BOSTON, July 26, 2016 (GLOBE NEWSWIRE) -- Meridian Bancorp, Inc. (the "Company" or "Meridian") (NASDAQ:EBSB), the holding company for East Boston Savings Bank (the "Bank") announced net income of $5.9 million, or $0.11 per diluted share, for the quarter ended June 30, 2016 compared to $7.5 million, or $0.14 per diluted share, for the quarter ended March 31, 2016 and $5.6 million, or $0.11 per diluted share, for the quarter ended June 30, 2015. For the six months ended June 30, 2016, net income was $13.4 million, or $0.26 per diluted share, up from $12.0 million, or $0.23 per diluted share, for the six months ended June 30, 2015. The Company's return on average assets was 0.62% for the quarter ended June 30, 2016 compared to 0.83% for the quarter ended March 31, 2016 and 0.68% for the quarter ended June 30, 2015. For the six months ended June 30, 2016, the Company's return on average assets was 0.72% compared to 0.73% for the six months ended June 30, 2015. The Company's return on average equity was 4.03% for the quarter ended June 30, 2016 compared to 5.11% for the quarter ended March 31, 2016 and 3.80% for the quarter ended June 30, 2015. For the six months ended June 30, 2016, the Company's return on average equity was 4.57% compared to 4.10% for the six months ended June 30, 2015. 

Richard J. Gavegnano, Chairman, President and Chief Executive Officer, said, "I am pleased to report net income of $5.9 million, or $0.11 per share, for the second quarter and $13.4 million, or $0.26 per share, for the first half of 2016. Our loan portfolio grew to $3.5 billion at June 30, 2016, reflecting record quarterly net loan growth of $299 million, or 37% on an annualized basis, during the second quarter and $461 million, or 30% on an annualized basis, during the first half of 2016. Due to our exceptionally strong organic growth across all our commercial loan categories, we recorded a $4.0 million loan loss provision in the second quarter. Even with the large loan loss provision, our core pre-tax income, which excludes gains on sales of securities, increased $2.0 million, or 29%, to $8.7 million for the second quarter and $4.1 million, or 27%, to $19.4 million for the first half of 2016 compared to the same periods last year, reflecting rising net interest income and improving operating efficiency. Although our core pre-tax income declined from $10.7 million for the first quarter, such income excluding the loan loss provision rose $866,000, or 7%, to $12.6 million in the second quarter."

The Company's net interest income was $29.5 million for the quarter ended June 30, 2016, up $1.1 million, or 3.8%, from the quarter ended March 31, 2016 and $4.5 million, or 18.1%, from the quarter ended June 30, 2015. The interest rate spread and net interest margin on a tax-equivalent basis were 3.15% and 3.36%, respectively, for the quarter ended June 30, 2016 compared to 3.18% and 3.39%, respectively, for the quarter ended March 31, 2016 and 3.07% and 3.29%, respectively, for the quarter ended June 30, 2015. For the six months ended June 30, 2016, net interest income increased $8.5 million, or 17.2%, to $57.8 million from the six months ended June 30, 2015. The net interest rate spread and net interest margin on a tax-equivalent basis were 3.17% and 3.37%, respectively, for the six months ended June 30, 2016 compared to 3.04% and 3.26%, respectively, for the six months ended June 30, 2015. The increases in net interest income were due primarily to loan growth, partially offset by growth in total deposits and borrowings for the quarter and six months ended June 30, 2016 compared to the respective prior periods.

Total interest and dividend income increased to $35.8 million for the quarter ended June 30, 2016, up $1.7 million, or 4.8%, from the quarter ended March 31, 2016 and $6.1 million, or 20.3%, from the quarter ended June 30, 2015, primarily due to growth in the Company's average loan balances to $3.422 billion, partially offset by the decline in the yield on loans on a tax-equivalent basis to 4.23%. The Company's yield on interest-earning assets on a tax-equivalent basis was 4.05% for the quarter ended June 30, 2016, down one basis point from the quarter ended March 31, 2016 and up 15 basis points from the quarter ended June 30, 2015.

