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News from East Boston's best information
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EBSB reports first six months of 2013
(BOSTON, July 23, Jul 23, 2013 (GLOBE
NEWSWIRE via COMTEX) -- Meridian Interstate Bancorp, Inc. (the
"Company" or "Meridian") (NASDAQ:EBSB) , the holding company for
East Boston Savings Bank (the "Bank"), which also operates under the
name Mt. Washington Bank, a Division of East Boston Savings Bank
("Mt. Washington"), announced net income of $3.0 million, or $0.14
per diluted share, for the quarter ended June 30, 2013 compared to
$5.4 million, or $0.25 per diluted share, for the quarter ended June
30, 2012. For the six months ended June 30, 2013, net income was
$6.1 million, or $0.28 per diluted share compared to $7.6 million,
or $0.35 per diluted share, for the six months ended June 30, 2012.
The Company's return on average assets was 0.50% for the quarter
ended June 30, 2013 compared to 1.07% for the quarter ended June 30,
2012. For the six months ended June 30, 2013, the Company's return
on average assets was 0.51% compared to 0.75% for the six months
ended June 30, 2012. The Company's return on average equity was
5.03% for the quarter ended June 30, 2013 compared to 9.65% for the
quarter ended June 30, 2012. For the six months ended June 30, 2013,
the Company's return on average equity was 5.12% compared to 6.74%
for the six months ended June 30, 2012.
During the second quarter of 2012, the Company recognized a pre-tax
gain of $4.8 million on the sale of its investment in Hampshire
First Bank, which was 43% owned by the Company, to NBT Bancorp, Inc.
and NBT Bank, N.A. On an after-tax basis, this one-time gain
increased net income by $2.9 million, or $0.13 per diluted share,
for the quarter and six months ended June 30, 2012.
Richard J. Gavegnano, Chairman and Chief Executive Officer, said, "I
am pleased to report net income of $3.0 million, or $0.14 per share,
for the second quarter and $6.1 million, or $0.28 per share, for the
first half of 2013. We achieved several key milestones during the
quarter as we celebrated the 165 anniversary of East Boston Savings
Bank. Our total assets rose to $2.5 billion during the quarter as
total loans and deposits each grew to over $2 billion. In the first
half of 2013, net loan growth was $219 million, or 12%, along with
net deposit growth of $197 million, or 11%. Our strategic focus has
resulted in significant growth from lucrative new markets in the
Boston area that increases the retail traction of our banking
products and services, especially loans and checking accounts.
Following our entrance into the Belmont and Allston markets earlier
this year, we expect our market share and franchise value will be
further enhanced by the opening of our 27 full service location in
Somerville during the fourth quarter."
Net interest income increased $1.9 million, or 11.7%, to $18.3
million for the quarter ended June 30, 2013 from $16.4 million for
the quarter ended June 30, 2012. The net interest rate spread and
net interest margin were 3.08% and 3.24%, respectively, for the
quarter ended June 30, 2013 compared to 3.37% and 3.53%,
respectively, for the quarter ended June 30, 2012. For the six
months ended June 30, 2013, net interest income increased $3.7
million, or 11.5%, to $35.9 million from $32.2 million for the six
months ended June 30, 2012. The net interest rate spread and net
interest margin were 3.13% and 3.28%, respectively, for the six
months ended June 30, 2013 compared to 3.33% and 3.50%,
respectively, for the six months ended June 30, 2012. The increases
in net interest income were due primarily to loan growth along with
declines in the cost of funds, partially offset by declines in
yields on interest-earning assets for the second quarter and six
months ended June 30, 2013 compared to the same periods in 2012.
The average balance of the Company's loan portfolio increased $439.8
million, or 29.4%, to $1.938 billion, which was partially offset by
the decline in the yield on loans of 51 basis points to 4.56% for
the quarter ended June 30, 2013 compared to the quarter ended June
30, 2012. The Company's cost of total deposits declined nine basis
points to 0.83%, which was partially offset by the increase in the
average balance of total deposits of $334.7 million, or 20.1%, to
$1.997 billion for the quarter ended June 30, 2013 compared to the
quarter ended June 30, 2012. The Company's yield on interest-earning
assets declined 40 basis points to 4.09% for the quarter ended June
30, 2013 compared to 4.49% for the quarter ended June 30, 2012,
while the cost of funds declined 11 basis points to 0.91% for the
quarter ended June 30, 2013 compared to 1.02% for the quarter ended
June 30, 2012.
