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Meridian Bancorp, Inc. Reports Record Net Income for the Third Quarter, up 30%, and its Intention to Increase the Quarterly Dividend 14%

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Meridian Bancorp, Inc. Reports Record Net Income for the Third Quarter, up 30%, and its Intention to Increase the Quarterly Dividend 14%

BOSTON, Oct. 22, 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 $19.7 million, or $0.38 per diluted share, for the quarter ended September 30, 2019, up from $15.2 million, or $0.29 per diluted share, for the quarter ended June 30, 2019 and $17.4 million, or $0.33 per diluted share, for the quarter ended September 30, 2018. For the nine months ended September 30, 2019, net income was $49.9 million, or $0.97 per diluted share, up from $43.4 million, or $0.82 per diluted share, for the nine months ended September 30, 2018. The Company’s return on average assets was 1.24% for the quarter ended September 30, 2019, up from 0.97% for the quarter ended June 30, 2019 and 1.22% for the quarter ended September 30, 2018. For the nine months ended September 30, 2019 the Company’s return on average assets was 1.06%, up from 1.05% for the nine months ended September 30, 2018. The Company’s return on average equity was 11.17% for the quarter ended September 30, 2019, up from 8.75% for the quarter ended June 30, 2019 and 10.28% for the quarter ended September 30, 2018. For the nine months ended September 30, 2019, the Company’s return on average equity was 9.60%, up from 8.72% for the nine months ended September 30, 2018.

Richard J. Gavegnano, Chairman, President and Chief Executive Officer, said, “I am pleased to report record net income of $19.7 million for the third quarter of 2019, up 30% from the second quarter of 2019 and 13% from the third quarter of 2018, and $49.9 million for the first nine months of 2019, up 15% from the first nine months of 2018. These earnings increases reflect a $3.0 million loan loss provision reversal resulting from over $200 million of commercial loan pay-offs and another $200 million of construction loans that converted to permanent status and also reflect overhead expense reductions in the third quarter of 2019. While the strong commercial real estate market conditions in the metropolitan Boston area that resulted in the sale of several large underlying properties and the challenging interest rate environment that impacted market lending rates contributed to the volume of our loan payoffs, our loan origination pipelines remain strong. In consideration of our current and expected earnings trends, the Board of Directors intends to declare an increase in our quarterly dividend by $0.01 per share, or 14%, to $0.08 per share in the fourth quarter.”

The Company’s net interest income was $44.2 million for the quarter ended September 30, 2019, up $1.7 million, or 4.1%, from the quarter ended June 30, 2019 and $2.8 million, or 6.9%, from the quarter ended September 30, 2018. The interest rate spread and net interest margin on a tax-equivalent basis were 2.52% and 2.87%, respectively, for the quarter ended September 30, 2019 compared to 2.48% and 2.82%, respectively, for the quarter ended June 30, 2019 and 2.70% and 2.99%, respectively, for the quarter ended September 30, 2018. For the nine months ended September 30, 2019, net interest income increased $7.0 million, or 5.7%, to $129.3 million from the nine months ended September 30, 2018. The interest rate spread and net interest margin on a tax-equivalent basis were 2.52% and 2.86%, respectively, for the nine months ended September 30, 2019, compared to 2.81% and 3.07% for the nine months ended September 30, 2018. The increases in net interest income were primarily due to growth in average loan balances and yields on interest-earning assets, reflecting higher commercial loan prepayment fees, partially offset by increases in the average balances of total deposits and borrowings and the cost of funds for the quarter and nine months ended September 30, 2019 compared to the respective periods of 2018.

