Meridian Bancorp, Inc. Announces Results for the Quarter and Nine Months Ended September 30, 2021

Meridian Bancorp, Inc. (the “Company” or “Meridian”) (NASDAQ: EBSB), the holding company for East Boston Savings Bank (the “Bank”), announced net income of $18.3 million, or $0.36 per diluted share, for the quarter ended September 30, 2021, compared to $16.5 million, or $0.32 per diluted share for the quarter ended June 30, 2021, and $16.7 million, or $0.33 per diluted share, for the quarter ended September 30, 2020. For the nine months ended September 30, 2021, net income was $59.2 million, or $1.17 per diluted share, up from $46.9 million, or $0.93 per diluted share, for the nine months ended September 30, 2020. The Company’s return on average assets was 1.17% for the quarter ended September 30, 2021, compared to 1.03% for the quarter ended June 30, 2021, and 1.03% for the quarter ended September 30, 2020. For the nine months ended September 30, 2021, the Company’s return on average assets was 1.22%, up from 0.98% for the nine months ended September 30, 2020. The Company’s return on average equity was 9.03% for the quarter ended September 30, 2021, compared to 8.32% for the quarter ended June 30, 2021, and 8.94% for the quarter ended September 30, 2020. For the nine months ended September 30, 2021, the Company’s return on average equity was 9.91%, up from 8.50% for the nine months ended September 30, 2020.

The Company’s net interest income was $46.0 million for the quarter ended September 30, 2021, a decrease of $2.8 million, or 5.7%, from the quarter ended September 30, 2020. The interest rate spread and net interest margin on a tax-equivalent basis were 2.91% and 3.05%, respectively, for the quarter ended September 30, 2021 compared to 2.91% and 3.13%, respectively, for the quarter ended September 30, 2020. For the nine months ended September 30, 2021 net interest income increased $935,000, or 0.7%, to $142.2 million compared to $141.3 million for the nine months ended September 30, 2020. The interest rate spread and net interest margin on a tax-equivalent basis were 2.92% and 3.07% for the nine months ended September 30, 2021 compared to 2.81% and 3.07% for the nine months ended September 30, 2020.

Total interest and dividend income totaled $52.6 million for the quarter ended September 30, 2021, a decrease of $9.0 million, or 14.6% from the quarter ended September 30, 2020, primarily due to a 12.8% decrease in the Company’s average loan balances to $4.947 billion. For the nine months ended September 30, 2021 the Company’s total interest and dividend income totaled $165.8 million, a decrease of $24.0 million, or 12.7%, from the nine months ended September 30, 2020, primarily due to a decrease in the Company’s average loan balances of $534.6 million, or 9.4%, to $5.177 billion.

Total interest expense totaled $6.6 million for the quarter ended September 30, 2021, a decrease of $6.2 million, or 48.6%, from the quarter ended September 30, 2020. Interest expense on deposits decreased to $3.1 million for the quarter ended September 30, 2021, a decrease of $5.7 million, or 64.8%, from the quarter ended September 30, 2020, primarily due to a decrease in the cost of average total deposits to 0.25% from 0.72% for the quarter ended September 30, 2020. The Company’s total cost of funds was 0.48% for the quarter ended September 30, 2021, a decrease of 42 basis points from 0.90% for the quarter ended September 30, 2020. For the nine months ended September 30, 2021, total interest expense totaled $23.6 million, a decrease of $24.9 million, or 51.4%, from the nine months ended September 30, 2020, primarily due to a decrease in the cost of average total deposits to 0.35% from 0.99% for the nine months ended September 30, 2020. The Company’s total cost of funds was 0.56% for the nine months ended September 30, 2021, down 60 basis points from the nine months ended September 30, 2020.

The Company’s provision for credit losses was $217,000 for the quarter ended September 30, 2021, compared to a provision of $7.2 million for the quarter ended September 30, 2020. For the nine months ended September 30, 2021 the Company recognized a provision reversal of $4.3 million compared to a provision of $17.5 million for the nine months ended September 30, 2020. The allowance for credit losses on loans was $60.8 million, or 1.24%, of total loans at September 30, 2021, compared to $68.8 million, or 1.25%, of total loans at December 31, 2020. Non-performing assets were $6.9 million, or 0.11% of total assets, at September 30, 2021, compared to $3.6 million, or 0.05% of total assets, at September 30, 2020.