Total interest expense increased to $6.4 million for the quarter ended June 30, 2016, up $579,000, or 10.0%, from the quarter ended March 31, 2016 and $1.5 million, or 31.9%, from the quarter ended June 30, 2015. Interest expense on deposits increased to $5.7 million for the quarter ended June 30, 2016, up $433,000, or 8.3%, from the quarter ended March 31, 2016 and $1.3 million, or 29.9%, from the quarter ended June 30, 2015 primarily due to the growth in average total deposits to $2.943 billion and increases in the cost of average total deposits to 0.77%. Interest expense on borrowings increased to $723,000 for the quarter ended June 30, 2016, up $146,000, or 25.3%, from the quarter ended March 31, 2016 and $241,000, or 50.0%, from the quarter ended June 30, 2015 primarily due to the growth in average total borrowings to $264.1 million, partially offset by decreases in the cost of average total borrowings to 1.10%. The Company's cost of funds was 0.80% for the quarter ended June 30, 2016, up two basis points from the quarter ended March 31, 2016 and seven basis points from the quarter ended June 30, 2015.

For the six months ended June 30, 2016, the Company's total interest and dividend income increased $10.7 million, or 18.0%, to $70.0 from the six months ended June 30, 2015 primarily due to growth in the average loan balances of $586.7 million, or 21.8%, to $3.284 billion, partially offset by a decrease in the yield on loans on a tax-equivalent basis of eight basis points to 4.29% for the six months ended June 30, 2016 compared to the six months ended June 30, 2015. The Company's yield on interest-earning assets on a tax-equivalent basis increased 17 basis points to 4.06% for the six months ended June 30, 2016 compared to 3.89% for the six months ended June 30, 2015.

Total interest expense increased $2.2 million, or 21.6%, to $12.2 million for the six months ended June 30, 2016 compared to $10.0 million for the six months ended June 30, 2015. Interest expense on deposits increased $1.9 million, or 20.5%, to $10.9 million for the six months ended June 30, 2016 from the six months ended June 30, 2015 primarily due to the growth in average total deposits of $341.5 million, or 13.5%, to $2.875 billion and an increase in the cost of average total deposits of four basis points to 0.76%. Interest expense on borrowings increased $310,000, or 31.3%, to $1.3 million for the six months ended June 30, 2016 from the six months ended June 30, 2015 primarily due to the growth in average total borrowings of $85.0 million, or 57.9%, to $231.9 million, partially offset by a decrease in the cost of average total borrowings of 23 basis points to 1.13%. The Company' cost of funds increased four basis points to 0.79% for the six months ended June 30, 2016 compared to the six months ended June 30, 2015.

Mr. Gavegnano noted, "Our net interest income has continued to rise each consecutive quarter as total loans grew $801 million, or 29%, over the past twelve months on commercial loan originations of $1.6 billion. During that time, our net interest margin has remained fairly stable due to rising asset yields supported by our strong loan growth that effectively offsets the small rise in our cost of funds. Our lending pipeline remains strong as we continue to benefit from many opportunities to originate CRE and C&I loans through our well-established commercial relationships across the Boston area market."

The Company's provision for loan losses was $4.0 million for the quarter ended June 30, 2016, up from $1.1 million for the quarter ended March 31, 2016 and $3.7 million for the quarter ended June 30, 2015. For the six months ended June 30, 2016, the provision for loan losses was $5.0 million compared to $3.7 million for the six months ended June 30, 2015. The allowance for loan losses was $38.3 million or 1.08% of total loans at June 30, 2016, up from $34.4 million or 1.06% of total loans at March 31, 2016, $33.4 million or 1.08% of total loans at December 31, 2015 and $30.1 million or 1.10% of total loans at June 30, 2015. The increases in the provision and the allowance for loan losses were primarily due to growth in the multi-family, commercial real estate, construction, and commercial and industrial loan categories, as such loans have higher inherent credit risk than loans in our residential real estate loan categories. The provision for loan losses and resulting allowance for loan losses also reflect management's assessment of improving historical charge-off trends, an ongoing evaluation of credit quality and current economic conditions. The provision for loan losses for the quarter and six months ended June 30, 2015 included a $2.3 million provision and charge-off on a multi-family construction loan relationship during the second quarter of 2015.

Net charge-offs totaled $24,000 for the quarter ended June 30, 2016, or less than 0.01% of average loans outstanding on an annualized basis compared to net charge-offs of $81,000 for the quarter ended March 31, 2016, or 0.01% of average loans outstanding on an annualized basis and net charge-offs of $2.1 million for the quarter ended June 30, 2015, or 0.32% of average loans outstanding on an annualized basis. For the six months ended June 30, 2016, net charge-offs totaled $105,000, or 0.01% of average loans outstanding on an annualized basis compared to net charge-offs of $2.1 million for the six months ended June 30, 2015, or 0.15% of average loans outstanding on an annualized basis.

