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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

 

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended March 31, 2021

OR

 

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from              to             

Commission file number 001-36573

 

Meridian Bancorp, Inc.

(Exact name of registrant as specified in its charter)

 

 

Maryland

46-5396964

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

67 Prospect Street,

Peabody, Massachusetts

01960

(Address of Principal Executive Offices)

Zip Code

 

(617) 567-1500

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

 

 

Securities Registered Pursuant to Section 12(b) of the Act:

 

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common Stock

EBSB

The NASDAQ Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

  

Accelerated filer

Non-accelerated filer

 

 

  

Small reporting company

 

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes      No    

As of May 3, 2021, there were 52,454,271 outstanding shares of the Registrant’s common stock.

 

 

 


 

MERIDIAN BANCORP, INC.

FORM 10-Q

 

INDEX

 

 

 

 

 

Page

PART I.

 

FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Financial Statements (Unaudited)

 

 

 

 

 

 

 

 

 

Consolidated Balance Sheets at March 31, 2021 and December 31, 2020

 

3

 

 

 

 

 

 

 

Consolidated Statements of Net Income for the three months ended March 31, 2021 and 2020

 

4

 

 

 

 

 

 

 

Consolidated Statements of Comprehensive Income for the three months ended March 31, 2021 and 2020

 

5

 

 

 

 

 

 

 

Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2021 and 2020

 

6

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020

 

7

 

 

 

 

 

 

 

Notes to Consolidated Financial Statements

 

8

 

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

22

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

35

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

36

 

 

 

 

 

PART II.

 

OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

37

 

 

 

 

 

Item 1A.

 

Risk Factors

 

37

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

37

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

37

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

37

 

 

 

 

 

Item 5.

 

Other Information

 

37

 

 

 

 

 

Item 6.

 

Exhibits

 

38

 

 

 

 

 

 

 

Signatures

 

40

 

2


 

PART I – FINANCIAL INFORMATION

 

ITEM 1.     FINANCIAL STATEMENTS

MERIDIAN BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

March 31,

 

 

December 31,

 

 

2021

 

 

2020

 

 

(Dollars in thousands)

 

ASSETS

 

Cash and due from banks

$

1,034,107

 

 

$

914,586

 

Securities available for sale, at fair value

 

10,518

 

 

 

11,326

 

Marketable equity securities, at fair value

 

8,900

 

 

 

12,189

 

Federal Home Loan Bank stock, at cost

 

28,447

 

 

 

30,658

 

Loans held for sale

 

7,422

 

 

 

8,224

 

Loans, net of deferred fees and costs

 

5,287,431

 

 

 

5,512,629

 

Less: allowance for credit losses on loans

 

(63,436

)

 

 

(68,824

)

Loans, net

 

5,223,995

 

 

 

5,443,805

 

Bank-owned life insurance

 

42,138

 

 

 

41,877

 

Premises and equipment, net

 

65,394

 

 

 

66,850

 

Accrued interest receivable

 

22,498

 

 

 

23,173

 

Deferred tax asset, net

 

21,418

 

 

 

21,355

 

Goodwill

 

20,378

 

 

 

20,378

 

Core deposit intangible

 

1,548

 

 

 

1,651

 

Other assets

 

17,162

 

 

 

23,776

 

Total assets

$

6,503,925

 

 

$

6,619,848

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

Deposits:

 

 

 

 

 

 

 

Non interest-bearing

$

751,809

 

 

$

711,573

 

Interest-bearing

 

4,345,560

 

 

 

4,369,594

 

Total deposits

 

5,097,369

 

 

 

5,081,167

 

Long-term debt

 

560,625

 

 

 

708,245

 

Accrued expenses and other liabilities

 

56,847

 

 

 

61,551

 

Total liabilities

 

5,714,841

 

 

 

5,850,963

 

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; 52,430,554  and

   52,415,061 shares issued and outstanding at March 31, 2021 and December 31,

   2020, respectively

 

524

 

 

 

524

 

Additional paid-in capital

 

364,751

 

 

 

363,995

 

Retained earnings

 

439,593

 

 

 

420,297

 

Accumulated other comprehensive loss

 

(131

)

 

 

(58

)

Unearned compensation - ESOP, 2,161,304 and 2,191,745 shares at March 31, 2021

   and December 31, 2020, respectively

 

(15,653

)

 

 

(15,873

)

Total stockholders' equity

 

789,084

 

 

 

768,885

 

Total liabilities and stockholders' equity

$

6,503,925

 

 

$

6,619,848

 

 

See accompanying notes to consolidated financial statements.

