BOSTON, Jan. 24, 2017 (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 $11.3 million, or $0.22 per diluted share, for the quarter ended December 31, 2016, up from $9.5 million, or $0.18 per diluted share, for the quarter ended September 30, 2016 and $6.9 million, or $0.13 per diluted share, for the quarter ended December 31, 2015. For the year ended December 31, 2016, net income was $34.2 million, or $0.65 per diluted share, up from $24.6 million, or $0.46 per diluted share, for the year ended December 31, 2015. The Company's return on average assets was 1.05% for the quarter ended December 31, 2016, up from 0.94% for the quarter ended September 30, 2016 and 0.80% for the quarter ended December 31, 2015. For the year ended December 31, 2016, the Company's return on average assets was 0.87%, up from 0.74% for the year ended December 31, 2015. The Company's return on average equity was 7.51% for the quarter ended December 31, 2016, up from 6.39% for the quarter ended September 30, 2016 and 4.67% for the quarter ended December 31, 2015. For the year ended December 31, 2016, the Company's return on average equity was 5.77%, up from 4.19% for the year ended December 31, 2015.

Richard J. Gavegnano, Chairman, President and Chief Executive Officer, said, "It is my great pleasure to report record net income of $34.2 million for the year 2016, up $9.6 million, or 39%, from 2015. Our net income of $11.3 million for the fourth quarter of 2016, a new quarterly record, was up $1.8 million, or 19%, from the third quarter of 2016 and $4.4 million, or 64%, from the fourth quarter of 2015. Our earnings momentum over the past year resulted from rising net interest income, driven by our strong organic growth in loans and deposits, along with increasingly favorable trends in asset quality and operating efficiency. These results are also directly related to the hard work of the entire East Boston Savings Bank team, and all of us remain committed to building on these accomplishments to further strengthen our franchise and enhance shareholder value."

The Company's net interest income was $33.4 million for the quarter ended December 31, 2016, up $2.1 million, or 6.8%, from the quarter ended September 30, 2016 and $6.1 million, or 22.2%, from the quarter ended December 31, 2015. The interest rate spread and net interest margin on a tax-equivalent basis were 3.09% and 3.31%, respectively, for the quarter ended December 31, 2016 compared to 3.11% and 3.32%, respectively, for the quarter ended September 30, 2016 and 3.17% and 3.39%, respectively, for the quarter ended December 31, 2015. For the year ended December 31, 2016, net interest income increased $19.7 million, or 19.1%, to $122.6 million from the year ended December 31, 2015. The net interest rate spread and net interest margin on a tax-equivalent basis were 3.13% and 3.34%, respectively, for the year ended December 31, 2016 compared to 3.09% and 3.31%, respectively, for the year ended December 31, 2015. The increases in net interest income were due primarily to loan growth, partially offset by increases in the average balances and costs of total deposits and borrowings for the quarter and year ended December 31, 2016 compared to the respective prior periods.

Total interest and dividend income increased to $41.2 million for the quarter ended December 31, 2016, up $2.8 million, or 7.4%, from the quarter ended September 30, 2016 and $8.6 million, or 26.4%, from the quarter ended December 31, 2015, primarily due to growth in the Company's average loan balances to $3.793 billion. The Company's yield on interest-earning assets on a tax-equivalent basis was 4.05% for the quarter ended December 31, 2016, up one basis point from the quarter ended September 30, 2016 and up two basis points from the quarter ended December 31, 2015.

Total interest expense increased to $7.8 million for the quarter ended December 31, 2016, up $712,000, or 10.0%, from the quarter ended September 30, 2016 and $2.5 million, or 47.7%, from the quarter ended December 31, 2015. Interest expense on deposits increased to $7.0 million for the quarter ended December 31, 2016, up $689,000, or 11.0%, from the quarter ended September 30, 2016 and $2.2 million, or 45.0%, from the quarter ended December 31, 2015 primarily due to growth in average total deposits to $3.343 billion and an increase in the cost of average total deposits to 0.83%. Interest expense on borrowings increased to $868,000 for the quarter ended December 31, 2016, up $23,000, or 2.7%, from the quarter ended September 30, 2016 and $368,000, or 73.6%, from the quarter ended December 31, 2015 primarily due to growth in average total borrowings to $325.4 million, partially offset by a decrease in the cost of average total borrowings to 1.06%. The Company's cost of funds was 0.85% for the quarter ended December 31, 2016, up two basis points from the quarter ended September 30, 2016 and 10 basis points from the quarter ended December 31, 2015.