Non-accrual loans were $29.4 million, or 0.83% of total loans outstanding, at June 30, 2016, down from $30.7 million, or 0.95% of total loans outstanding, at March 31, 2016, $31.3 million, or 1.02% of total loans outstanding, at December 31, 2015 and $37.0 million, or 1.35% of total loans outstanding, at June 30, 2015. The decreases in non-accrual loans were primarily due to steady reductions in construction loans. Non-accrual construction loans include the $11.5 million remaining balance of a multi-family construction loan in Boston placed on non-accrual status during the second quarter of 2015. Non-performing assets were $29.6 million, or 0.75% of total assets, at June 30, 2016, down from $31.3 million, or 0.84% of total assets, at March 31, 2016, $31.3 million, or 0.89% of total assets, at December 31, 2015 and $38.0 million, or 1.15% of total assets, at June 30, 2015.

Mr. Gavegnano commented, "The loan loss provision of $4.0 million for the second quarter of 2016 reflects prudent additions to general reserve allocations resulting from the significant commercial loan portfolio growth during the quarter. Non-performing assets are steadily declining and net charge-offs are historically low. Our credit quality has improved as we continue to directly underwrite high quality commercial loans for our portfolio with strict monitoring through strong credit review and collection processes. We are also making progress toward resolution and collection of the $11.5 million remaining balance on the non-accrual construction loan in Boston."

Non-interest income was $2.6 million for the quarter ended June 30, 2016, compared to $2.7 million for the quarter ended March 31, 2016 and $4.2 million for the quarter ended June 30, 2015.  As compared to the quarter ended June 30, 2015, non-interest income decreased $1.6 million, or 38.8%, primarily due to declines of $1.4 million in gain on sales of securities, net, $252,000 in loan fees and $164,000 in mortgage banking gains, net, partially offset by an increase of $133,000 in customer service fees. For the six months ended June 30, 2016, non-interest income decreased $2.3 million, or 30.3%, to $5.3 million from $7.6 million for the six months ended June 30, 2015 primarily due to declines of $2.3 million in gain on sales of securities, net, $204,000 in mortgage banking gains, net and 106,000 in loan fees, partially offset by an increase of $323,000 in customer service fees.

Non-interest expenses were $19.3 million, or 2.03% of average assets for the quarter ended June 30, 2016, compared to $19.2 million, or 2.13% of average assets for the quarter ended March 31, 2016 and $17.3 million, or 2.12% of average assets for the quarter ended June 30, 2015. As compared to the quarter ended June 30, 2015, non-interest expenses increased $2.0 million, or 11.4%, primarily due to increases of $1.3 million in salaries and employee benefits, $499,000 in occupancy and equipment and $280,000 in other general and administrative expenses, partially offset by a decrease of $196,000 in marketing and advertising. For the six months ended June 30, 2016, non-interest expenses increased $3.1 million, or 8.9%, to $38.6 million from $35.4 million for the six months ended June 30, 2015, primarily due to increases of $2.6 million in salaries and employee benefits, $363,000 in occupancy and equipment and $494,000 in other general and administrative expenses, partially offset by a decrease of $377,000 in marketing and advertising. The increases in salaries and employee benefits expenses were primarily due to annual increases in employee compensation and health benefits during the first quarter and expenses associated with the November 2015 grant of restricted stock and stock options to the Company's directors, officers and employees. In addition, increases in salaries and employee benefits expenses, occupancy and equipment expenses and other general and administrative expenses reflect costs associated with three new branches opened over the last twelve months. The decreases in marketing and advertising expenses reflect lower advertising production and direct mail costs and cost savings associated with the 2015 rebranding of the former Mt. Washington Bank Division into the East Boston Savings Bank brand. The Company's efficiency ratio improved to 60.44% for the quarter ended June 30, 2016 from 62.01% for the quarter ended March 31, 2016 and 62.53% for the quarter ended June 30, 2015. For the six months ended June 30, 2016, the efficiency ratio was 61.21% compared to 65.02% for the six months ended June 30, 2015.

