×

Meridian Interstate Bancorp, Inc. Reports Net Income for the Second Quarter and Six Months Ended June 30, 2014

BOSTON, July 22, 2014 (GLOBE NEWSWIRE) -- Meridian Interstate Bancorp, Inc. (the "Company" or "Meridian") (Nasdaq:EBSB), the holding company for East Boston Savings Bank (the "Bank"), which also operates under the name Mt. Washington Bank, a Division of East Boston Savings Bank ("Mt. Washington"), announced net income of $5.5 million, or $0.25 per diluted share, for the quarter ended June 30, 2014 compared to $3.0 million, or $0.14 per diluted share, for the quarter ended June 30, 2013. For the six months ended June 30, 2014, net income was $10.3 million, or $0.47 per diluted share compared to $6.1 million, or $0.28 per diluted share, for the six months ended June 30, 2013. The Company's return on average assets was 0.78% for the quarter ended June 30, 2014 compared to 0.50% for the quarter ended June 30, 2013. For the six months ended June 30, 2014, the Company's return on average assets was 0.74% compared to 0.51% for the six months ended June 30, 2013. The Company's return on average equity was 8.52% for the quarter ended June 30, 2014 compared to 5.03% for the quarter ended June 30, 2013. For the six months ended June 30, 2014, the Company's return on average equity was 8.06% compared to 5.12% for the six months ended June 30, 2013. Total assets increased $373.8 million, or 13.9%, to $3.056 billion at June 30, 2014 from $2.682 billion at December 31, 2013, reflecting cash proceeds of $206.9 million from stock subscription deposits received in connection with the Company's second step conversion during the second quarter of 2014.

Richard J. Gavegnano, Chairman, President and Chief Executive Officer, said, "I am pleased to report net income of $5.5 million, or $0.25 per share, for the second quarter and $10.3 million, or $0.47 per share, for the first half of 2014. This represents growth in net income of 82% from the second quarter and 69% from the first half of last year. I was also gratified to see the resulting increases in our return on assets and return on equity. We recently completed the subscription and community offering and syndicated community offering portions of the stock offering in connection with our previously announced plans to become a fully public company. The closing of the conversion and stock offering is expected to occur shortly after the receipt of the customary regulatory approvals."

Net interest income increased $2.9 million, or 15.9%, to $21.2 million for the quarter ended June 30, 2014 from $18.3 million for the quarter ended June 30, 2013. The interest rate spread and net interest margin were 3.00% and 3.16% for both the quarters ended June 30, 2014 and June 30, 2013. For the six months ended June 30, 2014, net interest income increased $5.9 million, or 16.4%, to $41.8 million from $35.9 million for the six months ended June 30, 2013. The net interest rate spread and net interest margin were 3.03% and 3.18%, respectively, for the six months ended June 30, 2014 compared to 3.05% and 3.20%, respectively, for the six months ended June 30, 2013. The increases in net interest income were due primarily to loan growth along with declines in the cost of funds, partially offset by declines in yields on interest-earning assets and deposit growth for the second quarter and six months ended June 30, 2014 compared to the same periods in 2013.

The average balance of the Company's loan portfolio increased $427.4 million, or 22.1%, to $2.365 billion, which was partially offset by the decline in the yield on loans of 24 basis points to 4.26% for the quarter ended June 30, 2014 compared to the quarter ended June 30, 2013. The average balance of the Company's total deposits increased $334.7 million, or 16.8%, to $2.331 billion, which was partially offset by the decline in cost of total deposits of seven basis points to 0.76% for the quarter ended June 30, 2014 compared to the quarter ended June 30, 2013. The Company's yield on interest-earning assets declined 10 basis points to 3.91% for the quarter ended June 30, 2014 compared to 4.01% for the quarter ended June 30, 2013, while the cost of funds declined 11 basis points to 0.80% for the quarter ended June 30, 2014 compared to 0.91% for the quarter ended June 30, 2013.

Mr. Gavegnano noted, "Our net interest income rose for the twelfth consecutive quarter reflecting growth of $367 million, or 18%, in total loans and $307 million, or 22%, in core deposits during the past year. As a result of this strong growth and continuing declines in our cost of funds, the net interest margin for both the second quarter and first half of 2014 has remained essentially even with the same periods last year."