Non-interest income was $3.1 million for the quarter ended September 30, 2021, a decrease of $509,000, or 14.2%, from the quarter ended September 30, 2020, primarily due to a decrease of $486,000 in mortgage banking gains, net. For the nine months ended September 30, 2021, non-interest income decreased $355,000, or 3.1%, to $11.0 million from $11.4 million for the nine months ended September 30, 2020, primarily due to a $4.2 million gain on sale of asset realized in 2020, a $623,000 decrease in loan fees and a $388,000 decrease in mortgage banking gains, net, partially offset by a $2.6 million valuation increase on marketable equity securities, net, a $1.5 million increase in gain on sale of equity securities, net, and a $976,000 increase in customer service fees.

Non-interest expenses were $24.5 million, or 1.57% of average assets for the quarter ended September 30, 2021, compared to $22.8 million, or 1.41% of average assets for the quarter ended September 30, 2020. The Company’s efficiency ratio was 47.53% for the quarter ended September 30, 2021 compared to 43.69% for the quarter ended September 30, 2020. For the nine months ended September 30, 2021, non-interest expenses increased $5.7 million, or 7.8%, to $78.1 million from $72.5 million for the nine months ended September 30, 2020, due primarily to $3.4 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 $2.3 million in merger and acquisition related expenses realized in the second and third quarters of 2021. For the nine months ended September 30, 2021 the efficiency ratio was 50.11% compared to 48.10% for the nine months ended September 30, 2020.

The Company recorded a provision for income taxes of $6.0 million for the quarter ended September 30, 2021, reflecting an effective tax rate of 24.7%, compared to $5.7 million, or an effective rate of 25.5%, for the quarter ended September 30, 2020. For the nine months ended September 30, 2021 the provision for income taxes was $20.2 million, reflecting an effective tax rate of 25.4%, compared to $15.8 million, reflecting an effective rate of 25.1% for the nine months ended September 30, 2020.

Total assets were $6.128 billion at September 30, 2021, down $491.5 million, or 7.4%, from $6.620 billion at December 31, 2020. Net loans were $4.850 billion at September 30, 2021, down $593.6 million, or 10.9%, from December 31, 2020, despite loan originations of $701.1 million during the nine months ended September 30, 2021. The allowance for credit losses on loans decreased $8.0 million, or 11.6%, to $60.8 million during the nine months ended September 30, 2021 from $68.8 million at December 31, 2020, primarily due to changes in the volume and mix of the loan portfolio.

Total deposits were $4.693 billion at September 30, 2021, down $388.0 million, or 7.6%, from $5.081 billion at December 31, 2020. Core deposits, which exclude certificates of deposit, decreased $50.3 million, or 1.3%, during the nine months ended September 30, 2021 to $3.812 billion, or 81.2% of total deposits, compared to 76.0% at December 31, 2020. The decrease in core deposits included the payoff of $175.6 million in brokered interest-bearing demand deposits. Certificates of deposit decreased $337.7 million during the nine months ended September 30, 2021, inclusive of a $87.0 million decrease in brokered certificates of deposit. Total borrowings were $560.6 million at September 30, 2021, down $147.6 million, or 20.8%, from December 31, 2020, primarily due to $50.0 million in matured advances from the FHLB and paying down all borrowings from the Federal Reserve’s PPPLF program.

Total stockholders’ equity increased $44.8 million, or 5.8%, to $813.7 million at September 30, 2021 from $768.9 million at December 31, 2020. The increase for the nine months ended September 30, 2021 was primarily due to net income of $59.2 million, partially offset by dividends of $0.30 per share totaling $15.1 million. Stockholders’ equity to assets was 13.28% at September 30, 2021, compared to 11.61% at December 31, 2020. Tangible book value per share increased to $15.02 at September 30, 2021 from $14.25 at December 31, 2020. Market price per share increased 39.2% to $20.76 at September 30, 2021 from $14.91 at December 31, 2020. The Company and the Bank exceeded the minimum requirement to be considered well capitalized at September 30, 2021.

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 43 branches in the greater Boston metropolitan area, including 42 full-service locations and one mobile branch. We offer a variety of deposit and loan products to individuals and businesses located in our primary market, which consists of Essex, Middlesex, Norfolk and Suffolk Counties, Massachusetts. For additional information, visit www.ebsb.com.