Mr. Gavegnano added, "Our efficiency ratio improved to new record low levels in the second quarter and first half of 2016. We will continue to execute the key components of our strategic business plan including a strong emphasis on organic commercial loan growth, selective expansion of our core banking franchise and close monitoring of our overhead expenses that we expect will result in continuing improvement in net interest income and operating efficiency."

The Company recorded a provision for income taxes of $2.9 million for the quarter ended June 30, 2016, reflecting an effective tax rate of 32.6% for the quarter ended June 30, 2016, compared to $3.3 million for the quarter ended March 31, 2016, reflecting an effective tax rate of 30.6% and $2.6 million, or a 31.6% effective tax rate, for the quarter ended June 30, 2015. For the six months ended June 30, 2016, the provision for income taxes was $6.2 million, reflecting an effective tax rate of 31.5%, compared to $5.8 million, or 32.6%, for the six months ended June 30, 2015. 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 $3.929 billion at June 30, 2016, an increase of $199.6 million, or 5.4%, from $3.729 billion at March 31, 2016 and an increase of $404.6 million, or 11.5%, from $3.525 billion at December 31, 2015.  Net loans were $3.507 billion at June 30, 2016, an increase of $298.9 million, or 9.3%, from March 31, 2016 and an increase of $461.4 million, or 15.1% from December 31, 2015. Loan originations totaled $321.9 million during the quarter ended June 30, 2016 and $742.4 million during the six months ended June 30, 2016. The net increase in loans for the six months ended June 30, 2016 was primarily due to increases of $239.9 million in commercial real estate loans, $100.8 million in commercial and industrial loans, $73.3 million in multi-family loans and $63.3 million in construction loans, partially offset by a decrease of $11.3 million in one- to four-family loans. Cash and due from banks was $101.7 million at June 30, 2016, a decrease of $52.4 million, or 34.0%, from March 31, 2016 and an increase of $5.4 million, or 5.6% from December 31, 2015.  Securities available for sale were $131.9 million at June 30, 2016, a decrease of $9.7 million, or 6.9%, from $141.6 million at December 31, 2015.

Total deposits were $2.998 billion at June 30, 2016, an increase of $86.6 million, or 3.0%, from $2.911 billion at March 31, 2016 and an increase of $255.0 million, or 9.3%, from $2.743 billion at December 31, 2015. Core deposits, which exclude certificate of deposits, increased $84.4 million, or 4.6%, during the six months ended June 30, 2016 to $1.939 billion, or 64.7% of total deposits. Total borrowings were $320.6 million, an increase $109.2 million, or 51.6%, from March 31, 2016 and an increase of $153.4 million, or 91.7%, from December 31, 2015.

Total stockholders' equity was $586.7 million, an increase of $4.0 million, or 0.7%, from $582.7 million at March 31, 2016 and a decline of $1.5 million, or 0.3%, from $588.1 million at December 31, 2015. The decrease for the six months ended June 30, 2016 was primarily due to a $17.0 million repurchase of 1,220,711 shares of the Company's common stock and two quarterly dividends of $0.03 per share totaling $3.1 million, partially offset by increases of $13.4 million in net income, $3.0 million related to stock-based compensation plans and $2.2 in accumulated other comprehensive income, reflecting an increase in the fair value of available-for-sale securities. Stockholders' equity to assets was 14.93% at June 30, 2016, compared to 15.62% at March 31, 2016 and 16.69% at December 31, 2015. Book value per share increased to $10.93 at June 30, 2016 from $10.72 at December 31, 2015. Tangible book value per share increased to $10.67 at June 30, 2016 from $10.47 at December 31, 2015. Market price per share increased $0.68, or 4.8%, to $14.78 at June 30, 2016 from $14.10 at December 31, 2015. At June 30, 2016, the Company and the Bank continued to exceed all regulatory capital requirements.

During the quarter ended June 30, 2016, the Company repurchased 244,294 shares of its stock at an average price of $14.63 per share. As of June 30, 2016, the Company had repurchased 1,942,815 shares of its stock at an average price of $13.58 per share, or 71.0% of the 2,737,334 shares authorized for repurchase under the Company's repurchase program as adopted in August 2015. 