The Company's provision for loan losses was $696,000 for the quarter ended June 30, 2014 compared to $3.2 million for the quarter ended June 30, 2013. For the six months ended June 30, 2014, the provision for loan losses was $829,000 compared to $4.5 million for the six months ended June 30, 2013. The change was based on management's assessment of loan portfolio growth and composition changes, a decline in historical charge-off trends, an ongoing evaluation of credit quality and improving economic conditions. The allowance for loan losses was $26.1 million or 1.09% of total loans outstanding at June 30, 2014, compared to $25.3 million or 1.11% of total loans outstanding at December 31, 2013. Net charge-offs totaled $6,000 for the quarter ended June 30, 2014, or less than 0.01% of average loans outstanding, and $33,000 for the six months ended June 30, 2014, or less than 0.01% of average loans outstanding.

Non-accrual loans decreased $4.2 million, or 10.2%, to $37.3 million, or 1.56% of total loans outstanding, at June 30, 2014, from $41.5 million, or 1.81% of total loans outstanding, at December 31, 2013, primarily due to decreases of $1.8 million in non-accrual commercial real estate loans, $633,000 in non-accrual construction loans and $1.3 million in non-accrual one- to four-family loans. Non-performing assets decreased $3.1 million, or 7.3%, to $39.8 million, or 1.30% of total assets, at June 30, 2014, from $42.9 million, or 1.60% of total assets, at December 31, 2013. Non-performing assets at June 30, 2014 were comprised of $16.3 million of one- to four-family mortgage loans, $10.7 million of construction loans, $7.2 million of commercial real estate loans, $2.3 million of home equity loans, $903,000 of commercial business loans and foreclosed real estate of $2.5 million. Non-performing assets at June 30, 2014 included $13.6 million of non-accrual loans acquired in the January 2010 Mt. Washington Co-operative Bank merger.

Non-interest income decreased $683,000, or 14.5%, to $4.0 million for the quarter ended June 30, 2014 from $4.7 million for the quarter ended June 30, 2013, primarily due to decreases of $623,000 in gain on sales of securities, net and $136,000 in mortgage banking gains, net partially offset by an increase of $84,000 in customer service fees. For the six months ended June 30, 2014, non-interest income decreased $1.1 million, or 11.7%, to $8.0 million from $9.1 million for the six months ended June 30, 2013, primarily due to decreases of $1.3 million in gain on sales of securities, net and $171,000 in mortgage banking gains, net partially offset by increases of $297,000 in customer service fees and $155,000 in loan fees.

Non-interest expenses increased $686,000, or 4.4%, to $16.3 million for the quarter ended June 30, 2014 from $15.6 million for the quarter ended June 30, 2013, primarily due to increases of $541,000 in salaries and employee benefits, $130,000 in occupancy and equipment, $122,000 in professional services and $113,000 in foreclosed real estate, partially offset by decreases of $170,000 in data processing and $124,000 in marketing and advertising. For the six months ended June 30, 2014, non-interest expenses increased $1.8 million, or 5.7%, to $33.7 million from $31.9 million for the six months ended June 30, 2013, primarily due to increases of $1.3 million in salaries and employee benefits, $357,000 in occupancy and equipment and $162,000 in professional services. The increases in salaries and employee benefits and occupancy and equipment expenses were primarily associated with the opening of three new branches in 2013 and costs associated with the expansion of residential and commercial lending capacity. The Company's efficiency ratio was 68.49% for the quarter ended June 30, 2014 compared to 74.58% for the quarter ended June 30, 2013. For the six months ended June 30, 2014, the efficiency ratio was 72.02% compared to 78.49% for the six months ended June 30, 2013.

Mr. Gavegnano added, "As expected, our efficiency ratio is improving as our operating profitability continues to increase. We remain committed to prudently managing our growth and cost structure while we continue to selectively and opportunistically recruit highly qualified employees that can enhance our business. We will also continue to enhance our infrastructure and technology as necessary."

The Company recorded a provision for income taxes of $2.8 million for the quarter ended June 30, 2014, reflecting an effective tax rate of 33.7%, compared to $1.2 million, or 28.4%, for the quarter ended June 30, 2013. For the six months ended June 30, 2014, the provision for income taxes was $5.1 million, reflecting an effective tax rate of 33.0%, compared to $2.6 million, or 29.6%, for the six months ended June 30, 2013. The change in the effective tax rate was primarily due to changes in the components of pre-tax income.