For the year ended December 31, 2016, the Company's total interest and dividend income increased $26.4 million, or 21.4%, to $149.7 million from the year ended December 31, 2015 primarily due to growth in the average loan balances of $693.1 million, or 24.7%, to $3.495 billion, partially offset by a decrease in the yield on loans on a tax-equivalent basis of five basis points to 4.30% for the year ended December 31, 2016 compared to 4.35% for the year ended December 31, 2015. The Company's yield on interest-earning assets on a tax-equivalent basis increased 11 basis points to 4.05% for the year ended December 31, 2016 compared to 3.94% for the year ended December 31, 2015.

Total interest expense increased $6.7 million, or 32.7%, to $27.1 million for the year ended December 31, 2016 compared to $20.5 million for the year ended December 31, 2015. Interest expense on deposits increased $5.6 million, or 30.5%, to $24.1 million for the year ended December 31, 2016 from the year ended December 31, 2015 primarily due to growth in average total deposits of $462.1 million, or 17.9%, to $3.049 billion and an increase in the cost of average total deposits of eight basis points to 0.79%. Interest expense on borrowings increased $1.0 million, or 52.8%, to $3.0 million for the year ended December 31, 2016 from the year ended December 31, 2015 primarily due to growth in average total borrowings of $131.2 million, or 89.7%, to $277.6 million, partially offset by a decrease in the cost of average total borrowings of 26 basis points to 1.09%. The Company's cost of funds increased seven basis points to 0.82% for the year ended December 31, 2016 compared to 0.75% for the year ended December 31, 2015.

Mr. Gavegnano noted, "The robust increases in net interest income have been driven by our proven capabilities to attract and retain high quality commercial loan and core deposit relationships. Over the past five years, our net interest income has steadily risen each consecutive quarter as our total loan portfolio increased $2.6 billion, for a compounded annual growth rate of 24%, and core deposits increased $1.4 billion, for a compounded annual growth rate of 20%."

The Company's provision for loan losses was $1.3 million for the quarter ended December 31, 2016, up from $858,000 for the quarter ended September 30, 2016 and $544,000 for the quarter ended December 31, 2015. For the year ended December 31, 2016, the provision for loan losses was $7.2 million compared to $6.7 million for the year ended December 31, 2015. The allowance for loan losses was $40.1 million or 1.02% of total loans at December 31, 2016, compared to $38.7 million or 1.04% of total loans at September 30, 2016 and $33.4 million or 1.08% of total loans at December 31, 2015. The changes in the provision and the allowance for loan losses were based on management's assessment of loan portfolio growth and composition changes, declines in historical charge-off trends, reductions in problem loans and other improving asset quality trends, partially offset by growth in the multi-family, commercial real estate, construction, and commercial and industrial loan categories. The changes also reflected provisions and charge-offs on a multi-family construction loan relationship of $486,000 during the third quarter of 2016 and $2.3 million during the second quarter of 2015.

Net recoveries totaled $147,000 for the quarter ended December 31, 2016, or 0.02% of average loans outstanding on an annualized basis compared to net charge-offs of $478,000 for the quarter ended September 30, 2016, or 0.05% of average loans outstanding on an annualized basis and net recoveries of $274,000 for the quarter ended December 31, 2015, or 0.04% of average loans outstanding on an annualized basis. For the year ended December 31, 2016, net charge-offs totaled $436,000, or 0.01% of average loans outstanding compared to net charge-offs of $1.7 million for the year ended December 31, 2015, or 0.06% of average loans outstanding.

