had adopted a new stock repurchase program for up to 500,000 shares, or approximately 0.9% of its outstanding common stock.

Mr. Gavegnano concluded, “We believe our repurchase of 3.4 million shares subsequent to the 2014 stock offering, the authorization to repurchase an additional 500,000 shares and our ongoing quarterly dividend to stockholders significantly enhance stockholder value. We are also working to further enhance our profitability through prudent loan and deposit growth, strategic expansion within our lucrative Boston market area and implementation of enhancements designed to improve operating efficiency.”

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 38 branches in the greater Boston metropolitan area, including 37 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, 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, 2019     December 31, 2018     March 31, 2018  
    (Dollars in thousands)  
ASSETS                        
Cash and due from banks   $ 344,259     $ 371,995     $ 316,372  
Certificates of deposit     5,247       5,247       44,133  
Securities available for sale, at fair value     16,890       17,159       19,507  
Marketable equity securities, at fair value     14,763       13,437       14,722  
Federal Home Loan Bank stock, at cost     26,377       29,187       27,572  
Loans held for sale     989       409       1,136  
Loans:                        
One- to four-family     660,551       647,367       614,043  
Home equity lines of credit     50,960       50,087       45,193  
Multi-family     1,036,331       1,010,521       858,894  
Commercial real estate     2,660,916       2,621,979       2,253,014  
Construction     726,061       686,948       638,751  
Commercial and industrial     622,431       625,018       533,056  
Consumer     11,095       10,953       10,466  
Total loans     5,768,345       5,652,873       4,953,417  
Allowance for loan losses     (53,997)       (53,231)       (47,488)  
Net deferred loan origination fees     (6,336)       (6,239)       (5,593)  
Loans, net     5,708,012       5,593,403       4,900,336  
Bank-owned life insurance     41,015       40,734       40,608  
Premises and equipment, net     62,279       45,140       41,415  
Accrued interest receivable     14,979       14,267       12,281  
Deferred tax asset, net     18,210       18,196       15,737  
Goodwill     20,378       20,378       19,638  
Core deposit intangible     2,517       2,653       3,096  
Other assets     5,441       6,478       4,145  
Total assets   $ 6,281,356     $ 6,178,683     $ 5,460,698  
                         
LIABILITIES AND STOCKHOLDERS' EQUITY                        
Deposits:                        
Non interest-bearing demand deposits   $ 499,536     $ 483,777     $ 487,096  
Interest-bearing demand deposits     1,215,105       1,190,346       1,098,646  
Money market deposits     685,078       729,174       851,702  
Regular savings and other deposits     958,348       794,813       343,466  
Certificates of deposit     1,664,943       1,686,074       1,408,464  
Total deposits     5,023,010       4,884,184       4,189,374  
Short-term borrowings           50,000        
Long-term debt     525,985       536,880       582,561  
Accrued expenses and other liabilities     45,973       32,965       33,156  
Total liabilities     5,594,968       5,504,029       4,805,091  
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; 53,542,646, 53,541,429, and
54,068,874 shares issued at March 31, 2019, December 31, 2018, and March 31, 2018, respectively
    535       535       540  
Additional paid-in capital     378,410       378,583       395,531  
Retained earnings     325,023       313,521       278,450  
Accumulated other comprehensive loss     (164)       (348)       (616)  
Unearned compensation - ESOP, 2,404,831, 2,435,272, and 2,526,595 shares at March 31, 2019,
December 31, 2018, and March 31, 2018, respectively
    (17,416)       (17,637)       (18,298)  
Total stockholders' equity     686,388       674,654       655,607  
Total liabilities and stockholders' equity   $ 6,281,356     $ 6,178,683     $ 5,460,698  
 

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

 