Net loans increased $104.1 million, or 4.6%, to $2.369 billion at June 30, 2014 from $2.265 billion at December 31, 2013. The net increase in loans for the six months ended June 30, 2014 was primarily due to increases of $78.8 million in multi-family loans and $34.1 million in commercial business loans, partially offset by a decrease of $10.3 million in commercial real estate loans. Cash and due from banks increased $281.5 million, or 326.4%, to $367.8 million at June 30, 2014 from $86.3 million at December 31, 2013. The increase in cash and due from banks was primarily due to $206.9 million of stock subscription deposits received in connection with the second step conversion. Securities available for sale decreased $18.4 million, or 9.1%, to $182.8 million at June 30, 2014 from $201.1 million at December 31, 2013.

Total deposits increased $315.7 million, or 14.0%, to $2.564 billion at June 30, 2014 from $2.249 billion at December 31, 2013. Core deposits, which exclude certificate of deposits and the $206.9 million of stock subscription deposits increased $103.2 million, or 6.6%, to $1.676 billion at June 30, 2014. Total borrowings increased $49.4 million, or 30.5%, to $211.3 million at June 30, 2014 from $161.9 million at December 31, 2013.

Total stockholders' equity increased $12.7 million, or 5.1%, to $261.9 million at June 30, 2014, from $249.2 million at December 31, 2013. The increase for the six months ended June 30, 2014 was primarily due to $10.3 million in net income and $1.4 million in accumulated other comprehensive income reflecting an increase in the fair value of available for sale securities. Stockholders' equity to assets was 8.57% at June 30, 2014, compared to 9.29% at December 31, 2013. Book value per share increased to $11.78 at June 30, 2014 from $11.21 at December 31, 2013. Tangible book value per share increased to $11.17 at June 30, 2014 from $10.60 at December 31, 2013. Market price per share increased $3.10, or 13.7%, to $25.68 at June 30, 2014 from $22.58 at December 31, 2013. At June 30, 2014, the Company and the Bank continued to exceed all regulatory capital requirements.

As of June 30, 2014, the Company had repurchased 287,652 shares of its stock at an average price of $14.68 per share, or 31.8% of the 904,224 shares authorized for repurchase under the Company's fourth repurchase program as adopted during 2011. The Company has repurchased 1,691,580 shares at an average price of $10.89 per share since December 2008. The Company terminated the repurchase program in connection with the Company's plan to convert into a fully public stock holding company structure.

Mr. Gavegnano concluded, "Our entire team is ready and eager to move forward as a fully public company. As we have demonstrated to this point, we plan to continue the careful expansion of the Bank's franchise while increasing profitability and further enhancing stockholder value."

Meridian Interstate Bancorp, Inc. is the holding company for East Boston Savings Bank. East Boston Savings Bank, a Massachusetts-chartered stock savings bank founded in 1848, operates 27 full service locations in the greater Boston metropolitan area including nine full-service locations in its Mt. Washington Bank Division. We offer a variety of deposit and loan products to individuals and businesses located in our primary market, which consists of Essex, Middlesex and Suffolk Counties, Massachusetts. For additional information, visit www.ebsb.com.

Forward-Looking Statements

Certain statements herein constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by words such as "believes," "will," "expects," "project," "may," "could," "developments," "strategic," "launching," "opportunities," "anticipates," "estimates," "intends," "plans," "targets" and similar expressions. These statements are based upon the current beliefs and expectations of Meridian Interstate Bancorp, Inc.'s management and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements as a result of numerous factors. Factors that could cause such differences to exist include, but are not limited to: the failure to obtain the approval of the Massachusetts Commissioner of Banks and the Board of Governors of the Federal Reserve System for the proposed conversion and related stock offering, delays in obtaining such approvals, or adverse conditions imposed in connection with such approvals, confirmation of final offering proceeds, general economic conditions, changes in interest rates, regulatory considerations, competition and the risk factors described in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, Meridian Interstate Bancorp, Inc.'s actual results could differ materially from those discussed. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release.