Forward Looking Statements

Certain statements herein constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by words such as “believes,” “will,” “expects,” “project,” “may,” “could,” “developments,” “strategic,” “launching,” “opportunities,” “anticipates,” “estimates,” “intends,” “plans,” “targets” and similar expressions. These statements are based upon the current beliefs and expectations of Meridian Bancorp, Inc.’s management and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements as a result of numerous factors. Factors that could cause such differences to exist include, but are not limited to, general economic conditions, the effects of any health pandemic, 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 SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Unaudited)

	September 30,2021			June 30,2021			December 31,2020			September 30,2020
	(Dollars in thousands)
ASSETS
Cash and due from banks	$	1,052,553		$	1,101,359		$	914,586		$	702,138
Securities available for sale, at fair value		9,170			9,810			11,326			12,183
Marketable equity securities, at fair value		10			9,112			12,189			16,203
Federal Home Loan Bank stock, at cost		26,184			26,184			30,658			33,282
Loans held for sale		2,408			5,711			8,224			11,662
Loans:
One- to four-family		468,796			489,310			564,146			604,037
Home equity lines of credit		54,170			56,032			68,721			73,581
Multi-family		765,262			809,317			880,552			941,409
Commercial real estate		2,243,290			2,295,030			2,499,660			2,595,124
Construction		707,503			645,622			731,432			666,375
Commercial and industrial		670,116			703,745			765,195			766,418
Consumer		9,296			9,749			10,707			12,213
Total loans		4,918,433			5,008,805			5,520,413			5,659,157
Allowance for credit losses on loans		(60,849	)		(64,300	)		(68,824	)		(67,639	)
Net deferred loan origination fees		(7,333	)		(7,930	)		(7,784	)		(7,717	)
Loans, net		4,850,251			4,936,575			5,443,805			5,583,801
Bank-owned life insurance		42,670			42,402			41,877			41,606
Premises and equipment, net		63,321			64,649			66,850			67,917
Accrued interest receivable		17,631			19,932			23,173			21,460
Deferred tax asset, net		20,865			21,437			21,355			17,007
Goodwill		20,378			20,378			20,378			20,378
Core deposit intangible		1,341			1,445			1,651			1,769
Other assets		21,592			28,147			23,776			37,327
Total assets	$	6,128,374		$	6,287,141		$	6,619,848		$	6,566,733

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non interest-bearing demand deposits	$	818,350		$	801,612		$	711,573		$	707,458
Interest-bearing demand deposits		1,331,001			1,270,484			1,364,548			1,353,153
Money market deposits		833,125			863,526			930,507			789,712
Regular savings and other deposits		829,194			866,191			855,329			850,810
Certificates of deposit		881,509			1,061,914			1,219,210			1,250,894
Total deposits		4,693,179			4,863,727			5,081,167			4,952,027
Short-term borrowings		—			—			—			25,000
Long-term debt		560,625			560,625			708,245			779,279
Accrued expenses and other liabilities		60,872			61,575			61,551			62,163
Total liabilities		5,314,676			5,485,927			5,850,963			5,818,469
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; 52,711,409, 52,608,747,
52,415,061 and 52,413,120 shares issued at September 30, 2021, June 30, 2021, December 31, 2020 and September 30, 2020, respectively		527			526			524			524
Additional paid-in capital		364,844			365,607			363,995			363,093
Retained earnings		464,384			451,100			420,297			400,649
Accumulated other comprehensive (loss) income		(184	)		(146	)		(58	)		91
Unearned compensation - ESOP; 2,191,745, 2,191,745, 2,191,745
and 2,222,186 shares at September 30, 2021, June 30, 2021, December 31, 2020 and September 30, 2020, respectively		(15,873	)		(15,873	)		(15,873	)		(16,093	)
Total stockholders' equity		813,698			801,214			768,885			748,264
Total liabilities and stockholders' equity	$	6,128,374		$	6,287,141		$	6,619,848		$	6,566,733