    Three Months Ended  
    March 31, 2019     December 31, 2018     March 31, 2018  
    (Dollars in thousands, except per share amounts)  
Interest and dividend income:                        
Interest and fees on loans   $ 61,641     $ 59,424     $ 49,985  
Interest on debt securities:                        
Taxable     110       115       126  
Tax-exempt     13       13       15  
Dividends on equity securities     105       121       148  
Interest on certificates of deposit     27       82       203  
Other interest and dividend income     2,577       1,957       1,522  
Total interest and dividend income     64,473       61,712       51,999  
Interest expense:                        
Interest on deposits     19,151       17,090       10,509  
Interest on short-term borrowings     295       183        
Interest on long-term debt     2,430       2,266       1,642  
Total interest expense     21,876       19,539       12,151  
Net interest income     42,597       42,173       39,848  
Provision for loan losses     843       3,563       2,189  
Net interest income, after provision for loan losses     41,754       38,610       37,659  
Non-interest income:                        
Customer service fees     2,097       2,371       2,170  
Loan fees     77       41       295  
Mortgage banking gains, net     40       25       133  
Gain (loss) on marketable equity securities, net     1,326       (2,698)       (537)  
Income from bank-owned life insurance     281       281       272  
Gain on life insurance distribution           110        
Other income     7       5        
Total non-interest income     3,828       135       2,333  
Non-interest expenses:                        
Salaries and employee benefits     15,632       14,648       15,394  
Occupancy and equipment     3,596       3,214       3,539  
Data processing     1,970       1,832       1,683  
Marketing and advertising     1,162       1,252       967  
Professional services     860       735       965  
Deposit insurance     1,012       576       797  
Merger and acquisition                 74  
Other general and administrative     1,564       1,380       1,270  
Total non-interest expenses     25,796       23,637       24,689  
Income before income taxes     19,786       15,108       15,303  
Provision for income taxes     4,715       2,750       3,309  
Net income   $ 15,071     $ 12,358     $ 11,994  
                         
Earnings per share:                        
Basic   $ 0.29     $ 0.24     $ 0.23  
Diluted   $ 0.29     $ 0.24     $ 0.23  
Weighted average shares outstanding:                        
Basic     51,120,599       51,530,878       51,531,835  
Diluted     51,467,917       51,955,139       53,083,815  
                         

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

 

    Three Months Ended
    March 31, 2019   December 31, 2018 March 31, 2018
    Average     Interest   Yield/   Average     Interest Yield/ Average     Interest Yield/
Balance   (1) Cost (1)(6) Balance (1) Cost (1)(6) Balance (1) Cost (1)(6)
    (Dollars in thousands)
Assets:                                                                  
Interest-earning assets:                                                                  
Loans (2)   $ 5,694,639     $ 62,325     4.44%     $ 5,434,068     $ 60,100     4.39%     $ 4,776,876     $ 50,573     4.29%  
Securities and certificates of deposit     36,510       272     3.02       52,818       356     2.67       96,511       523     2.20  
Other interest-earning assets (3)     353,201       2,577     2.96       321,924       1,957     2.41       317,883       1,522     1.94  
Total interest-earning assets     6,084,350       65,174     4.34       5,808,810       62,413     4.26       5,191,270       52,618     4.11  
Noninterest-earning assets     117,927                     122,446                     125,293                
Total assets   $ 6,202,277                   $ 5,931,256                   $ 5,316,563                
Liabilities and stockholders' equity:                                                                  
Interest-bearing liabilities:                                                                  
Interest-bearing demand deposits   $ 1,189,166     $ 4,940     1.68     $ 1,153,265     $ 4,716     1.62     $ 1,032,514     $ 2,791     1.10  
Money market deposits     699,807       2,148     1.24       782,007       2,449     1.24       883,549       2,057     0.94  
Regular savings and other deposits     920,579       3,802     1.67       597,827       1,829     1.21       335,288       114     0.14  
Certificates of deposit     1,621,436       8,261     2.07       1,610,632       8,096     1.99       1,376,113       5,547     1.63  
Total interest-bearing deposits     4,430,988       19,151     1.75       4,143,731       17,090     1.64       3,627,464       10,509     1.17  
Borrowings     577,954       2,725     1.91       581,619       2,449     1.67       521,090       1,642     1.28  
Total interest-bearing liabilities     5,008,942       21,876     1.77       4,725,350       19,539     1.64       4,148,554       12,151     1.19  
Noninterest-bearing demand deposits     482,634                     493,715                     488,459                
Other noninterest-bearing liabilities     29,048                     33,036                     26,638                
Total liabilities     5,520,624                     5,252,101                     4,663,651                
Total stockholders' equity     681,653                     679,155                     652,912                
Total liabilities and stockholders' equity   $ 6,202,277                   $ 5,931,256                   $ 5,316,563                
Net interest-earning assets   $ 1,075,408                   $ 1,083,460                   $ 1,042,716                
Fully tax-equivalent net interest income             43,298                     42,874                     40,467        
Less: tax-equivalent adjustments             (701)                     (701)                     (619)        
Net interest income           $ 42,597                   $ 42,173                   $ 39,848        
Interest rate spread (1)(4)                   2.57%                     2.62%                     2.92%  
Net interest margin (1)(5)                   2.89%                     2.93%                     3.16%  
Average interest-earning assets to average                                                                  
interest-bearing liabilities             121.47%                     122.93%                     125.13 %        
                                                                   