Mr. Gavegnano concluded, "Our plans are on track to open a second location in Brookline that will become our 31 st branch by year end. We also continually evaluate new opportunities to expand our franchise footprint in the greater Boston market area and increase shareholder 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 30 full-service locations 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 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)        
         
  June 30, 2016     March 31, 2016     December 31, 2015     June 30, 2015        
                                       
  (Dollars in thousands)        
ASSETS                                
Cash and due from banks $ 101,735     $ 154,122     $ 96,363     $ 176,654    
Certificates of deposit   35,342       92,675       99,062       95,000    
Securities available for sale, at fair value   131,942       132,115       141,646       175,171    
Federal Home Loan Bank stock, at cost   17,818       13,021       10,931       12,725    
Loans held for sale   2,397       1,194       4,669       5,154    
Loans:                                
One- to four-family   447,131       455,438       458,423       462,897    
Home equity lines of credit   47,412       47,807       46,660       48,274    
Multi-family   490,724       430,871       417,388       401,584    
Commercial real estate   1,568,224       1,411,410       1,328,344       1,134,686    
Construction   484,858       413,660       421,531       335,939    
Commercial and industrial   500,897       477,450       400,051       354,696    
Consumer   9,568       9,832       10,028       9,564    
Total loans   3,548,814       3,246,468       3,082,425       2,747,640    
Allowance for loan losses   (38,317 )     (34,390 )     (33,405 )     (30,109 )  
Net deferred loan origination fees   (3,902 )     (4,342 )     (3,778 )     (2,815 )  
Loans, net   3,506,595       3,207,736       3,045,242       2,714,716    
Bank-owned life insurance   40,155       39,859       39,557       39,201    
Foreclosed real estate, net   183       638             1,046    
Premises and equipment, net   40,821       40,733       40,248       38,700    
Accrued interest receivable   9,246       8,831       8,574       8,054    
Deferred tax asset, net   20,232       20,868       21,246       17,368    
Goodwill   13,687       13,687       13,687       13,687    
Other assets   8,923       3,976       3,284       4,785    
Total assets $ 3,929,076     $ 3,729,455     $ 3,524,509     $ 3,302,261    
                                 
LIABILITIES AND STOCKHOLDERS' EQUITY                                
Deposits:                                
Non interest-bearing demand deposits $ 373,561     $ 388,731     $ 370,546     $ 351,236    
NOW deposits   452,451       360,237       334,753       294,989    
Money market deposits   812,315       880,186       860,957       907,933    
Regular savings and other deposits   300,522       297,806       288,180       286,311    
Certificates of deposit   1,059,188       984,459       888,582       710,697    
Total deposits   2,998,037       2,911,419       2,743,018       2,551,166    
Short-term borrowings               20,000          
Long-term debt   320,624       211,426       147,226       140,817    
Accrued expenses and other liabilities   23,763       23,926       26,139       21,681    
Total liabilities   3,342,424       3,146,771       2,936,383       2,713,664    
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; 53,688,566, 53,895,870, 54,875,237 and 54,965,555 shares issued at June 30, 2016, March 31, 2016, December 31, 2015 and June 30, 2015, respectively   537       539       549       550    
Additional paid-in capital   389,318       391,399       403,737       411,701    
Retained earnings   216,539       212,158       206,214       196,705    
Accumulated other comprehensive income (loss)   99       (1,350 )     (2,092 )     364    
Unearned compensation - ESOP, 2,739,682, 2,770,123, 2,800,564 and 2,861,446 at June 30, 2016, March 31, 2016, December 31, 2015 and June 30, 2015, respectively   (19,841 )     (20,062 )     (20,282 )     (20,723 )  
Total stockholders' equity   586,652       582,684       588,126       588,597    
Total liabilities and stockholders' equity $ 3,929,076     $ 3,729,455     $ 3,524,509     $ 3,302,261    
                                 

  
MERIDIAN BANCORP, INC. AND SUBSIDIARIES        
CONSOLIDATED STATEMENTS OF NET INCOME        
(Unaudited)        
         
    For the Three Months Ended           For the Six Months Ended        
    June 30, 2016     March 31, 2016     June 30, 2015         June 30, 2016     June 30, 2015        
                                                       