 

3


 

MERIDIAN BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF NET INCOME

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

 

 

(Dollars in thousands, except per share amounts)

 

Interest and dividend income:

 

 

 

 

 

 

 

 

Interest and fees on loans

 

$

57,162

 

 

$

64,037

 

Interest on debt securities

 

 

65

 

 

 

100

 

Dividends on marketable equity securities

 

 

124

 

 

 

94

 

Other interest and dividend income

 

 

370

 

 

 

1,787

 

Total interest and dividend income

 

 

57,721

 

 

 

66,018

 

Interest expense:

 

 

 

 

 

 

 

 

Interest on deposits

 

 

5,729

 

 

 

16,769

 

Interest on short-term borrowings

 

 

 

 

 

8

 

Interest on borrowings

 

 

3,591

 

 

 

4,143

 

Total interest expense

 

 

9,320

 

 

 

20,920

 

Net interest income

 

 

48,401

 

 

 

45,098

 

Provision (reversal) for credit losses

 

 

(5,236

)

 

 

725

 

Net interest income, after provision (reversal) for credit losses

 

 

53,637

 

 

 

44,373

 

Non-interest income:

 

 

 

 

 

 

 

 

Customer service fees

 

 

2,199

 

 

 

2,097

 

Loan fees

 

 

95

 

 

 

674

 

Mortgage banking gains, net

 

 

582

 

 

 

411

 

Gain (loss) on marketable equity securities, net

 

 

1,785

 

 

 

(4,344

)

Income from bank-owned life insurance

 

 

261

 

 

 

297

 

Other income

 

 

9

 

 

 

34

 

Total non-interest income (loss)

 

 

4,931

 

 

 

(831

)

Non-interest expenses:

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

15,516

 

 

 

15,914

 

Occupancy and equipment

 

 

4,231

 

 

 

3,924

 

Data processing

 

 

2,241

 

 

 

2,137

 

Marketing and advertising

 

 

896

 

 

 

1,230

 

Professional services

 

 

730

 

 

 

997

 

Deposit insurance

 

 

513

 

 

 

669

 

Other general and administrative

 

 

1,416

 

 

 

1,449

 

Total non-interest expenses

 

 

25,543

 

 

 

26,320

 

Income before income taxes

 

 

33,025

 

 

 

17,222

 

Provision for income taxes

 

 

8,705

 

 

 

4,245

 

Net income

 

$

24,320

 

 

$

12,977

 

Earnings per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.48

 

 

$

0.26

 

Diluted

 

$

0.48

 

 

$

0.25

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

50,239,611

 

 

 

50,634,983

 

Diluted

 

 

50,565,459

 

 

 

50,920,259

 

 

See accompanying notes to consolidated financial statements.

 

4


 

MERIDIAN BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

 

 

Three Months Ended March 31,

 

 

2021

 

 

2020

 

 

(In thousands)

 

Net income

$

24,320

 

 

$

12,977

 

Other comprehensive income:

 

 

 

 

 

 

 

Securities available for sale:

 

 

 

 

 

 

 

Net unrealized (loss) gain

 

(102

)

 

 

230

 

Tax effect

 

29

 

 

 

(64

)

Total other comprehensive (loss) income

 

(73

)

 

 

166

 

Comprehensive income

$

24,247

 

 

$

13,143

 

 

 

 

 

 

 

 

 

See accompanying notes to consolidated financial statements.