MERIDIAN INTERSTATE BANCORP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
June 30, December 31,
2014 2013
(Dollars in thousands)
ASSETS
Cash and due from banks $ 367,819 $ 86,271
Securities available for sale, at fair value 182,752 201,137
Federal Home Loan Bank stock, at cost 12,681 11,907
Loans held for sale 5,900 2,363
Loans, net of fees and costs 2,395,625 2,290,735
Less allowance for loan losses (26,131) (25,335)
Loans, net 2,369,494 2,265,400
Bank-owned life insurance 38,020 37,446
Foreclosed real estate, net 2,503 1,390
Premises and equipment, net 38,967 39,426
Accrued interest receivable 7,118 7,127
Deferred tax asset, net 12,773 13,478
Goodwill 13,687 13,687
Other assets 4,213 2,469
Total assets $ 3,055,927 $ 2,682,101
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non interest-bearing $ 484,242 $ 255,639
Interest-bearing 2,080,065 1,992,961
Total deposits 2,564,307 2,248,600
Long-term debt 211,340 161,903
Accrued expenses and other liabilities 18,345 22,393
Total liabilities 2,793,992 2,432,896
Stockholders' equity:
Common stock, no par value, 50,000,000 shares authorized; 23,000,000 shares issued -- --
Additional paid-in capital 100,068 99,553
Retained earnings 172,663 162,388
Accumulated other comprehensive income 5,485 4,104
Treasury stock, at cost, 768,361 and 778,821 shares at June 30, 2014 and December 31, 2013, respectively (9,769) (9,919)
Unearned compensation - ESOP, 558,900 and 579,600 shares at June 30, 2014 and December 31, 2013, respectively (5,589) (5,796)
Unearned compensation - restricted shares, 85,190 and 103,810 at June 30, 2014 and December 31, 2013, respectively (923) (1,125)
Total stockholders' equity 261,935 249,205
Total liabilities and stockholders' equity $ 3,055,927 $ 2,682,101
MERIDIAN INTERSTATE BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Net Income
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2014 2013 2014 2013
(Dollars in thousands, except per share amounts)
Interest and dividend income:
Interest and fees on loans $ 25,112 $ 21,730 $ 49,547 $ 42,524
Interest on debt securities:
Taxable 630 1,007 1,375 2,163
Tax-exempt 44 53 89 106
Dividends on equity securities 377 364 690 713
Other interest and dividend income 138 101 228 165
Total interest and dividend income 26,301 23,255 51,929 45,671
Interest expense:
Interest on deposits 4,407 4,141 8,812 8,089
Interest on borrowings 655 795 1,276 1,637
Total interest expense 5,062 4,936 10,088 9,726
Net interest income 21,239 18,319 41,841 35,945
Provision for loan losses 696 3,219 829 4,479
Net interest income, after provision for loan losses 20,543 15,100 41,012 31,466
Non-interest income:
Customer service fees 1,860 1,776 3,659 3,362
Loan fees 106 108 319 164
Mortgage banking gains, net 267 403 387 558
Gain on sales of securities, net 1,505 2,128 3,065 4,401
Income from bank-owned life insurance 293 296 574 587
Other income 6 9 17 9
Total non-interest income 4,037 4,720 8,021 9,081
Non-interest expenses:
Salaries and employee benefits 10,017 9,476 20,818 19,551
Occupancy and equipment 2,216 2,086 4,777 4,420
Data processing 909 1,079 2,070 2,070
Marketing and advertising 688 812 1,495 1,503
Professional services 659 537 1,300 1,138
Foreclosed real estate 199 86 210 192
Deposit insurance 531 522 1,082 997
Other general and administrative 1,062 997 1,950 2,016
Total non-interest expenses 16,281 15,595 33,702 31,887
Income before income taxes 8,299 4,225 15,331 8,660
Provision for income taxes 2,795 1,200 5,056 2,567
Net income $ 5,504 $ 3,025 $ 10,275 $ 6,093
Earnings per share:
Basic $ 0.25 $ 0.14 $ 0.47 $ 0.28
Diluted $ 0.25 $ 0.14 $ 0.47 $ 0.28
Weighted average shares:
Basic 21,666,169 21,649,423 21,658,954 21,644,052
Diluted 22,106,586 21,962,628 22,095,156 21,957,397
MERIDIAN INTERSTATE BANCORP, INC. AND SUBSIDIARIES
Net Interest Income Analysis
(Unaudited)
For the Three Months Ended June 30,
2014 2013
Average Yield/ Average Yield/