Supplemental Information:                                                                  
Total deposits, including noninterest-bearing                                                                  
demand deposits   $ 4,913,622     $ 19,151     1.58%     $ 4,637,446     $ 17,090     1.46%     $ 4,115,923     $ 10,509     1.04%  
Total deposits and borrowings, including                                                                  
noninterest-bearing demand deposits   $ 5,491,576     $ 21,876     1.62%     $ 5,219,065     $ 19,539     1.49%     $ 4,637,013     $ 12,151     1.06%  

______________

(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 March 31, 2019, December 31, 2018 and March 31, 2018, yields on loans before tax-equivalent adjustments were 4.39%, 4.34% and 4.24%, respectively, yields on securities and certificates of deposit before tax-equivalent adjustments were 2.83%, 2.49% and 2.07%, respectively, and yield on total interest-earning assets before tax-equivalent adjustments were 4.30%, 4.22% and 4.06%, respectively. Interest rate spread before tax-equivalent adjustments for the three months ended March 31, 2019, December 31, 2018 and March 31, 2018 was 2.53%, 2.58% and 2.87%, respectively, while net interest margin before tax-equivalent adjustments for the three months ended March 31, 2019, December 31, 2018 and March 31, 2018 was 2.84%, 2.88% and 3.11%, 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, 2019   December 31, 2018   March 31, 2018
Key Performance Ratios                              
Return on average assets (1)     0.97%         0.83%         0.90%    
Return on average equity (1)     8.84         7.28         7.35    
Interest rate spread  (1) (2)     2.57         2.62         2.92    
Net interest margin  (1) (3)     2.89         2.93         3.16    
Non-interest expense to average assets  (1)     1.66         1.59         1.86    
Efficiency ratio (4)     57.20         52.52         57.62    


    March 31, 2019   December 31, 2018   March 31, 2018
    (Dollars in thousands)
Asset Quality                              
Non-accrual loans:                              
One- to four-family   $ 6,115       $ 5,888       $ 6,568    
Home equity lines of credit                     562    
Multi-family     252                    
Commercial real estate     640         342         378    
Commercial and industrial     537         676         523    
Total non-accrual loans     7,544         6,906         8,031    
Foreclosed assets                        
Total non-performing assets   $ 7,544       $ 6,906       $ 8,031    
                               
Allowance for loan losses/total loans     0.94%         0.94%         0.96%    
Allowance for loan losses/non-accrual loans     715.76         770.79         591.31    
Non-accrual loans/total loans     0.13         0.12         0.16    
Non-accrual loans/total assets     0.12         0.11         0.15    
Non-performing assets/total assets     0.12         0.11         0.15    
                               
Capital and Share Related                              
Stockholders' equity to total assets     10.93%         10.92%         12.01%    
Book value per share   $ 12.82       $ 12.60       $ 12.13    
Tangible book value per share (5)   $ 12.39       $ 12.17       $ 11.70    
Market value per share   $ 15.69       $ 14.32       $ 20.15    
Shares outstanding   53,542,646       53,541,429       54,068,874    

______________

(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, excluding merger and acquisition expenses, 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. We have removed merger and acquisition expenses as management deems them to be not representative of operating performance. Presented on a basis including merger and acquisition expenses and gains and losses on marketable equity securities, the efficiency ratio was 55.56%, 55.87% and 58.53% for the quarters ended March 31, 2019, December 31, 2018, and March 31, 2018, 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