Non-accrual loans were $13.4 million, or 0.34% of total loans outstanding, at December 31, 2016, down $1.8 million, or 11.6%, from September 30, 2016 and $17.9 million, or 57.1%, from December 31, 2015. The reductions in non-accrual loans were primarily due to the sale at foreclosure during the third quarter of 2016 of an $11.5 million multi-family construction loan in Boston that was originally placed on non-accrual status during the second quarter of 2015, along with steady reductions across all categories of non-accrual loans. Non-performing assets, comprised entirely of non-accrual loans, were $13.4 million, or 0.30% of total assets, at December 31, 2016, down from $15.2 million, or 0.36% of total assets, at September 30, 2016 and $31.3 million, or 0.89% of total assets, at December 31, 2015.

Mr. Gavegnano commented, "During 2016, we successfully reduced our non-performing assets to the lowest levels since before the Great Recession, while our loan charge-off rates have remained at historic lows. These results were achieved through highly selective loan underwriting, diligent credit monitoring and effective collection processes."

Non-interest income was $5.6 million for the quarter ended December 31, 2016, up from $3.3 million for the quarter ended September 30, 2016 and $2.7 million for the quarter ended December 31, 2015 primarily due to an increase in gain on sale of securities, net. For the year ended December 31, 2016, non-interest income increased $1.2 million, or 8.8%, to $14.2 million from $13.0 million for the year ended December 31, 2015 primarily due to increases of $561,000 in customer service fees and $588,000 in gain on sales of securities, net.

Non-interest expenses were $19.8 million, or 1.84% of average assets for the quarter ended December 31, 2016, compared to $19.2 million, or 1.90% of average assets for the quarter ended September 30, 2016 and $19.2 million, or 2.24% of average assets for the quarter ended December 31, 2015. As compared to the quarter ended December 31, 2015, non-interest expenses increased $591,000, or 3.1%, primarily due to increases of $549,000 in salaries and employee benefits, $399,000 in occupancy and equipment expenses and $317,000 in professional fees, partially offset by decreases of $187,000 in marketing and advertising expenses, $107,000 in foreclosed real estate expenses and $348,000 in other general and administrative expenses. For the year ended December 31, 2016, non-interest expenses increased $4.8 million, or 6.6%, to $77.5 million from $72.7 million for the year ended December 31, 2015, primarily due to increases of $4.1 million in salaries and employee benefits, $933,000 in occupancy and equipment expenses, $332,000 in professional services and $170,000 in other general and administrative expenses, partially offset by decreases of $498,000 in marketing and advertising expenses and $204,000 in foreclosed real estate expenses. The increases in salaries and employee benefits expenses were primarily due to annual increases in employee compensation and health benefits, 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 two new branches opened over the past year. 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 54.33% for the quarter ended December 31, 2016 from 55.81% for the quarter ended September 30, 2016 and 63.81% for the quarter ended December 31, 2015. For the year ended December 31, 2016, the efficiency ratio was 57.95% compared to 64.05% for the year ended December 31, 2015.

Mr. Gavegnano added, "Our efficiency ratio has steadily improved over the past four years from a high of 77.96% for the year 2012 to 57.95% for the year 2016, with further improvement in the ratio to 54.33% for the fourth quarter, reflecting our growth-driven rise in net interest income and prudent management of non-interest expenses. These improvements were realized during a period when we expanded our core banking franchise in the lucrative metropolitan Boston market area to 31 branches. We have opened eight new branches since the end of 2011, including the March opening in Boston's Chinatown neighborhood, the June roll-out of our innovative mobile branch and the December addition of a second Brookline location during 2016. This expansion has enabled the Bank to attract new business and consumer relationships with the resulting gains in market share of loans and deposits."