Mr. Gavegnano noted, "The tremendous growth of $468 million, or 30%,
in our loan portfolio and $290 million, or 27%, in core deposits
since June of last year contributed to our eighth consecutive
quarter of rising net interest income. This growth has also been a
factor in limiting the decline in our net interest margin despite
falling loan yields."
The Company's provision for loan losses was $3.2 million for the
quarter ended June 30, 2013 compared to $2.2 million for the quarter
ended June 30, 2012. For the six months ended June 30, 2013, the
provision for loan losses was $4.5 million compared to $3.4 million
for the six months ended June 30, 2012. The increases in the
provision for loan losses were primarily due to growth in the
commercial real estate, construction and commercial business loan
categories for the second quarter and six months ended June 30, 2013
compared to the same periods in 2012. In addition, the provision for
loan losses was based on management's assessment of loan portfolio
growth and composition changes, an ongoing evaluation of credit
quality and current economic conditions. The allowance for loan
losses was $23.5 million or 1.16% of total loans outstanding at June
30, 2013, compared to $20.5 million or 1.13% of total loans
outstanding at December 31, 2012. Net loan charge-offs totaled
$652,000 for the quarter ended June 30, 2013, or 0.13% of average
loans outstanding, and $1.5 million for the six months ended June
30, 2013, or 0.16% of average loans outstanding.
Non-performing loans increased $5.7 million, or 14.5%, to $45.3
million, or 2.23% of total loans outstanding, at June 30, 2013, from
$39.6 million, or 2.19% of total loans outstanding, at December 31,
2012, primarily due to a net increase of $7.6 million in
non-performing construction loans. Non-performing assets increased
$4.9 million, or 11.7%, to $47.1 million, or 1.88% of total assets,
at June 30, 2013, from $42.2 million, or 1.85% of total assets, at
December 31, 2012. Non-performing assets at June 30, 2013 were
comprised of $15.4 million of construction loans, $8.0 million of
commercial real estate loans, $18.2 million of one- to four-family
mortgage loans, $595,000 of multi-family mortgage loans, $2.6
million of home equity loans, $511,000 of commercial business loans
and foreclosed real estate of $1.8 million. Non-performing assets at
June 30, 2013 included $17.0 million of assets acquired in the
January 2010 Mt. Washington Co-operative Bank merger, comprised of
$16.7 million of non-performing loans and $320,000 of foreclosed
real estate.
Non-interest income decreased $3.9 million, or 45.5%, to $4.7
million for the quarter ended June 30, 2013 from $8.7 million for
the quarter ended June 30, 2012, primarily due to the $4.8 million
gain on sale of the Hampshire First Bank affiliate recognized in
second quarter of 2012, partially offset by an increase of $869,000
in gain on sales of securities, net. For the six months ended June
30, 2013, non-interest income decreased $3.5 million, or 27.7%, to
$9.1 million from $12.6 million for the six months ended June 30,
2012, primarily due to the prior year $4.8 million gain on sale of
the Hampshire First Bank affiliate and a decrease of $604,000 in
mortgage banking gains, net, partially offset by an increase of $2.1
million in gain on sales of securities, net.
Non-interest expenses increased $796,000, or 5.4%, to $15.6 million
for the quarter ended June 30, 2013 from $14.8 million for the
quarter ended June 30, 2012, primarily due to increases of $834,000
in salaries and employee benefits, $222,000 in data processing and
$162,000 in marketing and advertising, partially offset by decreases
of $333,000 in professional services and $182,000 in other
non-interest expenses. For the six months ended June 30, 2013,
non-interest expenses increased $1.8 million, or 6.1%, to $31.9
million from $30.1 million for the six months ended June 30, 2012,
primarily due to increases of $1.6 million in salaries and employee
benefits, $325,000 in occupancy and equipment, $381,000 in data
processing and $294,000 in marketing and advertising, partially
offset by decreases of $565,000 in professional services, $94,000 in
foreclosed real estate and $253,000 in other non-interest expenses.