Balance Interest (1) Cost (6) Balance Interest (1) Cost (6)
(Dollars in thousands)
Assets:
Interest-earning assets:
Loans (2) $ 2,364,971 $ 25,734 4.36% $ 1,937,574 $ 22,035 4.56%
Securities and certificates of deposits 183,100 1,212 2.66 232,794 1,584 2.73
Other interest-earning assets (3) 147,456 138 0.38 154,113 101 0.26
Total interest-earning assets 2,695,527 27,084 4.03 2,324,481 23,720 4.09
Noninterest-earning assets 116,468 116,638
Total assets $ 2,811,995 $ 2,441,119
Liabilities and stockholders' equity:
Interest-bearing liabilities:
NOW deposits $ 236,524 332 0.56 $ 177,170 228 0.52
Money market deposits 855,929 1,887 0.88 660,024 1,489 0.90
Regular and other deposits 267,270 174 0.26 252,868 166 0.26
Certificates of deposit 677,827 2,014 1.19 686,854 2,258 1.32
Total interest-bearing deposits 2,037,550 4,407 0.87 1,776,916 4,141 0.93
Borrowings 204,460 655 1.28 187,082 795 1.70
Total interest-bearing liabilities 2,242,010 5,062 0.91 1,963,998 4,936 1.01
Noninterest-bearing demand deposits 293,776 219,757
Other noninterest-bearing liabilities 17,799 16,889
Total liabilities 2,553,585 2,200,644
Total stockholders' equity 258,410 240,475
Total liabilities and stockholders' equity $ 2,811,995 $ 2,441,119
Net interest-earning assets $ 453,517 $ 360,483
Fully tax-equivalent net interest income 22,022 18,784
Less: tax-equivalent adjustments (783) (465)
Net interest income $ 21,239 $ 18,319
Interest rate spread (4) 3.12% 3.08%
Net interest margin (5) 3.28% 3.24%
Average interest-earning assets to average interest-bearing liabilities 120.23% 118.35%
Supplemental Information:
Total deposits, including noninterest-bearing demand deposits $ 2,331,326 $ 4,407 0.76% $ 1,996,673 $ 4,141 0.83%
Total deposits and borrowings, including noninterest-bearing demand deposits $ 2,535,786 $ 5,062 0.80% $ 2,183,755 $ 4,936 0.91%
(1) Income on debt securities, equity securities and revenue bonds included in commercial real estate loans, resulting yields, and 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 June 30, 2014 and 2013, yields on loans before tax-equivalent adjustments were 4.26% and 4.50%, respectively, yields on securities and certificates of deposits before tax-equivalent adjustments were 2.30% and 2.45%, respectively, and yield on total interest-earning assets before tax-equivalent adjustments were 3.91% and 4.01%, respectively. Interest rate spread before tax-equivalent adjustments for the three months ended June 30, 2014 and 2013 was 3.00% and 3.00%, respectively, while net interest margin before tax-equivalent adjustments for the three months ended June 30, 2014 and 2013 was 3.16% and 3.16%, respectively.
(2) Annualized.
(3) Loans on non-accrual status are included in average balances.
(4) Includes Federal Home Loan Bank stock and associated dividends.
(5) Interest rate spread represents the difference between the tax-equivalent yield on interest-earning assets and the cost of interest-bearing liabilities.
(6) Net interest margin represents net interest income (tax-equivalent basis) divided by average interest-earning assets.
MERIDIAN INTERSTATE BANCORP, INC. AND SUBSIDIARIES
Net Interest Income Analysis
(Unaudited)
For the Six Months Ended June 30, 2014,
2014 2013
Average Yield/ Average Yield/
Balance Interest (1) Cost (6) Balance Interest (1) Cost (6)
(Dollars in thousands)
Assets:
Interest-earning assets:
Loans (2) $ 2,339,074 $ 50,763 4.38% $ 1,883,894 $ 43,085 4.61%
Securities and certificates of deposits 189,151 2,452 2.61 242,655 3,297 2.74
Other interest-earning assets (3) 124,706 228 0.37 135,247 165 0.25
Total interest-earning assets 2,652,931 53,443 4.06 2,261,796 46,547 4.15
Noninterest-earning assets 113,970 119,128
Total assets $ 2,766,901 $ 2,380,924
Liabilities and stockholders' equity:
Interest-bearing liabilities:
NOW deposits $ 226,714 633 0.56 $ 176,455 459 0.52
Money market deposits 853,773 3,744 0.88 638,532 2,844 0.90
Regular and other deposits 264,841 342 0.26 249,878 327 0.26