Total interest and dividend income increased to $68.5 million for the quarter ended September 30, 2019, up $2.3 million, or 3.4%, from the quarter ended June 30, 2019 and $10.4 million, or 17.9%, from the quarter ended September 30, 2018, primarily due to growth in the Company’s average loan balances to $5.841 billion and increases in the yield on loans. The Company’s yield on loans on a tax-equivalent basis was 4.54% for the quarter ended September 30, 2019, up seven basis points from the quarter ended June 30, 2019 and up 24 basis points from the quarter ended September 30, 2018. Interest and fees on loans included commercial loan prepayment fees of $873,000 for the quarter ended September 30, 2019, up from $136,000 for the quarter ended June 30, 2019 and $29,000 for the quarter ended September 30, 2018. The Company’s yield on interest-earning assets on a tax-equivalent basis was 4.42% for the quarter ended September 30, 2019, up four basis points from the quarter ended June 30, 2019 and up 24 basis points from the quarter ended September 30, 2018. For the nine months ended September 30, 2019 the Company’s total interest and dividend income increased $33.3 million, or 20.1%, to $199.3 million from the nine months ended September 30, 2018, primarily due to growth in the Company’s average loan balances of $769.4 million, or 15.3%, to $5.782 billion and an increase in the yield on loans on a tax-equivalent basis of 17 basis points to 4.48% for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. Interest and fees on loans included commercial loan prepayment fees of $1.2 million for the nine months ended September 30, 2019, up from $658,000 for the nine months ended September 30, 2018. The Company’s yield on interest-earning assets on a tax-equivalent basis increased 23 basis points to 4.38% for the nine months ended September 30, 2019 compared to the same period in 2018.

Total interest expense increased to $24.3 million for the quarter ended September 30, 2019, up $504,000, or 2.1%, from the quarter ended June 30, 2019 and $7.6 million, or 45.1%, from the quarter ended September 30, 2018. Interest expense on deposits decreased $475,000, or 2.3%, to $20.2 million for the quarter ended September 30, 2019, from the quarter ended June 30, 2019, primarily due to decreases of $30.1 million in average total deposits to $4.971 billion and five basis points in the cost of average total deposits to 1.61%. Interest expense on deposits increased $5.9 million, or 41.3%, from the quarter ended September 30, 2018 primarily due to a $585.8 million increase, or 13.4%, in average total deposits and a 32 basis point increase in the cost of average total deposits from the quarter ended September 30, 2018. Interest expense on borrowings increased to $4.1 million for the quarter ended September 30, 2019, up $979,000, or 31.1%, from the quarter ended June 30, 2019 and $1.7 million, or 67.7%, from the quarter ended September 30, 2018 primarily due to growth in average total borrowing to $627.1 million and increases in the average cost of borrowings to 2.61% from 2.37% for the quarter ended June 30, 2019, and 1.60% for the quarter ended September 30, 2018. The Company’s total cost of funds was 1.72% for the quarter ended September 30, 2019, down one basis point from the quarter ended June 30, 2019 and up 39 basis points from the quarter ended September 30, 2018. Total interest expense increased $26.3 million, or 60.2%, to $70.0 million for the nine months ended September 30, 2019 from the nine months ended September 30, 2018. Interest expense on deposits increased $22.4 million, or 59.8%, to $60.0 million for the nine months ended September 30, 2019 from the nine months ended September 30, 2018 due to growth in average total deposits of $700.7 million, or 16.4%, to $4.962 billion and an increase in the cost of average total deposits of 44 basis points to 1.62%. Interest expense on borrowings increased $3.9 million, or 62.6%, to $10.0 million for the nine months ended September 30, 2019 from the nine months ended September 30, 2018 due to an increase in the cost of average total borrowings of 88 basis points to 2.31% and an increase in average total borrowings of $4.0 million, or 0.7%, to $579.3 million. The Company’s cost of funds increased 48 basis points to 1.69% for the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018.

Mr. Gavegnano continued, “Our net interest income rose 4% along with a five basis point increase in our net interest margin to 2.87% for the third quarter from the second quarter of 2019. This improvement was driven by a seven basis point increase in our yield on loans as enhanced by commercial loan prepayment fees along with a one basis point decline in our cost of funds, reflecting a five basis point decrease in our cost of deposits. We expect further expansion in our margin in the coming months with continuing declines in our funding costs.”