    (Dollars in thousands, except per share amounts)        
Interest and dividend income:                                          
Interest and fees on loans   $ 34,828     $ 33,097     $ 28,546     $ 67,925     $ 56,878    
Interest on debt securities:                                          
Taxable     238       266       434       504       945    
Tax-exempt     32       33       41       65       83    
Dividends on equity securities     418       400       421       818       808    
Interest on certificates of deposit     135       170       157       305       293    
Other interest and dividend income     188       218       188       406       358    
Total interest and dividend income     35,839       34,184       29,787       70,023       59,365    
Interest expense:                                          
Interest on deposits     5,661       5,228       4,359       10,889       9,036    
Interest on short-term borrowings           6             6          
Interest on long-term debt     723       571       482       1,294       990    
Total interest expense     6,384       5,805       4,841       12,189       10,026    
Net interest income     29,455       28,379       24,946       57,834       49,339    
Provision for loan losses     3,952       1,066       3,651       5,018       3,711    
Net interest income, after provision for loan losses     25,503       27,313       21,295       52,816       45,628    
Non-interest income:                                          
Customer service fees     2,136       1,947       2,003       4,083       3,760    
Loan fees     (22 )     312       230       290       396    
Mortgage banking gains, net     104       70       268       174       378    
Gain on sales of securities, net     68       59       1,424       127       2,444    
Income from bank-owned life insurance     296       302       294       598       590    
Other income     1       2             3       1    
Total non-interest income     2,583       2,692       4,219       5,275       7,569    
Non-interest expenses:                                          
Salaries and employee benefits     11,979       12,513       10,717       24,492       21,884    
Occupancy and equipment     2,867       2,484       2,368       5,351       4,988    
Data processing     1,254       1,257       1,249       2,511       2,512    
Marketing and advertising     699       713       895       1,412       1,789    
Professional services     720       613       664       1,333       1,337    
Foreclosed real estate     31       8       15       39       29    
Deposit insurance     532       452       479       984       940    
Other general and administrative     1,240       1,190       960       2,430       1,936    
Total non-interest expenses     19,322       19,230       17,347       38,552       35,415    
Income before income taxes     8,764       10,775       8,167       19,539       17,782    
Provision for income taxes     2,857       3,298       2,582       6,155       5,792    
Net income   $ 5,907     $ 7,477     $ 5,585     $ 13,384     $ 11,990    
                                           
Earnings per share:                                          
Basic   $ 0.12     $ 0.14     $ 0.11     $ 0.26     $ 0.23    
Diluted   $ 0.11     $ 0.14     $ 0.11     $ 0.26     $ 0.23    
Weighted average shares:                                          
Basic   51,026,985     51,569,683       52,074,889     51,298,334       51,969,106    
Diluted   52,137,475     51,663,921       53,166,560     52,400,698       53,085,679    
                                     

  
MERIDIAN BANCORP, INC. AND SUBSIDIARIES  
NET INTEREST INCOME ANALYSIS  
(Unaudited)  
   
  For the Three Months Ended  
  June 30, 2016   March 31, 2016   June 30, 2015  
                  Yield/                   Yield/                   Yield/  
  Average Balance     Interest (1)   Cost (1)(6)   Average Balance     Interest (1)   Cost (1)(6)   Average Balance     Interest (1)   Cost (1)(6)  
                                                                                     
  (Dollars in thousands)
Assets:                                                                                    
Interest-earning assets:                                                                                    
Loans (2) $ 3,422,193     $ 36,000         4.23   %   $ 3,146,449     $ 34,104         4.36   %   $ 2,708,690     $ 29,346         4.35   %  
Securities and certificates of deposits   199,596       995         2.00         231,604       1,034         1.80         281,526       1,228         1.75      
Other interest-earning assets (3)   69,914       188         1.08         123,476       218         0.71         172,820       188         0.44      
Total interest-earning assets   3,691,703       37,183         4.05         3,501,529       35,356         4.06         3,163,036       30,762         3.90      
Noninterest-earning assets   124,147                           114,476                           113,572                        
Total assets $ 3,815,850                         $ 3,616,005                         $ 3,276,608                        
                                                                                     
