Meridian Bancorp, Inc. Reports Net Income for the Second Quarter and Six Months Ended June 30, 2015

BOSTON, July 28, 2015 (GLOBE NEWSWIRE) -- Meridian Bancorp, Inc. (the “Company” or “Meridian”) (NASDAQ:EBSB), the holding company for East Boston Savings Bank (the “Bank”) announced net income of $5.6 million, or $0.11 per diluted share, for the quarter ended June 30, 2015 compared to $5.5 million, or $0.10 per diluted share, for the quarter ended June 30, 2014. For the six months ended June 30, 2015, net income was $12.0 million, or $0.23 per diluted share compared to $10.3 million, or $0.19 per diluted share, for the six months ended June 30, 2014. The Company’s return on average assets was 0.68% for the quarter ended June 30, 2015 compared to 0.78% for the quarter ended June 30, 2014. For the six months ended June 30, 2015, the Company’s return on average assets was 0.73% compared to 0.74% for the six months ended June 30, 2014. The Company’s return on average equity declined to 3.80% for the quarter ended June 30, 2015 compared to 8.52% for the quarter ended June 30, 2014. For the six months ended June 30, 2015, the Company’s return on average equity was 4.10% compared to 8.06% for the six months ended June 30, 2014. The decreases in return on average equity reflect the net cash proceeds of $302.3 million raised in the Company’s second-step common stock offering completed on July 28, 2014. As a result of the Company’s second-step common stock offering, all historical share and per share information has been restated to reflect the 2.4484-to-one exchange ratio.

Richard J. Gavegnano, Chairman, President and Chief Executive Officer, said, “I am pleased to report net income of $5.6 million, or $0.11 per share, for the second quarter and $12.0 million, or $0.23 per share, for the first half of 2015. During the second quarter of 2015, our net interest income increased 18% while our net interest margin rose to 3.29% to the level prior to our second step stock offering, our cost of funds declined to 0.73% and our efficiency ratio improved to 62.53%. Our loan portfolio grew in the second quarter at an annualized rate of nearly 10% based on the continuing strength of our loan origination pipeline. Although we had a large pre-2008 construction loan relationship slip into non-performing status with a resulting $2.3 million charge-off, our asset quality trends have otherwise continued to improve. We also remain on schedule to open new branches this year in the Town of Brookline and the Boston neighborhoods of Dorchester and Chinatown that will further enhance our franchise footprint in the Boston market area and bring our total full-service locations to 30.”

Net interest income increased $3.7 million, or 17.5%, to $24.9 million for the quarter ended June 30, 2015 from $21.2 million for the quarter ended June 30, 2014. The interest rate spread and net interest margin on a tax-equivalent basis were 3.07% and 3.29%, respectively, for the quarter ended June 30, 2015 compared to 3.12% and 3.28%, respectively, for the quarter ended June 30, 2014. For the six months ended June 30, 2015, net interest income increased $7.5 million, or 17.9%, to $49.3 million from $41.8 million for the six months ended June 30, 2014. The net interest rate spread and net interest margin on a tax-equivalent basis were 3.04% and 3.26%, respectively, for the six months ended June 30, 2015 compared to 3.14% and 3.30%, respectively, for the six months ended June 30, 2014. 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, 2015 compared to the same periods in 2014.

The Company’s yield on interest-earning assets on a tax-equivalent basis declined 13 basis points to 3.90% for the quarter ended June 30, 2015 compared to 4.03% for the quarter ended June 30, 2014, while the cost of funds declined seven basis points to 0.73% for the quarter ended June 30, 2015 compared to 0.80% for the quarter ended June 30, 2014. The increase in interest income was primarily due to growth in the Company’s average loan balances of $343.7 million, or 14.5%, to $2.709 billion, partially offset by a decrease in the yield on loans on a tax-equivalent basis of one basis point to 4.35% for the quarter ended June 30, 2015 compared to the quarter ended June 30, 2014. The decrease in interest expense on deposits was primarily due to the decline in the cost of average total deposits of seven basis points to 0.69%, partially offset by the growth in average total deposits of $192.8 million, or 8.3%, to $2.524 billion for the quarter ended June 30, 2015 compared to the quarter ended June 30, 2014. The decrease in interest expense on borrowings was primarily due to the reduction in average borrowings of $61.6 million, or 30.1%, to $142.9 million, partially offset by an increase in the cost of average borrowings of seven basis points to 1.35% for the quarter ended June 30, 2015 compared to the quarter ended June 30, 2014.