The Company recognized a reversal of $3.0 million in its provision for loan losses for the quarter ended September 30, 2019, compared to provisions of $78,000 for the quarter ended June 30, 2019 and $226,000 for the quarter ended September 30, 2018. For the nine months ended September 30, 2019, there was a loan loss provision reversal of $2.1 million compared to a provision expense of $4.3 million for the nine months ended September 30, 2018. The reductions in the provision for loan losses were primarily due to substantial payoffs of multi-family, commercial real estate and commercial and industrial loans, the conversion of construction loans to permanent status in the commercial loan categories and continuing improvements in credit quality trends during the quarter and nine months ended September 30, 2019. The allowance for loan losses was $50.8 million or 0.88% of total loans at September 30, 2019, compared to $53.9 million or 0.92% of total loans at June 30, 2019, $53.2 million or 0.94% of total loans at December 31, 2018, and $49.6 million or 0.94% of total loans at September 30, 2018. The declines in the allowance for loan losses coverage ratio were based on management’s assessment of the loan portfolio balance 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 $56,000 for the quarter ended September 30, 2019 compared to net charge-offs of $210,000 for the quarter ended June 30, 2019 and net charge-offs of $18,000 for the quarter ended September 30, 2018. For the nine months ended September 30, 2019, net charge-offs totaled $343,000 compared to net recoveries of $139,000 for the nine months ended September 30, 2018.

Non-accrual loans were $3.9 million, or 0.07% of total loans outstanding, at September 30, 2019; down $2.1 million, or 34.7%, from June 30, 2019; down $3.0 million, or 42.8%, from December 31, 2018 and down $4.1 million, or 50.7%, from September 30, 2018. Non-performing assets were $3.9 million, or 0.06% of total assets, at September 30, 2019, compared to $6.0 million, or 0.09% of total assets, at June 30, 2019, $6.9 million, or 0.11% of total assets, at December 31, 2018, and $8.0 million, or 0.14% of total assets, at September 30, 2018.

Mr. Gavegnano noted, “We are also gratified to have achieved asset quality levels not seen since well before the Great Recession. Along with non-performing loans of only $3.9 million, or 0.06% of total assets, we currently have no past due multi-family, commercial real estate or construction loans outstanding.”

Non-interest income was $2.8 million for the quarter ended September 30, 2019, down from $3.0 million for the quarter ended June 30, 2019 and $3.7 million for the quarter ended September 30, 2018. Non-interest income decreased $105,000, or 3.6%, compared to the quarter ended June 30, 2019, primarily due to a $686,000 decrease in gain on marketable equity securities, net, reflecting decreases in market valuations, partially offset by increases of $383,000 in loan fees and $140,000 in customer service fees. Compared to the quarter ended September 30, 2018, non-interest income decreased $828,000, or 22.5%, primarily due to a decrease of $1.2 million in gain on marketable equity securities, net, partially offset by increases of $186,000 in customer service fees and $135,000 in loan fees. For the nine months ended September 30, 2019, non-interest income increased $763,000, or 8.6%, to $9.6 million from $8.9 million for the nine months ended September 30, 2018, primarily due to increases of $454,000 in gain on marketable equity securities, net, reflecting increases in market valuations, $128,000 in loan fees and $119,000 in customer service fees. The increases in loan fees are primarily due to $308,000 of loan swap fee income recognized in the third quarter of 2019.

Non-interest expenses were $23.8 million, or 1.50% of average assets for the quarter ended September 30, 2019, compared to $25.1 million, or 1.60% of average assets for the quarter ended June 30, 2019 and $23.0 million, or 1.61% of average assets for the quarter ended September 30, 2018. Non-interest expenses decreased $1.3 million, or 5.1%, compared to the quarter ended June 30, 2019, due primarily to decreases of $919,000 in deposit insurance, $280,000 in marketing and advertising, $176,000 in other general and administrative and $104,000 in professional services, partially offset by a $185,000 increase in salaries and employee benefits. Non-interest expenses increased $840,000, or 3.7%, compared to the quarter ended September 30, 2018, due primarily to increases of $715,000 in salaries and employee benefits, $676,000 in occupancy and equipment, $279,000 in data processing and $187,000 in marketing and advertising, partially offset by decreases of $841,000 in deposit insurance and $147,000 in other general and administrative. For the nine months ended September 30, 2019, non-interest expenses increased $3.6 million, or 5.1%, to $74.8 million from $71.2 million for the nine months ended September 30, 2018, due primarily to increases of $1.4 million in salaries and employee benefits, $1.4 million in occupancy and equipment, $922,000 in data processing and $675,000 in marketing and advertising, partially offset by decreases of $479,000 in deposit insurance and $324,000 in professional services. The decreases in deposit insurance reflect the application of $903,000 in Small Bank Assessment Credits by the Federal Deposit Insurance Corporation for the quarter ended September 30, 2019. The increases in salaries and employee benefits were primarily due to annual increases in employee compensation, payroll taxes and employee benefits, while the increases in 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, three new branch openings in the fourth quarter of 2018 and one new branch opened in July 2019. The Company’s efficiency ratio was 50.18% for the quarter ended September 30, 2019 compared to 55.57% for the quarter ended June 30, 2019 and 51.92% for the quarter ended September 30, 2018. For the nine months ended September 30, 2019, the efficiency ratio was 54.24% compared to 54.44% for the nine months ended September 30, 2018.