Liabilities and stockholders' equity:                                                                                    
Interest-bearing liabilities:                                                                                    
NOW deposits $ 462,543       646         0.56       $ 338,517       500         0.59       $ 283,429       381         0.54      
Money market deposits   813,625       1,609         0.80         873,774       1,745         0.80         941,219       1,914         0.82      
Regular savings and other deposits   296,638       106         0.14         290,463       103         0.14         283,702       104         0.15      
Certificates of deposit   1,005,764       3,300         1.32         936,674       2,880         1.24         693,054       1,960         1.13      
Total interest-bearing deposits   2,578,570       5,661         0.88         2,439,428       5,228         0.86         2,201,404       4,359         0.79      
Borrowings   264,060       723         1.10         199,779       577         1.16         142,867       482         1.35      
Total interest-bearing liabilities   2,842,630       6,384         0.90         2,639,207       5,805         0.88         2,344,271       4,841         0.83      
Noninterest-bearing demand deposits   364,327                           368,038                           322,701                        
Other noninterest-bearing liabilities   22,909                           23,312                           21,500                        
Total liabilities   3,229,866                           3,030,557                           2,688,472                        
Total stockholders' equity   585,984                           585,448                           588,136                        
Total liabilities and stockholders' equity $ 3,815,850                         $ 3,616,005                         $ 3,276,608                        
Net interest-earning assets $ 849,073                         $ 862,322                         $ 818,765                        
Fully tax-equivalent net interest income           30,799                           29,551                           25,921                
Less: tax-equivalent adjustments           (1,344 )                         (1,172 )                         (975 )              
Net interest income         $ 29,455                         $ 28,379                         $ 24,946                
Interest rate spread (1)(4)                     3.15   %                       3.18   %                       3.07   %  
Net interest margin (1)(5)                     3.36   %                       3.39   %                       3.29   %  
Average interest-earning assets to average                                                                                    
interest-bearing liabilities           129.87   %                       132.67   %                       134.93   %            
                                                                                     
Supplemental Information:                                                                                    
Total deposits, including noninterest-bearing                                                                                    
demand deposits $ 2,942,897     $ 5,661         0.77   %   $ 2,807,466     $ 5,228         0.75   %   $ 2,524,105     $ 4,359         0.69   %  
Total deposits and borrowings, including                                                                                    
noninterest-bearing demand deposits $ 3,206,957     $ 6,384         0.80   %   $ 3,007,245     $ 5,805         0.78   %   $ 2,666,972     $ 4,841         0.73   %  
                                                                                     

(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, 2016, March 31, 2016 and June 30, 2015, yields on loans before tax-equivalent adjustments were 4.09%, 4.23% and 4.23%, respectively, yields on securities and certificates of deposit before tax-equivalent adjustments were 1.66%, 1.51% and 1.50%, respectively, and yield on total interest-earning assets before tax-equivalent adjustments were 3.90%, 3.93% and 3.78%, respectively. Interest rate spread before tax-equivalent adjustments for the three months ended June 30, 2016, March 31, 2016 and June 30, 2015 was 3.00%, 3.05% and 2.95%, respectively, while net interest margin before tax-equivalent adjustments for the three months ended June 30, 2016, March 31, 2016 and June 30, 2015 was 3.21%, 3.26% and 3.16%, 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  
NET INTEREST INCOME ANALYSIS  
(Unaudited)  
   
  For the Six Months Ended  
  June 30, 2016   June 30, 2015  
  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) $ 3,284,321     $ 70,104         4.29   %   $ 2,697,590     $ 58,465         4.37   %  
Securities and certificates of deposits   215,600       2,028         1.89         284,144       2,469         1.75      
Other interest-earning assets (3)   96,695       406         0.84         192,333       358         0.38      
Total interest-earning assets   3,596,616       72,538         4.06         3,174,067       61,292         3.89      
Noninterest-earning assets   118,614                           113,297                        
Total assets $ 3,715,230                         $ 3,287,364                        
                                                         
Liabilities and stockholders' equity:                                                        
Interest-bearing liabilities:                                                        
NOW deposits $ 401,952       1,146         0.57       $ 289,340       838         0.58      
Money market deposits   843,700       3,355         0.80         960,554       3,992         0.84      
Regular savings and other deposits   293,550       209         0.14         279,134       255         0.18      
Certificates of deposit   971,219       6,179         1.28         695,495       3,951         1.15      
Total interest-bearing deposits   2,510,421       10,889         0.87         2,224,523       9,036         0.82      
Borrowings   231,920       1,300         1.13         146,881       990         1.36      
Total interest-bearing liabilities   2,742,341       12,189         0.89         2,371,404       10,026         0.85      
Noninterest-bearing demand deposits   364,760                           309,185                        
Other noninterest-bearing liabilities   22,413                           22,478                        
Total liabilities   3,129,514                           2,703,067                        
Total stockholders' equity   585,716                           584,297                        
Total liabilities and stockholders' equity $ 3,715,230                         $ 3,287,364                        
Net interest-earning assets $ 854,275                         $ 802,663                        
Fully tax-equivalent net interest income           60,349                           51,266                
Less: tax-equivalent adjustments           (2,515 )                         (1,927 )              
Net interest income         $ 57,834                         $ 49,339                
Interest rate spread (1)(4)                     3.17   %                       3.04   %  
Net interest margin (1)(5)                     3.37   %                       3.26   %  
Average interest-earning assets to average                                                        
interest-bearing liabilities           131.15   %                       133.85   %            
                                                         