The increases in salaries and employee benefits and occupancy and
equipment expenses were primarily associated with the opening of new
branches and costs associated with the expansion of residential and
commercial lending capacity. The Company's efficiency ratio was
74.58% for the quarter ended June 30, 2013 compared to 77.98% for
the quarter ended June 30, 2012, excluding the gain on sale of the
Hampshire First Bank affiliate. For the six months ended June 30,
2013, the efficiency ratio was 78.49% compared to 79.88% for the six
months ended June 30, 2012, excluding the gain on sale of the
Hampshire First Bank affiliate.
Mr. Gavegnano added, "After rising to 82.64% for the first quarter
of 2013, our efficiency ratio declined to 74.58% for the second
quarter due to continued growth in net interest income and a more
moderate increase in non-interest expenses. We expect additional
improvements in efficiency as we continue to grow into our expanded
lending and core deposit funding capacity along with diligently
monitoring our overhead expenses."
The Company recorded a provision for income taxes of $1.2 million
for the quarter ended June 30, 2013, reflecting an effective tax
rate of 28.4%, compared to $2.6 million, or 32.6%, for the quarter
ended June 30, 2012. For the six months ended June 30, 2013, the
provision for income taxes was $2.6 million, reflecting an effective
tax rate of 29.6%, compared to $3.7 million, or 32.7%, for the six
months ended June 30, 2012. The change in the effective tax rate was
primarily due to changes in the components of pre-tax income.
Total assets increased $229.7 million, or 10.1%, to $2.508 billion
at June 30, 2013 from $2.279 billion at December 31, 2012. Net loans
increased $219.2 million, or 12.3%, to $2.006 billion at June 30,
2013 from $1.786 billion at December 31, 2012. The net increase in
loans for the six months ended June 30, 2013 was primarily due to
increases of $151.4 million in commercial real estate loans, $59.3
million in construction loans and $30.6 million in commercial
business loans. Cash and cash equivalents increased $50.3 million,
or 54.0%, to $143.5 million at June 30, 2013 from $93.2 million at
December 31, 2012. Securities available for sale decreased $40.8
million, or 15.5%, to $222.0 million at June 30, 2013 from $262.8
million at December 31, 2012.
Total deposits increased $196.6 million, or 10.5%, to $2.062 billion
at June 30, 2013 from $1.865 billion at December 31, 2012, including
net growth in core deposits of $132.2 million, or 10.7%, to $1.369
billion, or 66.4% of total deposits. Total borrowings increased
$27.3 million, or 16.9%, to $188.6 million at June 30, 2013 from
$161.3 million at December 31, 2012.
Total stockholders' equity increased $5.0 million, or 2.1%, to
$238.9 million at June 30, 2013, from $233.9 million at December 31,
2012. The increase for the six months ended June 30, 2013 was due
primarily to $6.1 million in net income, partially offset by a
decrease of $1.1 million in accumulated other comprehensive income
reflecting a decrease in the fair value of available for sale
securities, net of tax and a $1.0 million increase in treasury stock
resulting from the Company's repurchase of 60,786 shares.
Stockholders' equity to assets was 9.52% at June 30, 2013, compared
to 10.27% at December 31, 2012. Book value per share increased to
$10.81 at June 30, 2013 from $10.57 at December 31, 2012. Tangible
book value per share increased to $10.19 at June 30, 2013 from $9.95
at December 31, 2012. Market price per share increased $2.05, or
12.2%, to $18.83 at June 30, 2013 from $16.78 at December 31, 2012.
At June 30, 2013, the Company and the Bank continued to exceed all
regulatory capital requirements.
As of June 30, 2013, the Company had repurchased 257,352 shares of
its stock at an average price of $14.10 per share, or 28.5% of the
904,224 shares authorized for repurchase under the Company's fourth
repurchase program as adopted during 2011. The Company has
repurchased 1,661,280 shares at an average price of $10.73 per share
since December 2008.
Mr. Gavegnano concluded, "The Company and East Boston Savings Bank
will continue to build on our solid record over the past 165 years
as we consider various opportunities to enhance stockholder value."
Meridian Interstate 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
26 full service locations in the greater Boston metropolitan area
including nine full-service locations in its Mt. Washington Bank
Division. 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 Interstate 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
Interstate Bancorp, Inc.'s actual results could differ materially
from those discussed. Readers are cautioned not to place undue
reliance on these forward-looking statements,
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