The Company recorded a provision for income taxes of $6.6 million for the quarter ended December 31, 2016, reflecting an effective tax rate of 37.0%, compared to $5.1 million for the quarter ended September 30, 2016, reflecting an effective tax rate of 34.9% and $3.4 million, or a 33.1% effective tax rate, for the quarter ended December 31, 2015. For the year ended December 31, 2016, the provision for income taxes was $17.9 million, reflecting an effective tax rate of 34.3%, compared to $12.0 million, or 32.7%, for the year ended December 31, 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 $4.436 billion at December 31, 2016, an increase of $262.9 million, or 6.3%, from $4.173 billion at September 30, 2016 and an increase of $911.5 million, or 25.9%, from $3.525 billion at December 31, 2015. Net loans were $3.899 billion at December 31, 2016, an increase of $237.1 million, or 6.5%, from September 30, 2016 and an increase of $853.4 million, or 28.0% from December 31, 2015. Loan originations totaled $550.3 million during the quarter ended December 31, 2016 and $1.6 billion during the year ended December 31, 2016. The net increase in loans for the year ended December 31, 2016 was primarily due to increases of $482.8 million in commercial real estate loans, $189.9 million in multi-family loans, $115.4 million in commercial and industrial loans and $81.2 million in construction loans, partially offset by a decrease of $4.8 million in one- to four-family loans. These net changes exclude reclassifications during the third quarter of $44.3 million in multi-family loans and $34.5 million in commercial real estate loans to one- to four-family loans in accordance with regulatory guidance. Cash and due from banks was $236.4 million at December 31, 2016, an increase of $53.6 million, or 29.3%, from September 30, 2016 and an increase of $140.1 million, or 145.3% from December 31, 2015. Securities available for sale were $67.7 million at December 31, 2016, a decrease of $74.0 million, or 52.2%, from $141.6 million at December 31, 2015 primarily due to $56.4 million in maturities, calls and principal payments and $35.4 million in sales, partially offset by $12.5 million in purchases and $6.4 million in market value appreciation.

Total deposits were $3.476 billion at December 31, 2016, an increase of $246.3 million, or 7.6%, from $3.230 billion at September 30, 2016 and an increase of $732.8 million, or 26.7%, from $2.743 billion at December 31, 2015. Core deposits, which exclude certificate of deposits, increased $493.2 million, or 26.6%, during the year ended December 31, 2016 to $2.348 billion, or 67.5% of total deposits. Total borrowings were $322.5 million, an increase of $2.7 million, or 0.8%, from September 30, 2016 and an increase of $155.3 million, or 92.9%, from December 31, 2015.

Total stockholders' equity was $607.3 million, an increase of $10.2 million, or 1.7%, from $597.1 million at September 30, 2016 and an increase of $19.2 million, or 3.3%, from $588.1 million at December 31, 2015. The increase for the year ended December 31, 2016 was primarily due to net income of $34.2 million, $6.0 million related to stock-based compensation plans and $3.9 million in accumulated other comprehensive income, reflecting an increase in the fair value of available-for-sale securities, partially offset by a $18.8 million repurchase of 1,337,507 shares of the Company's common stock and four quarterly dividends of $0.03 per share totaling $6.1 million. Stockholders' equity to assets was 13.69% at December 31, 2016, compared to 14.31% at September 30, 2016 and 16.69% at December 31, 2015. Book value per share increased to $11.33 at December 31, 2016 from $10.72 at December 31, 2015. Tangible book value per share increased to $11.08 at December 31, 2016 from $10.47 at December 31, 2015. Market price per share increased $4.80, or 34.0%, to $18.90 at December 31, 2016 from $14.10 at December 31, 2015. At December 31, 2016, the Company and the Bank continued to exceed all regulatory capital requirements.

During the quarter ended December 31, 2016, the Company repurchased 116,796 shares of its stock at an average price of $15.79 per share. As of December 31, 2016, the Company had repurchased 2,059,611 shares of its stock at an average price of $13.71 per share, or 75.2% of the 2,737,334 shares authorized for repurchase under the Company's repurchase program as adopted in August 2015.