Supplemental Information:                                                        
Total deposits, including noninterest-bearing                                                        
demand deposits $ 2,875,181     $ 10,889         0.76   %   $ 2,533,708     $ 9,036         0.72   %  
Total deposits and borrowings, including                                                        
noninterest-bearing demand deposits $ 3,107,101     $ 12,189         0.79   %   $ 2,680,589     $ 10,026         0.75   %  
                                                         

(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, 2016 and 2015, yields on loans before tax-equivalent adjustments were 4.16% and 4.25%, respectively, yields on securities and certificates of deposit before tax-equivalent adjustments were 1.58% and 1.51%, respectively, and yield on total interest-earning assets before tax-equivalent adjustments were 3.92% and 3.77%, respectively. Interest rate spread before tax-equivalent adjustments for the six months ended June 30, 2016 and 2015 was 3.03% and 2.92%, respectively, while net interest margin before tax-equivalent adjustments for the six months ended June 30, 2016 and 2015 was 3.23% and 3.13%, 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)  
   
    For the Three Months Ended For the Six Months Ended  
    June 30, 2016   March 31, 2016   June 30, 2015   June 30, 2016   June 30, 2015  
                                                     
Key Performance Ratios                                                    
Return on average assets (1)     0.62   %     0.83   %     0.68   %     0.72   %     0.73   %  
Return on average equity (1)     4.03         5.11         3.80         4.57         4.10      
Interest rate spread  (1) (2)     3.15         3.18         3.07         3.17         3.04      
Net interest margin  (1) (3)     3.36         3.39         3.29         3.37         3.26      
Non-interest expense to average assets  (1)     2.03         2.13         2.12         2.08         2.15      
Efficiency ratio (4)     60.44         62.01         62.53         61.21         65.02      

  
  June 30, 2016   March 31, 2016   December 31, 2015   June 30, 2015  
                                         
  (Dollars in thousands)  
Asset Quality                                        
Non-accrual loans:                                        
One- to four-family $ 9,552       $ 9,662       $ 9,264       $ 11,094      
Home equity lines of credit   1,609         1,983         1,763         1,930      
Multi-family                                
Commercial real estate   3,829         3,686         3,663         5,271      
Construction   13,698         14,612         15,849         17,775      
Commercial and industrial   737         745         805         892      
Consumer                                
Total non-accrual loans   29,425         30,688         31,344         36,962      
Foreclosed assets   183         638                 1,046      
Total non-performing assets $ 29,608       $ 31,326       $ 31,344       $ 38,008      
                                         
Allowance for loan losses/total loans   1.08   %     1.06   %     1.08   %     1.10   %  
Allowance for loan losses/non-accrual loans   130.22         112.06         106.58         81.46      
Non-accrual loans/total loans   0.83         0.95         1.02         1.35      
Non-accrual loans/total assets   0.75         0.82         0.89         1.12      
Non-performing assets/total assets   0.75         0.84         0.89         1.15      
                                         
Capital and Share Related                                        
Stockholders' equity to total assets   14.93   %     15.62   %     16.69   %     17.82   %  
Book value per share $ 10.93       $ 10.81       $ 10.72       $ 10.71      
Tangible book value per share $ 10.67       $ 10.56       $ 10.47       $ 10.46      
Market value per share $ 14.78       $ 13.92       $ 14.10       $ 13.41      
Shares outstanding 53,688,566       53,895,870       54,875,237       54,965,555      
                                 

(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 represents non-interest expense divided by the sum of net interest income and non-interest income excluding gains or losses on securities.

Contact: Richard J. Gavegnano, Chairman, President and Chief Executive Officer(978) 977-2211

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