Mr. Gavegnano added, “Our non-interest expenses decreased 5% and our efficiency ratio improved to 50.18% from 55.57% for the third quarter of 2019 from the second quarter. While these improvements reflected the deposit insurance assessment credits applied by the FDIC, they were also indicative of our prudent management of overhead expense levels in recent years while we significantly expanded our branch network. We remained committed to this disciplined approach as we approach the scheduled opening of our 40th branch in Boston’s Brighton neighborhood in early December and consider additional opportunities to expand our market share in the metropolitan Boston area.”

The Company recorded a provision for income taxes of $6.5 million for the quarter ended September 30, 2019, reflecting an effective tax rate of 24.8%, compared to $5.1 million, or an effective tax rate of 25.0%, for the quarter ended June 30, 2019, and $4.5 million, or an effective tax rate of 20.4%, for the quarter ended September 30, 2018. For the nine months ended September 30, 2019, the provision for income taxes was $16.3 million, reflecting an effective tax rate of 24.6%, compared to $12.3 million, or an effective tax rate of 22.0%, for the nine months ended September 30, 2018.

Total assets were $6.363 billion at September 30, 2019, down $5.4 million, or 0.1%, from $6.369 billion at June 30, 2019 and up $184.5 million, or 3.0%, from $6.179 billion at December 31, 2018. Net loans were $5.698 billion at September 30, 2019, down $67.8 million, or 1.2%, from June 30, 2019, and up $104.2 million, or 1.9%, from December 31, 2018. The net decrease in loans for the quarter ended September 30, 2019 reflects loan payoffs of $66.1 million in the multi-family, $123.3 million in the commercial real estate, $43.2 million in the commercial and industrial and $14.3 million in the construction loan categories. Loan originations totaled $183.2 million during the quarter ended September 30, 2019 and $736.7 million during the nine months ended September 30, 2019. The net increase in loans for the nine months ended September 30, 2019 was primarily due to increases of $65.6 million in commercial real estate loans, $58.8 million in multi-family loans, $20.0 million in one- to four-family loans, and $16.4 million in home equity lines of credit, partially offset by decreases of $30.3 million in construction loans and $30.3 million in commercial and industrial loans. These balance changes reflect commercial loan payoffs totaling $439.5 million and construction loans that converted to permanent status totaling $321.1 million during the nine months ended September 30, 2019. Cash and due from banks was $428.1 million at September 30, 2019, an increase of $56.1 million, or 15.1% from December 31, 2018. Securities, at fair value, were $30.1 million at September 30, 2019, a decrease of $484,000, or 1.6%, 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 nine months ended September 30, 2019, premises and equipment, net increased $20.4 million to $65.6 million and accrued expenses and other liabilities increased $25.9 million to $58.8 million at September 30, 2019, reflecting the recognition of operating lease assets and liabilities totaling $18.1 million based on the present value of future minimum lease payments as required by ASU No. 2016-02.

Total deposits were $4.956 billion at September 30, 2019, down $62.6 million, or 1.2%, from $5.018 billion at June 30, 2019 and up $71.5 million, or 1.5%, from $4.884 billion at December 31, 2018. The net decrease in deposits for the quarter ended September 30, 2019 reflects a $108.3 million reduction in brokered deposits. Core deposits, which exclude certificates of deposit, increased $117.3 million, or 3.7%, during the nine months ended September 30, 2019 to $3.315 billion, or 66.9% of total deposits. Total borrowings were $636.6 million, up $36.5 million, or 6.1%, from June 30, 2019 and $49.7 million, or 8.5%, from December 31, 2018.