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

	Three Months Ended							Nine Months Ended
	September 30,2021			June 30,2021		September 30,2020		September 30,2021			September 30,2020
	(Dollars in thousands, except per share amounts)
Interest and dividend income:
Interest and fees on loans	$	51,964		$	54,918	$	60,918	$	164,044		$	186,400
Interest on debt securities		57			61		76		183			263
Dividends on marketable equity securities		40			90		118		254			357
Interest on certificates of deposit		—			—		—		—			1
Other interest and dividend income		555			361		494		1,286			2,753
Total interest and dividend income		52,616			55,430		61,606		165,767			189,774
Interest expense:
Interest on deposits		3,081			4,209		8,746		13,019			36,106
Interest on short-term borrowings		—			—		52		—			112
Interest on borrowings		3,491			3,453		3,999		10,535			12,278
Total interest expense		6,572			7,662		12,797		23,554			48,496
Net interest income		46,044			47,768		48,809		142,213			141,278
Provision (reversal) for credit losses		217			749		7,163		(4,270	)		17,529
Net interest income, after provision (reversal) for credit losses		45,827			47,019		41,646		146,483			123,749
Non-interest income:
Customer service fees		2,530			2,485		2,193		7,214			6,238
Loan fees		146			39		264		280			903
Mortgage banking gains, net		218			45		704		845			1,233
Gain on sale of asset		—			—		—		—			4,195
(Loss) gain on marketable equity securities, net		(104	)		200		122		1,881			(2,197	)
Income from bank-owned life insurance		268			264		272		793			842
Other income		5			17		17		31			185
Total non-interest income		3,063			3,050		3,572		11,044			11,399
Non-interest expenses:
Salaries and employee benefits		13,941			13,939		13,426		43,396			43,198
Occupancy and equipment		3,644			3,900		3,734		11,775			11,397
Data processing		2,354			2,273		2,196		6,868			6,466
Marketing and advertising		663			1,032		554		2,591			2,814
Professional services		704			691		688		2,125			2,380
Deposit insurance		406			345		692		1,264			1,967
Merger and acquisition		1,158			1,115		—		2,273			—
Other general and administrative		1,677			4,738		1,540		7,831			4,229
Total non-interest expenses		24,547			28,033		22,830		78,123			72,451
Income before income taxes		24,343			22,036		22,388		79,404			62,697
Provision for income taxes		6,007			5,490		5,714		20,202			15,767
Net income	$	18,336		$	16,546	$	16,674	$	59,202		$	46,930

Earnings per share:
Basic	$	0.36		$	0.33	$	0.33	$	1.18		$	0.93
Diluted	$	0.36		$	0.32	$	0.33	$	1.17		$	0.93
Weighted average shares outstanding:
Basic		50,470,710			50,375,468		50,169,024		50,362,807			50,311,231
Diluted		50,865,435			50,943,160		50,248,048		50,792,228			50,459,326

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

	Three Months Ended
	September 30, 2021									June 30, 2021									September 30, 2020
	AverageBalance		Interest(1)				Yield/Cost (1)(6)			AverageBalance		Interest(1)				Yield/Cost (1)(6)			AverageBalance		Interest(1)				Yield/Cost (1)(6)
	(Dollars in thousands)
Assets:
Interest-earning assets:
Loans (2)	$	4,947,057	$	52,723				4.23	%	$	5,160,579	$	55,702				4.33	%	$	5,671,957	$	61,682				4.33	%
Securities and certificates of deposit		14,886		108				2.88			19,445		171				3.53			29,263		219				2.98
Other interest-earning assets (3)		1,128,550		555				0.20			1,099,850		361				0.13			604,916		494				0.32
Total interest-earning assets		6,090,493		53,386				3.48			6,279,874		56,234				3.59			6,306,136		62,395				3.94
Noninterest-earning assets		158,025									154,470									161,886
Total assets	$	6,248,518								$	6,434,344								$	6,468,022
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Interest-bearing demand deposits	$	1,312,061	$	669				0.20		$	1,403,276	$	959				0.27		$	1,291,341	$	1,946				0.60
Money market deposits		866,553		326				0.15			859,189		471				0.22			769,571		1,270				0.66
Regular savings and other deposits		849,253		217				0.10			870,508		333				0.15			834,368		966				0.46
Certificates of deposit		978,573		1,869				0.76			1,116,928		2,446				0.88			1,262,433		4,564				1.44
Total interest-bearing deposits		4,006,440		3,081				0.31			4,249,901		4,209				0.40			4,157,713		8,746				0.84
Borrowings		560,625		3,491				2.47			560,625		3,453				2.47			804,281		4,051				2.00
Total interest-bearing liabilities		4,567,065		6,572				0.57			4,810,526		7,662				0.64			4,961,994		12,797				1.03
Noninterest-bearing demand deposits		814,961									777,688									702,717
Other noninterest-bearing liabilities		54,669									50,409									57,636
Total liabilities		5,436,695									5,638,623									5,722,347
Total stockholders' equity		811,823									795,721									745,675
Total liabilities and stockholders' equity	$	6,248,518								$	6,434,344								$	6,468,022
Net interest-earning assets	$	1,523,428								$	1,469,348								$	1,344,142
Fully tax-equivalent net interest income				46,814									48,572									49,598
Less: tax-equivalent adjustments				(770	)								(803	)								(789	)
Net interest income			$	46,044								$	47,769								$	48,809
Interest rate spread (1)(4)								2.91	%								2.95	%								2.91	%
Net interest margin (1)(5)								3.05	%								3.10	%								3.13	%
Average interest-earning assets to average
interest-bearing liabilities				133.36		%							130.54		%							127.09		%