Certificates of deposit 678,315 4,093 1.22 667,973 4,459 1.35
Total interest-bearing deposits 2,023,643 8,812 0.88 1,732,838 8,089 0.94
Borrowings 194,221 1,276 1.32 182,071 1,637 1.81
Total interest-bearing liabilities 2,217,864 10,088 0.92 1,914,909 9,726 1.02
Noninterest-bearing demand deposits 275,550 210,014
Other noninterest-bearing liabilities 18,609 17,821
Total liabilities 2,512,023 2,142,744
Total stockholders' equity 254,878 238,180
Total liabilities and stockholders' equity $ 2,766,901 $ 2,380,924
Net interest-earning assets $ 435,067 $ 346,887
Fully tax-equivalent net interest income 43,355 36,821
Less: tax-equivalent adjustments (1,514) (876)
Net interest income $ 41,841 $ 35,945
Interest rate spread (4) 3.14% 3.13%
Net interest margin (5) 3.30% 3.28%
Average interest-earning assets to average interest-bearing liabilities 119.62% 118.12%
Supplemental Information:
Total deposits, including noninterest-bearing demand deposits $ 2,299,193 $ 8,812 0.77% $ 1,942,852 $ 8,089 0.84%
Total deposits and borrowings, including noninterest-bearing demand deposits $ 2,493,414 $ 10,088 0.82% $ 2,124,923 $ 9,726 0.92%
(1) Income on debt securities, equity securities and revenue bonds included in commercial real estate loans, resulting yields, and 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 six months ended June 30, 2014 and 2013, yields on loans before tax-equivalent adjustments were 4.27% and 4.55%, respectively, yields on securities and certificates of deposits before tax-equivalent adjustments were 2.30% and 2.48%, respectively, and yield on total interest-earning assets before tax-equivalent adjustments were 3.95% and 4.07%, respectively. Interest rate spread before tax-equivalent adjustments for the six months ended June 30, 2014 and 2013 was 3.03% and 3.05%, respectively, while net interest margin before tax-equivalent adjustments for the six months ended June 30, 2014 and 2013 was 3.18% and 3.20%, respectively.
(2) Annualized.
(3) Loans on non-accrual status are included in average balances.
(4) Includes Federal Home Loan Bank stock and associated dividends.
(5) Interest rate spread represents the difference between the tax-equivalent yield on interest-earning assets and the cost of interest-bearing liabilities.
(6) Net interest margin represents net interest income (tax-equivalent basis) divided by average interest-earning assets.
MERIDIAN INTERSTATE BANCORP, INC. AND SUBSIDIARIES
Selected Financial Highlights
(Unaudited)
At or For the Three Months Ended At or For the Six Months Ended
June 30, June 30,
2014 2013 2014 2013
Key Performance Ratios
Return on average assets (1) 0.78% 0.50% 0.74% 0.51%
Return on average equity (1) 8.52 5.03 8.06 5.12
Stockholders' equity to total assets 8.57 9.52 8.57 9.52
Interest rate spread (1) (2) 3.00 3.00 3.03 3.05
Net interest margin (1) (3) 3.16 3.16 3.18 3.20
Non-interest expense to average assets (1) 2.32 2.56 2.44 2.68
Efficiency ratio (4) 68.49 74.58 72.02 78.49
June 30, December 31, June 30,
2014 2013 2013
Asset Quality Ratios
Allowance for loan losses/total loans 1.09% 1.11% 1.16%
Allowance for loan losses/non-accrual loans 70.08 61.00 51.75
Non-accrual loans/total loans 1.56 1.81 2.23
Non-accrual loans/total assets 1.22 1.55 1.81
Non-performing assets/total assets 1.30 1.60 1.88
Share Related
Book value per share $ 11.78 $ 11.21 $ 10.74
Tangible book value per share $ 11.17 $ 10.60 $ 10.13
Market value per share $ 25.68 $ 22.58 $ 18.83
Shares outstanding 22,231,639 22,221,179 22,241,256
(1) Annualized.
(2) Interest rate spread represents the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by average interest-earning assets.
(4) The efficiency ratio represents non-interest expense divided by the sum of net interest income and non-interest income excluding gains or losses on securities.

CONTACT: Richard J. Gavegnano, Chairman, President and Chief Executive Officer (978) 977-2211Source:Meridian Interstate Bancorp