Total stockholders’ equity increased $16.3 million, or 2.3%, to $712.0 million at September 30, 2019 from $695.7 million at June 30, 2019, and $37.3 million, or 5.5%, from $674.7 million at December 31, 2018. The increase for the nine months ended September 30, 2019 was primarily due to net income of $49.9 million and $5.2 million related to stock-based compensation plans, partially offset by the repurchase of 428,820 shares of the Company’s common stock related to the stock repurchase programs at a total cost of $7.3 million and dividends of $0.21 per share totaling $10.7 million. Stockholders’ equity to assets was 11.19% at September 30, 2019, compared to 10.92% at June 30, 2019 and 10.92% at December 31, 2018. Book value per share increased to $13.36 at September 30, 2019 from $12.60 at December 31, 2018. Tangible book value per share increased to $12.93 at September 30, 2019 from $12.17 at December 31, 2018. Market price per share increased $4.43 or 30.9%, to $18.75 at September 30, 2019 from $14.32 at December 31, 2018. At September 30, 2019, the Company and the Bank continued to exceed all regulatory capital requirements.

The Company repurchased 87,801 shares of its stock at an average price of $17.64 during the quarter ended September 30, 2019. As of September 30, 2019, the Company has repurchased 324,544 shares of its stock at an average price of $17.32, or 64.91% of the 500,000 shares authorized for repurchase under the Company’s repurchase program adopted in April 2019. The Company has repurchased 3,698,165 shares at an average price of $15.11 per share since August 2015.

Mr. Gavegnano concluded, “In addition to our stock repurchases to date and our announced intention to increase the quarterly dividend to stockholders, we are also considering the expansion of our stock repurchase program as we explore additional opportunities to enhance stockholder value.”

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 39 branches in the greater Boston metropolitan area, including 38 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)

September 30,
2019

June 30,
2019

December 31,
2018

September 30,
2018

(Dollars in thousands)

ASSETS

Cash and due from banks

$

428,061

$

361,050

$

371,995

$

313,668

Certificates of deposit

247

5,247

5,247

20,891

Securities available for sale, at fair value

15,799

16,500

17,159

17,510

Marketable equity securities, at fair value

14,313

14,776

13,437

16,135

Federal Home Loan Bank stock, at cost

28,947

27,469

29,187

31,100

Loans held for sale

1,828

2,105

409

843

Loans:

One- to four-family

667,385

668,997

647,367

636,419

Home equity lines of credit

66,495

60,040

50,087

46,534

Multi-family

1,069,312

1,061,839

1,010,521

969,628

Commercial real estate

2,687,614

2,647,033

2,621,979

2,438,139

Construction

656,615

748,457

686,948

594,611

Commercial and industrial

594,683

627,718

625,018

585,215

Consumer

12,017

11,445

10,953

10,934

Total loans

5,754,121

5,825,529

5,652,873

5,281,480

Allowance for loan losses

(50,831

)

(53,865

)

(53,231

)

(49,609

)

Net deferred loan origination fees

(5,670

)

(6,292

)

(6,239

)

(5,970

)

Loans, net

5,697,620

5,765,372

5,593,403

5,225,901

Bank-owned life insurance

41,267

41,295

40,734

41,164

Premises and equipment, net

65,582

66,280

45,140

42,448

Accrued interest receivable

14,305

15,436

14,267

13,409

Deferred tax asset, net

18,393

18,301

18,196

15,998

Goodwill

20,378

20,378

20,378

19,638

Core deposit intangible

2,254

2,385

2,653

2,801

Other assets

14,146

11,978

6,478

13,822

Total assets

$

6,363,140

$

6,368,572

$

6,178,683

$

5,775,328

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:

Non interest-bearing demand deposits

$

514,941

$

505,679

$

483,777

$

490,703

Interest-bearing demand deposits

1,262,552

1,161,835

1,190,346

1,151,955

Money market deposits

689,324

675,452

729,174

844,183

Regular savings and other deposits

848,582

986,112

794,813

327,721

Certificates of deposit

1,640,303

1,689,226

1,686,074

1,596,691

Total deposits

4,955,702

5,018,304

4,884,184

4,411,253

Short-term borrowings

50,000

40,000

Long-term debt

636,615

600,088

536,880

610,772

Accrued expenses and other liabilities

58,841

54,479

32,965

34,160

Total liabilities

5,651,158

5,672,871

5,504,029

5,096,185

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; 53,297,061, 53,321,805, 53,541,429 and 54,233,331 shares issued at September 30, 2019, June 30, 2019, December 31, 2018 and September 30, 2018, respectively