Meridian Bancorp, Inc. is the holding company for East Boston Savings Bank. East Boston Savings Bank, a Massachusetts-chartered stock savings bank founded in 1848, operates 31 full-service locations 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)    
                           
    December 31, 2016     September 30, 2016     December 31, 2015    
                           
    (Dollars in thousands)    
ASSETS                          
Cash and due from banks   $ 236,423     $ 182,852     $ 96,363    
Certificates of deposit     80,323       30,342       99,062    
Securities available for sale, at fair value     67,663       145,441       141,646    
Federal Home Loan Bank stock, at cost     18,175       17,818       10,931    
Loans held for sale     3,944       2,854       4,669    
Loans:                          
One- to four-family     532,450       526,828       458,423    
Home equity lines of credit     42,913       46,249       46,660    
Multi-family     562,948       522,444       417,388    
Commercial real estate     1,776,601       1,607,276       1,328,344    
Construction     502,753       490,016       421,531    
Commercial and industrial     515,430       501,976       400,051    
Consumer     9,712       9,680       10,028    
Total loans     3,942,807       3,704,469       3,082,425    
Allowance for loan losses     (40,149 )     (38,697 )     (33,405 )  
Net deferred loan origination fees     (3,990 )     (4,159 )     (3,778 )  
Loans, net     3,898,668       3,661,613       3,045,242    
Bank-owned life insurance     40,745       40,451       39,557    
Premises and equipment, net     41,427       40,747       40,248    
Accrued interest receivable     10,381       9,209       8,574    
Deferred tax asset, net     21,461       19,835       21,246    
Goodwill     13,687       13,687       13,687    
Other assets     3,105       8,281       3,284    
Total assets   $ 4,436,002     $ 4,173,130     $ 3,524,509    
                           
LIABILITIES AND STOCKHOLDERS' EQUITY                          
Deposits:                          
Non interest-bearing demand deposits   $ 431,222     $ 410,667     $ 370,546    
NOW deposits     630,413       547,650       334,753    
Money market deposits     980,344       863,385       860,957    
Regular savings and other deposits     305,632       301,754       288,180    
Certificates of deposit     1,128,226       1,106,113       888,582    
Total deposits     3,475,837       3,229,569       2,743,018    
Short-term borrowings                 20,000    
Long-term debt     322,512       319,820       147,226    
Accrued expenses and other liabilities     30,356       26,685       26,139    
Total liabilities     3,828,705       3,576,074       2,936,383    
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; 53,596,105, 53,714,191 and 54,875,237 shares issued at December 31, 2016, September 30, 2016 and December 31, 2015, respectively     536       537       549    
Additional paid-in capital     390,065       390,587       403,737    
Retained earnings     234,290       224,509       206,214    
Accumulated other comprehensive income (loss)     1,806       1,044       (2,092 )  
Unearned compensation - ESOP, 2,678,800, 2,709,242 and 2,800,564 at December 31, 2016, September 30, 2016 and December 31, 2015, respectively     (19,400 )     (19,621 )     (20,282 )  
Total stockholders' equity     607,297       597,056       588,126    
Total liabilities and stockholders' equity   $ 4,436,002     $ 4,173,130     $ 3,524,509    
                           

 
MERIDIAN BANCORP, INC. AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF NET INCOME  
(Unaudited)  
                                         
    Three Months Ended     Years Ended  
    December 31, 2016     September 30, 2016     December 31, 2015     December 31, 2016     December 31, 2015  
                                         