Supplemental Information:
Total deposits, including noninterest-bearing
demand deposits	$	4,821,401	$	3,081				0.25	%	$	5,027,589	$	4,209				0.34	%	$	4,860,430	$	8,746				0.72	%
Total deposits and borrowings, including
noninterest-bearing demand deposits	$	5,382,026	$	6,572				0.48	%	$	5,588,214	$	7,662				0.55	%	$	5,664,711	$	12,797				0.90	%

____________________
(1)	Income on debt securities, marketable 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 September 30, 2021, June 30, 2021, and September 30, 2020, yields on loans before tax-equivalent adjustments were 4.17%, 4.27% and 4.27%, respectively, yields on securities and certificates of deposit before tax-equivalent adjustments were 2.59%, 3.11% and 2.64%, respectively, and yields on total interest-earning assets before tax-equivalent adjustments were 3.43%, 3.54% and 3.89%, respectively. Interest rate spread before tax-equivalent adjustments for the three months ended September 30, 2021, June 30, 2021 and September 30, 2020 was 2.86%, 2.90% and 2.86%, respectively, while net interest margin before tax-equivalent adjustments for the three months ended September 30, 2021, June 30, 2021 and September 30, 2020 was 3.00%, 3.05% and 3.08%, 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 SUBSIDIARIESNET INTEREST INCOME ANALYSIS(Unaudited)

	Nine Months Ended
	September 30, 2021									September 30, 2020
	AverageBalance		Interest (1)				Yield/Cost (1)			AverageBalance		Interest (1)				Yield/Cost (1)
	(Dollars in thousands)
Assets:
Interest-earning assets:
Loans (2)	$	5,177,216	$	166,379				4.30	%	$	5,711,852	$	188,603				4.41	%
Securities and certificates of deposit		18,368		479				3.49			29,201		676				3.09
Other interest-earning assets (3)		1,095,483		1,286				0.16			495,054		2,753				0.74
Total interest-earning assets		6,291,067		168,144				3.57			6,236,107		192,032				4.11
Noninterest-earning assets		158,898									159,039
Total assets	$	6,449,965								$	6,395,146

Liabilities and stockholders' equity:
Interest-bearing liabilities:
Interest-bearing demand deposits	$	1,391,975	$	3,037				0.29		$	1,289,479	$	8,736				0.90
Money market deposits		867,744		1,577				0.24			728,024		4,551				0.84
Regular savings and other deposits		860,355		1,085				0.17			860,593		4,493				0.70
Certificates of deposit		1,105,381		7,320				0.89			1,356,139		18,326				1.81
Total interest-bearing deposits		4,225,455		13,019				0.41			4,234,235		36,106				1.14
Borrowings		596,646		10,535				2.36			738,058		12,390				2.24
Total interest-bearing liabilities		4,822,101		23,554				0.65			4,972,293		48,496				1.30
Noninterest-bearing demand deposits		775,951									630,072
Other noninterest-bearing liabilities		52,470									56,420
Total liabilities		5,650,522									5,658,785
Total stockholders' equity		796,443									736,361
Total liabilities and stockholders' equity	$	6,446,965								$	6,395,146
Net interest-earning assets	$	1,468,966								$	1,263,814
Fully tax-equivalent net interest income				144,590									143,536
Less: tax-equivalent adjustments				(2,377	)								(2,258	)
Net interest income			$	142,213								$	141,278
Interest rate spread (1)(4)								2.92	%								2.81	%
Net interest margin (1)(5)								3.07	%								3.07	%
Average interest-earning assets to average
interest-bearing liabilities				130.46		%							125.42		%