Mr. Gavegnano noted, “Net interest income rose for the sixteenth consecutive quarter and our net interest margin rose for the third consecutive quarter reflecting loan growth of 15% over the past year, stable loan yields and declines in the cost of funds of five basis points from the first quarter of 2015. We expect our net interest margin will continue to benefit from the deployment of the capital raised in last year’s stock offering into commercial loans.”

The Company's provision for loan losses increased to $3.7 million for the quarter and six months ended June 30, 2015 from $696,000 for the quarter ended June 30, 2014 and $829,000 for the six months ended June 30, 2014. These increases were primarily due to a $2.3 million charge-off related to a construction loan relationship during the second quarter of 2015. Changes in the provision for loan losses were also based on management’s assessment of loan portfolio growth and composition changes, historical charge-off trends, an ongoing evaluation of credit quality and current economic conditions. The allowance for loan losses was $30.1 million or 1.10% of total loans outstanding at June 30, 2015, compared to $28.5 million or 1.06% of total loans outstanding at December 31, 2014. Net charge-offs totaled $2.1 million for the quarter ended June 30, 2015, or 0.32% of average loans outstanding, and $2.1 million for the six months ended June 30, 2015, or 0.15% of average loans outstanding on an annualized basis.

Non-accrual loans increased $5.5 million, or 17.3%, to $37.0 million, or 1.35% of total loans outstanding, at June 30, 2015, from $31.5 million, or 1.18% of total loans outstanding, at December 31, 2014, primarily due to an increase of $9.4 million in non-accrual construction loans, partially offset by a decrease of $3.6 million in non-accrual one- to four-family loans. Non-performing assets increased $5.5 million, or 16.8%, to $38.0 million, or 1.15% of total assets, at June 30, 2015, from $32.6 million, or 0.99% of total assets, at December 31, 2014. Non-performing assets at June 30, 2015 were comprised of $17.8 million of construction loans, $11.1 million of one- to four-family mortgage loans, $5.3 million of commercial real estate loans, $1.9 million of home equity loans, $891,000 of commercial and industrial loans and foreclosed real estate of $1.0 million.

Mr. Gavegnano commented, “The increase in non-performing assets resulted from the placement on non-accrual status in the second quarter of 2015 of a $16.3 million construction loan collateralized by a multi-family development project that dates back prior to 2008 and other properties in Boston. We wrote down this loan by $2.3 million based on recent appraisals as we work to protect the integrity and value of the project, reduce the Bank’s exposure as much as possible and move steadily toward resolution. The increase in the loan loss provision reflects this charge-off along with additional reserve allocations resulting from loan portfolio growth in the second quarter of 2015. Otherwise, our asset quality trends have continued to improve. Our other non-performing assets declined by $8.6 million, or 26%, due to non-accrual loan reductions of $4.7 million in construction and $3.9 million in residential categories, while other net charge-offs were negligible for the first half of 2015.”

Non-interest income increased $182,000, or 4.5%, to $4.2 million for the quarter ended June 30, 2015 from $4.0 million for the quarter ended June 30, 2014, primarily due to increases of $143,000 in customer service fees and $124,000 in loan fees, partially offset by a decrease of $81,000 in gain on sales of securities, net. For the six months ended June 30, 2015, non-interest income decreased $452,000, or 5.6%, to $7.6 million from $8.0 million for the six months ended June 30, 2014, primarily due to decreases of $621,000 in gain on sales of securities, net, partially offset by increases of $101,000 in customer service fees and $77,000 in loan fees.

Non-interest expenses increased $1.1 million, or 6.5%, to $17.3 million for the quarter ended June 30, 2015 as compared to the quarter ended June 30, 2014, primarily due to increases of $700,000 in salaries and employee benefits, $152,000 in occupancy and equipment, $340,000 in data processing and $207,000 in marketing and advertising, partially offset by decreases of $184,000 in foreclosed real estate and $102,000 in other general and administrative expenses. For the six months ended June 30, 2015, non-interest expenses increased $1.7 million, or 5.1%, to $35.4 million from $33.7 million for the six months ended June 30, 2014, primarily due to increases of $1.1 million in salaries and employee benefits, $211,000 in occupancy and equipment, $442,000 in data processing and $294,000 in marketing and advertising, partially offset by decreases of $181,000 in foreclosed real estate and $142,000 in deposit insurance assessments. The increases in salaries and employee benefits expense were primarily due to annual employee salary increases and higher expenses related to the Bank’s employee stock ownership plan during the current year. The increases in data processing expense reflected a one-time cost reduction during the second quarter of 2014 along with a scheduled contractual increase and business growth during the current year. The increases in marketing and advertising expense reflected the Bank’s new and expanded advertising campaign in our Boston area market. The Company’s efficiency ratio was 62.53% for the quarter ended June 30, 2015 compared to 68.49% for the quarter ended June 30, 2014. For the six months ended June 30, 2015, the efficiency ratio was 65.02% compared to 72.02% for the six months ended June 30, 2014.

