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   %

____________________
(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    

____________________
(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.

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

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