 

5


 

MERIDIAN BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Three Months Ended March 31, 2021 and 2020

(Unaudited)

 

 

 

Shares of

Common Stock

Outstanding

 

 

Common

Stock

 

 

Additional

Paid-in

Capital

 

 

Retained

Earnings

 

 

Accumulated

Other

Comprehensive

Income (Loss)

 

 

Unearned

Compensation -

ESOP

 

 

Total

 

 

 

(Dollars in thousands)

 

Three Months Ended March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2020

 

 

52,415,061

 

 

$

524

 

 

$

363,995

 

 

$

420,297

 

 

$

(58

)

 

$

(15,873

)

 

$

768,885

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

24,320

 

 

 

(73

)

 

 

 

 

 

24,247

 

Dividends declared ($0.10 per share)

 

 

 

 

 

 

 

 

 

 

 

(5,024

)

 

 

 

 

 

 

 

 

(5,024

)

ESOP shares committed to be allocated

   (30,441 shares)

 

 

 

 

 

 

 

 

292

 

 

 

 

 

 

 

 

 

220

 

 

 

512

 

Share-based compensation expense -

   restricted stock, net of awards forfeited

 

 

(2,800

)

 

 

 

 

 

235

 

 

 

 

 

 

 

 

 

 

 

 

235

 

Share-based compensation expense -

   stock options, net of awards forfeited

 

 

 

 

 

 

 

 

137

 

 

 

 

 

 

 

 

 

 

 

 

137

 

Stock options exercised

 

 

18,293

 

 

 

 

 

 

92

 

 

 

 

 

 

 

 

 

 

 

 

92

 

Balance at March 31, 2021

 

 

52,430,554

 

 

$

524

 

 

$

364,751

 

 

$

439,593

 

 

$

(131

)

 

$

(15,653

)

 

$

789,084

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

        

 

 

 

 

Three Months Ended March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2019

 

 

53,377,506

 

 

$

534

 

 

$

377,213

 

 

$

365,742

 

 

$

(147

)

 

$

(16,755

)

 

$

726,587

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

12,977

 

 

 

166

 

 

 

 

 

 

13,143

 

Dividends declared ($0.08 per share)

 

 

 

 

 

 

 

 

 

 

 

(4,007

)

 

 

 

 

 

 

 

 

(4,007

)

Repurchased stock related to buyback

   program

 

 

(1,000,000

)

 

 

(10

)

 

 

(17,670

)

 

 

 

 

 

 

 

 

 

 

 

(17,680

)

ESOP shares committed to be allocated

   (30,441 shares)

 

 

 

 

 

 

 

 

287

 

 

 

 

 

 

 

 

 

220

 

 

 

507

 

Share-based compensation expense -

   restricted stock, net of awards forfeited

 

 

(5,245

)

 

 

 

 

 

640

 

 

 

 

 

 

 

 

 

 

 

 

640

 

Share-based compensation expense -

   stock options, net of awards forfeited

 

 

 

 

 

 

 

 

380

 

 

 

 

 

 

 

 

 

 

 

 

380

 

Stock options exercised

 

 

30,134

 

 

 

 

 

 

51

 

 

 

 

 

 

 

 

 

 

 

 

51

 

Balance at March 31, 2020

 

 

52,402,395

 

 

$

524

 

 

$

360,901

 

 

$

374,712

 

 

$

19

 

 

$

(16,535

)

 

$

719,621

 

 

See accompanying notes to consolidated financial statements.  

6


MERIDIAN BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

 

 

(In thousands)

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net income

 

$

24,320

 

 

$

12,977

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Net amortization of acquisition fair value adjustments

 

 

32

 

 

 

16

 

Amortization of core deposit intangible

 

 

103

 

 

 

118

 

ESOP shares expense

 

 

512

 

 

 

507

 

Provision (reversal) for credit losses

 

 

(5,236

)

 

 

725

 

Accretion of net deferred loan origination fees

 

 

(1,664

)

 

 

(959

)

Net amortization of securities available for sale

 

 

15

 

 

 

13

 

Depreciation and amortization expense

 

 

919

 

 

 

841

 

(Gain) loss on marketable equity securities, net

 

 

(1,785

)

 

 

4,344

 

Deferred income tax benefit

 

 

(34

)

 

 

(120

)

Income from bank-owned life insurance

 

 

(261

)

 

 

(297

)

Share-based compensation expense

 

 

372

 

 

 

1,020

 

Net changes in:

 

 

 

 

 

 

 

 

Loans held for sale

 

 

802

 

 

 

(948

)

Accrued interest receivable

 

 

675

 

 

 

613

 

Other assets

 