    (Dollars in thousands, except per share amounts)  
Interest and dividend income:                                        
Interest and fees on loans   $ 40,172     $ 37,444     $ 31,555     $ 145,541     $ 118,586  
Interest on debt securities:                                        
Taxable     159       203       297       866       1,608  
Tax-exempt     19       30       38       114       162  
Dividends on equity securities     346       365       422       1,529       1,638  
Interest on certificates of deposit     115       75       168       495       624  
Other interest and dividend income     438       303       159       1,147       724  
Total interest and dividend income     41,249       38,420       32,639       149,692       123,342  
Interest expense:                                        
Interest on deposits     6,962       6,273       4,800       24,124       18,479  
Interest on short-term borrowings                 5       6       5  
Interest on long-term debt     868       845       495       3,007       1,967  
Total interest expense     7,830       7,118       5,300       27,137       20,451  
Net interest income     33,419       31,302       27,339       122,555       102,891  
Provision for loan losses     1,304       858       544       7,180       6,667  
Net interest income, after provision for loan losses     32,115       30,444       26,795       115,375       96,224  
Non-interest income:                                        
Customer service fees     2,231       2,170       2,114       8,484       7,923  
Loan fees     282       293       203       865       917  
Mortgage banking gains, net     125       274       119       573       535  
Gain (loss) on sales of securities, net     2,627       266       (57 )     3,020       2,432  
Income from bank-owned life insurance     294       296       295       1,188       1,225  
Other income     55       2             60       8  
Total non-interest income     5,614       3,301       2,674       14,190       13,040  
Non-interest expenses:                                        
Salaries and employee benefits     12,167       12,169       11,618       48,828       44,737  
Occupancy and equipment     2,881       2,577       2,482       10,809       9,876  
Data processing     1,331       1,293       1,317       5,135       5,204  
Marketing and advertising     973       832       1,160       3,217       3,715  
Professional services     969       663       652       2,965       2,633  
Foreclosed real estate     2       (11 )     109       30       234  
Deposit insurance     481       572       527       2,037       1,989  
Other general and administrative     974       1,069       1,322       4,473       4,303  
Total non-interest expenses     19,778       19,164       19,187       77,494       72,691  
Income before income taxes     17,951       14,581       10,282       52,071       36,573  
Provision for income taxes     6,642       5,084       3,407       17,881       11,966  
Net income   $ 11,309     $ 9,497     $ 6,875     $ 34,190     $ 24,607  
                                         
Earnings per share:                                        
Basic   $ 0.22     $ 0.19     $ 0.13     $ 0.67     $ 0.47  
Diluted   $ 0.22     $ 0.18     $ 0.13     $ 0.65     $ 0.46  
Weighted average shares:                                        
Basic     50,940,037       50,982,633       51,982,009       51,128,914       51,965,036  
Diluted     52,102,511       52,093,009       53,092,652       52,248,308       53,071,932  
                                         

 
MERIDIAN BANCORP, INC. AND SUBSIDIARIES
NET INTEREST INCOME ANALYSIS
(Unaudited)
                                                                             
  Three Months Ended
  December 31, 2016   September 30, 2016   December 31, 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) $ 3,792,961     $ 41,394         4.34 %   $ 3,614,168     $ 38,684         4.26 %   $ 2,995,593     $ 32,427         4.29 %
Securities and certificates of deposit   147,509       778         2.10       157,293       823         2.08       242,945       1,100         1.80  
Other interest-earning assets (3)   244,241       438         0.71       148,425       303         0.81       78,836       159         0.80  
Total interest-earning assets   4,184,711       42,610         4.05       3,919,886       39,810         4.04       3,317,374       33,686         4.03  
Noninterest-earning assets   113,336                         117,703                         114,080                    
Total assets $ 4,298,047                       $ 4,037,589                       $ 3,431,454                    
Liabilities and stockholders' equity:                                                                            
Interest-bearing liabilities:                                                                            
NOW deposits $ 577,419     $ 1,025         0.71     $ 493,612       816         0.66     $ 308,105     $ 455         0.59  
Money market deposits   907,157       1,955         0.86       836,941       1,715         0.82       873,355       1,762         0.80  
Regular savings and other deposits   301,832       108         0.14       298,799       107         0.14       284,085       102         0.14  
Certificates of deposit   1,139,816       3,874         1.35       1,085,898       3,635         1.33       831,152       2,481         1.18  
Total interest-bearing deposits   2,926,224       6,962         0.95       2,715,250       6,273         0.92       2,296,697       4,800         0.83  
Borrowings   325,421       868         1.06       320,091       845         1.05       151,416       500         1.31  
Total interest-bearing liabilities   3,251,645       7,830         0.96       3,035,341       7,118         0.93       2,448,113       5,300         0.86  
Noninterest-bearing demand deposits   416,727                         383,953                         370,061                    
Other noninterest-bearing liabilities   26,977                         23,977                         24,285                    
Total liabilities   3,695,349                         3,443,271                         2,842,459                    
Total stockholders' equity   602,698                         594,318                         588,995                    
Total liabilities and stockholders' equity $ 4,298,047                       $ 4,037,589                       $ 3,431,454                    
Net interest-earning assets $ 933,066                       $ 884,545                       $ 869,261                    
Fully tax-equivalent net interest income           34,780                         32,692                         28,386            
Less: tax-equivalent adjustments           (1,361 )                       (1,390 )                       (1,047 )          
Net interest income         $ 33,419                       $ 31,302                       $ 27,339            
Interest rate spread (1)(4)                     3.09 %                       3.11 %                       3.17 %
Net interest margin (1)(5)                     3.31 %                       3.32 %                       3.39 %
Average interest-earning assets to average                                                                            
interest-bearing liabilities           128.70   %                     129.14   %                     135.51   %        
Supplemental Information:                                                                            
Total deposits, including noninterest-bearing                                                                            
demand deposits $ 3,342,951     $ 6,962         0.83 %   $ 3,099,203     $ 6,273         0.81 %   $ 2,666,758     $ 4,800         0.71 %
Total deposits and borrowings, including                                                                            
noninterest-bearing demand deposits $ 3,668,372     $ 7,830         0.85 %   $ 3,419,294     $ 7,118         0.83 %   $ 2,818,174     $ 5,300         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 three months ended December 31, 2016, September 30, 2016 and December 31, 2015, yields on loans before tax-equivalent adjustments were 4.21%, 4.12% and 4.18%, respectively, yields on securities and certificates of deposit before tax-equivalent adjustments were 1.72%, 1.70% and 1.51%, respectively, and yield on total interest-earning assets before tax-equivalent adjustments were 3.92%, 3.90% and 3.90%, respectively. Interest rate spread before tax-equivalent adjustments for the three months ended December 31, 2016, September 30, 2016 and December 31, 2015 was 2.96%, 2.97% and 3.04%, respectively, while net interest margin before tax-equivalent adjustments for the three months ended December 31, 2016, September 30, 2016 and December 31, 2015 was 3.18%, 3.18% and 3.27%, 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)
                                                   
