Meridian Bancorp, Inc. Announces Results for the Quarter and Six Months Ended June 30, 2021
BOSTON, July 22, 2021 (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 $16.5 million, or $0.32 per diluted share, for the quarter ended June 30, 2021, compared to $24.3 million, or $0.48 per diluted share for the quarter ended March 31, 2021, and $17.3 million, or $0.34 per diluted share, for the quarter ended June 30, 2020. For the six months ended June 30, 2021, net income was $40.9 million, or $0.81 per diluted share, up from $30.3 million, or $0.60 per diluted share, for the six months ended June 30, 2020. The Company’s return on average assets was 1.03% for the quarter ended June 30, 2021, compared to 1.46% for the quarter ended March 31, 2021, and 1.08% for the quarter ended June 30, 2020. For the six months ended June 30, 2021, the Company’s return on average assets was 1.25%, up from 0.95% for the six months ended June 30, 2020. The Company’s return on average equity was 8.32% for the quarter ended June 30, 2021, compared to 12.45% for the quarter ended March 31, 2021, and 9.45% for the quarter ended June 30, 2020. For the six months ended June 30, 2021, the Company’s return on average equity was 10.36%, up from 8.27% for the six months ended June 30, 2020.
Richard J. Gavegnano, Chairman, President and Chief Executive Officer, said, “I am pleased to report net income of $16.5 million for the second quarter of 2021 and $40.9 million for the six months ended June 30, 2021, a 35.1% increase over the six months ended June 30, 2020. These earnings reflect a 4.0% increase in net interest income and an improvement in the net interest margin to 3.08%, from 3.05%, for the six months ended June 30, 2021 compared to the same period in 2020. Also affecting the 2021 results was the recognition of an expense of $3.3 million with respect to a previously disclosed legal judgment related to a loan assumed in the Mt. Washington Bank acquisition over ten years ago. The Company also incurred $1.1 million in merger-related expenses associated with the Company’s proposed transaction with Independent Bank Corp.”
The Company’s net interest income was $47.8 million for the quarter ended June 30, 2021, an increase of $397,000, or 0.8%, from the quarter ended June 30, 2020. The interest rate spread and net interest margin on a tax-equivalent basis were 2.95% and 3.10%, respectively, for the quarter ended June 30, 2021 compared to 2.86% and 3.10%, respectively, for the quarter ended June 30, 2020. For the six months ended June 30, 2021 net interest income increased $3.7 million, or 4.0%, to $96.2 million from the six months ended June 30, 2020. The interest rate spread and net interest margin on a tax-equivalent basis were 2.93% and 3.08% for the six months ended June 30, 2021 compared to 2.76% and 3.05% for the six months ended June 30, 2020.
Total interest and dividend income totaled $55.4 million for the quarter ended June 30, 2021, a decrease of $6.7 million, or 10.8% from the quarter ended June 30, 2020, primarily due to a 9.8% decrease in the Company’s average loan balances to $5.161 billion. The Company’s yield on interest-earning assets on a tax-equivalent basis was 3.59% for the quarter ended June 30, 2021, down 47 basis points from the quarter ended June 30, 2020. For the six months ended June 30, 2021 the Company’s total interest and dividend income totaled $113.2 million, a decrease of $15.0 million, or 11.7%, from the six months ended June 30, 2020, primarily due to a decrease in the Company’s average loan balances of $437.8 million, or 7.6%, to $5.294 billion.
Total interest expense totaled $7.7 million for the quarter ended June 30, 2021, a decrease of $7.2 million, or 48.2%, from the quarter ended June 30, 2020. Interest expense on deposits decreased to $4.2 million for the quarter ended June 30, 2021, a decrease of $6.4 million, or 60.3%, from the quarter ended June 30, 2020, primarily due to a decrease in the cost of average total deposits to 0.34% from 0.88% for the quarter ended June 30, 2020. The Company’s total cost of funds was 0.55% for the quarter ended June 30, 2021, a decrease of 51 basis points from 1.06% for the quarter ended June 30, 2020. For the six months ended June 30, 2021, total interest expense totaled $17.0 million, a decrease of $18.7 million, or 52.4%, from the six months ended June 30, 2020, primarily due to a decrease in the cost of average total deposits to 0.39% from 1.13% for the six months ended June 30, 2020. The Company’s total cost of funds was 0.60% for the six months ended June 30, 2021, down 69 basis points from the six months ended June 30, 2020.
The Company’s provision for credit losses was $749,000 for the quarter ended June 30, 2021, compared to a provision of $9.6 million for the quarter ended June 30, 2020. For the six months ended June 30, 2021 the Company recognized a provision reversal of $4.5 million compared to a provision of $10.4 million for the six months ended June 30, 2020. The allowance for credit losses on loans was $64.3 million, or 1.28%, of total loans at June 30, 2021, compared to $68.8 million, or 1.25%, of total loans at December 31, 2020. Non-performing assets were $10.5 million, or 0.17% of total assets, at June 30, 2021, compared to $3.8 million, or 0.06% of total assets, at June 30, 2020.
Non-interest income was $3.0 million for the quarter ended June 30, 2021, a decrease of $5.6 million, or 64.8%, from the quarter ended June 30, 2020, primarily due to a $4.2 million gain on sale of asset recognized in the second quarter of 2020, and a $1.8 million valuation decrease on marketable equity securities, net. For the six months ended June 30, 2021, non-interest income increased $154,000, or 2.0%, to $8.0 million from $7.8 million for the six months ended June 30, 2020, primarily due to a $3.0 million valuation increase on marketable equity securities, net, a $1.3 million increase in gain on sale of equity securities, net, partially offset by a $4.2 million gain on sale of asset realized in 2020.
Non-interest expenses were $28.0 million, or 1.74% of average assets for the quarter ended June 30, 2021, compared to $23.3 million, or 1.46% of average assets for the quarter ended June 30, 2020. The Company’s efficiency ratio was 53.18% for the quarter ended June 30, 2021 compared to 46.79% for the quarter ended June 30, 2020. For the six months ended June 30, 2021, non-interest expenses increased $4.0 million, or 8.0%, to $53.6 million from $49.6 million for the six months ended June 30, 2020, due primarily to $3.3 million in expense for a legal judgment related to a loan assumed in the Mt. Washington Bank acquisition included in other general and administrative and $1.1 million in merger and acquisition related expenses realized in the second quarter of 2021. For the six months ended June 30, 2021 the efficiency ratio is 51.35% compared to 50.44% for the six months ended June 30, 2020.
The Company recorded a provision for income taxes of $5.5 million for the quarter ended June 30, 2021, reflecting an effective tax rate of 24.9%, compared to $5.8 million, or an effective rate of 25.2%, for the quarter ended June 30, 2020. For the six months ended June 30, 2021 the provision for income taxes was $14.2 million, reflecting an effective tax rate of 25.8%, compared to $10.1 million, reflecting an effective rate of 24.9% for the six months ended June 30, 2020.