 

6,614

 

 

 

(9,052

)

Accrued expenses and other liabilities

 

 

(5,078

)

 

 

1,168

 

Net cash provided by operating activities

 

 

20,306

 

 

 

10,966

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Activity in securities, at fair value:

 

 

 

 

 

 

 

 

Proceeds from maturities, calls and principal payments

 

 

693

 

 

 

1,473

 

Proceeds from sales

 

 

6,484

 

 

 

541

 

Purchases

 

 

(1,412

)

 

 

(2,772

)

Loan principal payments, net

 

 

226,673

 

 

 

57,898

 

Proceeds from bank-owned life insurance distribution

 

 

 

 

 

391

 

Purchases of premises and equipment

 

 

(105

)

 

 

(1,650

)

Purchase of Federal Home Loan Bank stock

 

 

 

 

 

(4,331

)

Redemption of Federal Home Loan Bank stock

 

 

2,211

 

 

 

 

Net cash provided by investing activities

 

 

234,544

 

 

 

51,550

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Net change in deposits

 

 

16,207

 

 

 

(99,579

)

Proceeds from Federal Home Loan Bank advances with maturities of three months or more

 

 

 

 

 

135,000

 

Repayment of Federal Home Loan Bank advances with maturities of three months or more

 

 

(50,000

)

 

 

(25,372

)

Repayment of Federal Reserve PPPLF borrowings with maturities of three months or more

 

 

(97,620

)

 

 

 

Cash dividends paid on common stock

 

 

(4,008

)

 

 

(4,270

)

Stock options exercised, net of cash paid in connection with income taxes

 

 

92

 

 

 

51

 

Repurchase of common stock

 

 

 

 

 

(17,680

)

Net cash used by financing activities

 

 

(135,329

)

 

 

(11,850

)

Net change in cash and cash equivalents

 

 

119,521

 

 

 

50,666

 

Cash and cash equivalents at beginning of period

 

 

914,586

 

 

 

406,382

 

Cash and cash equivalents at end of period

 

$

1,034,107

 

 

$

457,048

 

Supplemental cash flow information:

 

 

 

 

 

 

 

 

Interest paid on deposits

 

$

6,453

 

 

$

18,246

 

Interest paid on borrowings

 

 

3,839

 

 

 

4,115

 

Income taxes paid, net of refunds

 

 

3,958

 

 

 

3,075

 

 

See accompanying notes to consolidated financial statements.

7


MERIDIAN BANCORP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The consolidated financial statements include the accounts of Meridian Bancorp, Inc. (the “Company”) and all other entities in which it has a controlling financial interest. The Company owns 100% of the outstanding shares of East Boston Savings Bank (the “Bank”). The Bank’s subsidiaries include: (1) Prospect, Inc., which engages in securities transactions on its own behalf; (2) EBOSCO, LLC, which can hold foreclosed real estate; and (3) East Boston Investment Services, Inc., which is authorized for third-party investment sales and is currently inactive and Investment in Affordable Home Ownership, LLC, which is authorized to form partnerships with agencies to develop projects for affordable housing and is currently inactive. All significant intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by such generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Such adjustments were of a normal recurring nature. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the entire year or any other interim period. For additional information, refer to the financial statements and footnotes thereto of the Company included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 which was filed with the Securities and Exchange Commission (“SEC”) on March 1, 2021, and is available through the SEC’s website at www.sec.gov.

In preparing consolidated financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated balance sheet and reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. A material estimate that is particularly susceptible to significant change in the near term relates to the determination of the allowance for credit losses.