  Years Ended December 31,
  2016   2015
  Average Balance     Interest (1)       Yield Cost (1)   Average Balance     Interest (1)       Yield Cost (1)
                                                   
  (Dollars in thousands)
Assets:                                                  
Interest-earning assets:                                                  
Loans (2) $ 3,495,088     $ 150,182         4.30 %   $ 2,801,970     $ 121,859         4.35 %
Securities and certificates of deposit   183,828       3,629         1.97       268,398       4,719         1.76  
Other interest-earning assets (3)   146,786       1,147         0.78       158,463       724         0.46  
Total interest-earning assets   3,825,702       154,958         4.05       3,228,831       127,302         3.94  
Noninterest-earning assets   116,985                         114,081                    
Total assets $ 3,942,687                       $ 3,342,912                    
                                                   
Liabilities and stockholders' equity:                                                  
Interest-bearing liabilities:                                                  
NOW deposits $ 469,103     $ 2,988         0.64     $ 295,958     $ 1,709         0.58  
Money market deposits   857,952       7,025         0.82       928,712       7,663         0.83  
Regular savings and other deposits   296,951       424         0.14       281,389       459         0.16  
Certificates of deposit   1,042,425       13,687         1.31       745,866       8,648         1.16  
Total interest-bearing deposits   2,666,431       24,124         0.90       2,251,925       18,479         0.82  
Borrowings   277,586       3,013         1.09       146,364       1,972         1.35  
Total interest-bearing liabilities   2,944,017       27,137         0.92       2,398,289       20,451         0.85  
Noninterest-bearing demand deposits   382,644                         335,060                    
Other noninterest-bearing liabilities   23,879                         22,605                    
Total liabilities   3,350,540                         2,755,954                    
Total stockholders' equity   592,147                         586,958                    
Total liabilities and stockholders' equity $ 3,942,687                       $ 3,342,912                    
Net interest-earning assets $ 881,685                       $ 830,542                    
Fully tax-equivalent net interest income           127,821                         106,851            
Less: tax-equivalent adjustments           (5,266 )                       (3,960 )          
Net interest income         $ 122,555                       $ 102,891            
Interest rate spread (1)(4)                     3.13 %                       3.09 %
Net interest margin (1)(5)                     3.34 %                       3.31 %
Average interest-earning assets to average                                                  
interest-bearing liabilities           129.95   %                     134.63   %        
                                                   