533

533

535

542

Additional paid-in capital

375,618

375,760

378,583

392,545

Retained earnings

352,758

336,628

313,521

304,725

Accumulated other comprehensive income (loss)

48

(24

)

(348

)

(812

)

Unearned compensation - ESOP, 2,343,949, 2,374,390, 2,435,272 and 2,465,713 shares at September 30, 2019, June 30, 2019, December 31, 2018 and September 30, 2018, respectively

(16,975

)

(17,196

)

(17,637

)

(17,857

)

Total stockholders' equity

711,982

695,701

674,654

679,143

Total liabilities and stockholders' equity

$

6,363,140

$

6,368,572

$

6,178,683

$

5,775,328


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

Three Months Ended

Nine Months Ended

September 30,
2019

June 30,
2019

September 30,
2018

September 30,
2019

September 30,
2018

(Dollars in thousands, except per share amounts)

Interest and dividend income:

Interest and fees on loans

$

66,121

$

64,040

$

55,849

$

191,802

$

159,738

Interest on debt securities:

Taxable

101

108

115

319

367

Tax-exempt

12

13

13

38

43

Dividends on equity securities

137

142

101

384

383

Interest on certificates of deposit

18

28

104

73

448

Other interest and dividend income

2,136

1,943

1,932

6,656

4,981

Total interest and dividend income

68,525

66,274

58,114

199,272

165,960

Interest expense:

Interest on deposits

20,178

20,653

14,284

59,982

37,544

Interest on short-term borrowings

1

8

296

8

Interest on long-term debt

4,129

3,151

2,455

9,710

6,146

Total interest expense

24,308

23,804

16,747

69,988

43,698

Net interest income

44,217

42,470

41,367

129,284

122,262

Provision (reversal) for loan losses

(2,978

)

78

226

(2,057

)

4,285

Net interest income, after provision (reversal) for loan losses

47,195

42,392

41,141

131,341

117,977

Non-interest income:

Customer service fees

2,428

2,288

2,242

6,813

6,694

Loan fees

436

53

301

566

438

Mortgage banking gains, net

99

101

74

240

270

(Loss) gain on marketable equity securities, net

(463

)

223

781

1,086

632

Income from bank-owned life insurance

285

280

279

846

828

Gain on life insurance distribution

52

52

Other income

12

9

28

6

Total non-interest income

2,849

2,954

3,677

9,631

8,868

Non-interest expenses:

Salaries and employee benefits

15,101

14,916

14,386

45,649

44,218

Occupancy and equipment

3,657

3,650

2,981

10,903

9,545

Data processing

2,026

2,009

1,747

6,005

5,083

Marketing and advertising

1,019

1,299

832

3,480

2,805

Professional services

680

784

683

2,324

2,648

Deposit insurance

10

929

851

1,951

2,430

Merger and acquisition

26

114

Other general and administrative

1,354

1,530

1,501

4,448

4,318

Total non-interest expenses

23,847

25,117

23,007

74,760

71,161

Income before income taxes

26,197

20,229

21,811

66,212

55,684

Provision for income taxes

6,508

5,061

4,454

16,284

12,271

Net income

$

19,689

$

15,168

$

17,357

$

49,928

$

43,413

Earnings per share:

Basic

$

0.39

$

0.30

$

0.34

$

0.98

$

0.84

Diluted

$

0.38

$

0.29

$

0.33

$

0.97

$

0.82

Weighted average shares outstanding:

Basic

50,923,760

51,051,880

51,492,448

51,031,359

51,487,192

Diluted

51,454,186

51,511,678

52,732,340

51,477,206

52,894,503



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

Three Months Ended

September 30, 2019

June 30, 2019

September 30, 2018

Average

Interest

Yield/

Average

Interest

Yield/

Average

Interest

Yield/

Balance

(1)

Cost (1)(6)null