Supplemental Information:
Total deposits, including noninterest-bearing
demand deposits	$	5,001,406	$	13,019				0.35	%	$	4,864,307	$	36,106				0.99	%
Total deposits and borrowings, including
noninterest-bearing demand deposits	$	5,598,052	$	23,554				0.56	%	$	5,602,365	$	48,496				1.16	%

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(1)	Income on debt securities, marketable 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 nine months ended September 30, 2021 and 2020, yields on loans before tax-equivalent adjustments were 4.24%, and 4.36%, respectively, yields on securities and certificates of deposit before tax-equivalent adjustments were 3.18% and 2.84%, respectively, and yields on total interest-earning assets before tax-equivalent adjustments were 3.52% and 4.06%, respectively. Interest rate spread before tax-equivalent adjustments for the nine months ended September 30, 2021 and 2020 was 2.87% and 2.76%, respectively, while net interest margin before tax-equivalent adjustments for the nine months ended September 30, 2021 and 2020 was 3.02%, and 3.03%, 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 SUBSIDIARIESSELECTED FINANCIAL HIGHLIGHTS(Unaudited)

	Three Months Ended									Nine Months Ended
	September 30,2021			June 30,2021			September 30,2020			September 30,2021			September 30,2020
Key Performance Ratios
Return on average assets (1)		1.17	%		1.03	%		1.03	%		1.22	%		0.98	%
Return on average equity (1)		9.03			8.32			8.94			9.91			8.50
Interest rate spread (1) (2)		2.91			2.95			2.91			2.92			2.81
Net interest margin (1) (3)		3.05			3.10			3.13			3.07			3.07
Non-interest expense to average assets (1)		1.57			1.74			1.41			1.61			1.51
Efficiency ratio (4)		47.53			53.18			43.69			50.11			48.10

	September 30,2021			June 30,2021			December 31,2020			September 30,2020
	(Dollars in thousands)
Asset Quality
Non-accrual loans:
One- to four-family	$	1,605		$	1,633		$	2,617		$	3,041
Home equity lines of credit		339			20			20			20
Commercial real estate		5,005			8,176			—			—
Commercial and industrial		—			635			527			541
Total non-accrual loans		6,949			10,464			3,164			3,602
Foreclosed assets		—			—			—			—
Total non-performing assets	$	6,949		$	10,464		$	3,164		$	3,602

Allowance for credit losses on loans/total loans		1.24	%		1.28	%		1.25	%		1.20	%
Allowance for credit losses on loans/non-accrual loans		875.65			614.49			2,175.22			1,877.82
Non-accrual loans/total loans		0.14			0.21			0.06			0.06
Non-accrual loans/total assets		0.11			0.17			0.05			0.05
Non-performing assets/total assets		0.11			0.17			0.05			0.05

Capital and Share Related
Stockholders' equity to total assets		13.28	%		12.74	%		11.61	%		11.39	%
Book value per share	$	15.44		$	15.23		$	14.67		$	14.28
Tangible book value per share (5)	$	15.02		$	14.81		$	14.25		$	13.85
Market value per share	$	20.76		$	20.46		$	14.91		$	10.35
Shares outstanding		52,711,409		52,608,747			52,415,061			52,413,120

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(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, excluding merger and acquisition expenses, divided by the sum of net interest income and non-interest income excluding gains and losses on marketable equity securities and gains and losses on sale of assets. The efficiency ratio is a common measure used by banks to understand expenses related to the generation of revenue. We have removed gains and losses on marketable equity securities, gains and losses on sale of assets, and merger and acquisition expenses as management deems them to be either discretionary or market driven and not representative of operating performance. Presented on a basis including gains and losses on marketable equity securities, gains and losses on sale of assets, and merger and acquisition expenses the efficiency ratio was 49.99%, 55.16% and 43.58% for the quarters ended September 30, 2021, June 30, 2021 and September 30, 2020, respectively and 50.98% and 47.45% for the nine months ended September 30, 2021 and 2020, respectively.
(5)	Tangible book value per share represents total stockholders’ equity less goodwill and other intangible assets divided by the number of shares outstanding.