Supplemental Information:                                                  
Total deposits, including noninterest-bearing                                                  
demand deposits $ 3,049,075     $ 24,124         0.79 %   $ 2,586,985     $ 18,479         0.71 %
Total deposits and borrowings, including                                                  
noninterest-bearing demand deposits $ 3,326,661     $ 27,137         0.82 %   $ 2,733,349     $ 20,451         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 years ended December 31, 2016 and 2015, yields on loans before tax-equivalent adjustments were 4.16% and 4.23%, respectively, yields on securities and certificates of deposit before tax-equivalent adjustments were 1.63% and 1.50%, respectively, and yield on total interest-earning assets before tax-equivalent adjustments were 3.91% and 3.82%, respectively. Interest rate spread before tax-equivalent adjustments for the years ended December 31, 2016 and 2015 was 2.99% and 2.97%, respectively, while net interest margin before tax-equivalent adjustments for the years ended December 31, 2016 and 2015 was 3.20% and 3.19%, 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.
                                                   

 
MERIDIAN BANCORP, INC. AND SUBSIDIARIES  
SELECTED FINANCIAL HIGHLIGHTS  
(Unaudited)  
                                           
    Three Months Ended   Years Ended  
    December 31, 2016   September 30, 2016   December 31, 2015   December 31, 2016   December 31, 2015  
                                           
Key Performance Ratios                                          
Return on average assets (1)     1.05 %     0.94 %     0.80 %     0.87 %     0.74 %  
Return on average equity (1)     7.51       6.39       4.67       5.77       4.19    
Interest rate spread  (1) (2)     3.09       3.11       3.17       3.13       3.09    
Net interest margin  (1) (3)     3.31       3.32       3.39       3.34       3.31    
Non-interest expense to average assets  (1)     1.84       1.90       2.24       1.97       2.17    
Efficiency ratio (4)     54.33       55.81       63.81       57.95       64.05    

 
    December 31, 2016   September 30, 2016   December 31, 2015  
                           
    (Dollars in thousands)  
Asset Quality                          
Non-accrual loans:                          
One- to four-family   $ 8,487     $ 8,828     $ 9,264    
Home equity lines of credit     674       746       1,763    
Multi-family                    
Commercial real estate     2,807       2,871       3,663    
Construction     815       2,031       15,849    
Commercial and industrial     653       730       805    
Consumer                    
Total non-accrual loans     13,436       15,206       31,344    
Foreclosed assets                    
Total non-performing assets   $ 13,436     $ 15,206     $ 31,344    
                           
Allowance for loan losses/total loans     1.02 %     1.04 %     1.08 %  
Allowance for loan losses/non-accrual loans     298.82       254.49       106.58    
Non-accrual loans/total loans     0.34       0.41       1.02    
Non-accrual loans/total assets     0.30       0.36       0.89    
Non-performing assets/total assets     0.30       0.36       0.89    
                           
Capital and Share Related                          
Stockholders' equity to total assets     13.69 %     14.31 %     16.69 %  
Book value per share   $ 11.33     $ 11.12     $ 10.72    
Tangible book value per share   $ 11.08     $ 10.86     $ 10.47    
Market value per share   $ 18.90     $ 15.57     $ 14.10    
Shares outstanding     53,596,105       53,714,191       54,875,237    
                           
(1) Annualized.  
(2) Interest rate spread represents the difference between the tax-equivalent yield on interest-earning assets and the cost of interest-bearing liabilities.  
(3) Net interest margin represents net interest income (tax-equivalent basis) divided by average interest-earning assets.  
(4) The efficiency ratio is a non-GAAP measure representing non-interest expense divided by the sum of net interest income and non-interest income excluding gains or losses on sales of securities. The efficiency ratio is a common measure used by banks to understand expenses related to the generation of revenue. We have removed gains or losses on sales of securities as management deems them to be discretionary and not representative of operating performance.  

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

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