On April 22, 2021, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") with Independent Bank Corp., a Massachusetts corporation ("Independent"), Bradford Merger Sub Inc. a direct, wholly owned subsidiary of Independent (“Merger Sub”), Rockland Trust Company, a Massachusetts-chartered trust company and wholly owned subsidiary of Independent ("Rockland Trust"), and the Bank. Pursuant to the Merger Agreement, Merger Sub will merge with and into the Company (the "Merger"), with the Company being the surviving corporation, and as soon as reasonably practicable following the Merger, the Company will merge with and into Independent, with Independent as the surviving entity (the “Holdco Merger”). The Merger Agreement further provides that immediately following the Holdco Merger, the Bank  will merge with and into Rockland Trust, with Rockland Trust as the surviving company (the “Bank Merger” and, together with the Merger and the Holdco Merger, the “Transaction”). Upon completion of the Merger, each outstanding share of Company common stock will convert into the right to receive 0.275 shares of Independent common stock (the "Merger Consideration"). Each outstanding option to acquire a share of Company common stock, whether or not vested, will be converted into the right to receive cash in an amount equal to the amount by which the per share cash equivalent of the Merger Consideration (calculated in accordance with the Merger Agreement) exceeds the exercise price of the option. In addition, each award of Company restricted stock, whether or not vested, that is outstanding immediately prior to the effective time of the Merger will fully vest and be cancelled and converted into the right to receive the Merger Consideration. Completion of the Merger is subject to customary closing conditions, including receipt of regulatory approvals and the approvals of the Company's stockholders and Independent's shareholders. The Company anticipates that the Merger will close in the fourth quarter of 2021.

8


 

 

2. EARNINGS PER SHARE

Basic earnings per share excludes dilution and is calculated by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during the period. Rights to dividends on unvested stock awards are non-forfeitable, therefore these unvested stock awards are considered outstanding in the computation of basic earnings per share. Diluted earnings per share is computed in a manner similar to that of basic earnings per share except that the weighted-average number of common shares outstanding is increased to include the number of incremental common shares (computed using the treasury method) that would have been outstanding if all potentially dilutive common stock equivalents (such as options) were issued during the period. Unallocated common shares held by the ESOP are shown as a reduction in stockholders’ equity and are not included in the weighted-average number of common shares outstanding for either basic or diluted earnings per share calculations.

Basic and diluted earnings per share have been computed based on the following:

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

 

 

(Dollars in thousands, except share information)

 

Net income available to common stockholders

 

$

24,320

 

 

$

12,977

 

Basic weighted average shares outstanding

 

 

50,239,611

 

 

 

50,634,983

 

Effect of dilutive stock options

 

 

325,848

 

 

 

285,276

 

Diluted weighted average shares outstanding

 

 

50,565,459

 

 

 

50,920,259

 

Earnings per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.48

 

 

$

0.26

 

Diluted

 

$

0.48

 

 

$

0.25

 

 

For the three months ended March 31, 2021 and 2020, options for the exercise of 53,381 shares and 93,545 shares, respectively, were not included in the calculation of diluted earnings per share because to do so would have been anti-dilutive. An anti-dilutive option exists when the average stock price for the period is less than the exercise price of the option.

3. SECURITIES

Securities Available for Sale

The amortized cost and fair values of securities available for sale, with gross unrealized gains and losses, follows:

 

 

 

 

 

 

 

 

 

Gross

 

 

Gross

 

 

 

 

 

 

 

Amortized

 

 

 

 

Unrealized

 

 

Unrealized

 

 

Fair

 

 

 

Cost

 

 

 

 

Gains

 

 

Losses

 

 

Value

 

 

 

(In thousands)

 

March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government-sponsored enterprises

 

$

346

 

 

 

 

$

17

 

 

$

 

 

$

363

 

Municipal bonds

 

 

2,073

 

 

 

 

 

125

 

 

 

 

 

 

2,198

 

Residential mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government-sponsored enterprises

 

 

7,006

 

 

 

 

 

290

 

 

 

(10

)

 

 

7,286

 

Private label

 

 

563

 

 

 

 

 

108

 

 

 

 

 

 

671

 

Total securities available for sale

 

$

9,988

 

 

 

 

$

540

 

 

$

(10

)

 

$

10,518

 

December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government-sponsored enterprises

 

$

346

 

 

 

 

$

21

 

 

$

 

 

$

367

 

Municipal bonds

 

 

2,075

 

 

 

 

 

146

 

 

 

 

 

 

2,221

 

Residential mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government-sponsored enterprises

 

 

7,706

 

 

 

 

 

359

 

 

 

(10

)

 

 

8,055

 

Private label

 

 

567

 

 

 

 

 

116

 

 

 

 

 

 

683

 

Total securities available for sale

 

$

10,694

 

 

 

 

$

642

 

 

$

(10

)

 

$