Mr. Gavegnano added, “The trend of improvement in our efficiency ratio continued through the first half of 2015 due to rising net interest income aided by prudent control of overhead expenses. Although gains on sales of securities, which have been a recurring source of earnings for us, are not included in the basic calculation of the efficiency ratio, the efficiency ratio would have been 59.48% for the second quarter of 2015 compared to 64.41% for the second quarter of 2014 and 62.23% for the first six months of 2015 compared to 67.59% for the same period of 2014 if such gains were included.”

The Company recorded a provision for income taxes of $2.6 million for the quarter ended June 30, 2015, reflecting an effective tax rate of 31.6%, compared to $2.8 million, or 33.7%, for the quarter ended June 30, 2014. For the six months ended June 30, 2015, the provision for income taxes was $5.8 million, reflecting an effective tax rate of 32.6%, compared to $5.1 million, or 33.0%, for the six months ended June 30, 2014. The changes in the effective tax provision were primarily due to changes in the components of pre-tax income.

Total assets increased $23.7 million, or 0.7%, to $3.302 billion at June 30, 2015 from $3.279 billion at December 31, 2014. Net loans increased $65.8 million, or 2.5%, to $2.715 billion at June 30, 2015 from $2.649 billion at December 31, 2014. The net increase in loans for the six months ended June 30, 2015 was primarily due to increases of $70.0 million in construction loans and $23.9 million in commercial and industrial loans, partially offset by decreases of $11.1 million in commercial real estate loans, $8.1 million in multi-family loans and $5.7 million in one- to four-family loans. Cash and due from banks decreased $29.1 million, or 14.1%, to $176.7 million at June 30, 2015 from $205.7 million at December 31, 2014­­­­­­­­­­­­­­­. Securities available for sale decreased $28.4 million, or 13.9%, to $175.2 million at June 30, 2015 from $203.5 million at December 31, 2014.

Total deposits increased $47.2 million, or 1.9%, to $2.551 billion at June 30, 2015 from $2.504 billion at December 31, 2014. Core deposits, which exclude certificate of deposits, increased $44.5 million, or 2.5%, to $1.840 billion, or 72.1% of total deposits, at June 30, 2015, reflecting an increase of $65.2 million in non interest-bearing demand deposits. Total borrowings decreased $31.1 million, or 18.1%, to $140.8 million at June 30, 2015 from $171.9 million at December 31, 2014, reflecting maturing advances with the Federal Home Loan Bank of Boston.

Total stockholders’ equity increased $10.9 million, or 1.9%, to $588.6 million at June 30, 2015, from $577.7 million at December 31, 2014. The increase for the six months ended June 30, 2015 was due primarily to $12.0 million in net income and $1.4 million related to stock-based compensation plans, partially offset by a decrease of $2.5 million in accumulated other comprehensive income reflecting a decrease in the fair value of available for sale securities. Stockholders’ equity to assets was 17.82% at June 30, 2015, compared to 17.62% at December 31, 2014. Book value per share increased to $10.71 at June 30, 2015 from $10.56 at December 31, 2014. Tangible book value per share increased to $10.46 at June 30, 2015 from $10.31 at December 31, 2014. Market price per share increased $2.19, or 19.5%, to $13.41 at June 30, 2015 from $11.22 at December 31, 2014. At June 30, 2015, the Company and the Bank continued to exceed all regulatory capital requirements.

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 27 full-service locations in the greater Boston metropolitan area. 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 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, 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 SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
June 30, December 31,
2015 2014
(Dollars in thousands)
ASSETS
Cash and due from banks$ 176,654 $ 205,732
Certificates of deposit 95,000 85,000
Securities available for sale, at fair value 175,171 203,521
Federal Home Loan Bank stock, at cost 12,725 12,725
Loans held for sale 5,154 971
Loans, net of fees and costs 2,744,825 2,677,376
Less allowance for loan losses (30,109) (28,469)
Loans, net 2,714,716 2,648,907
Bank-owned life insurance 39,201 38,611
Foreclosed real estate, net 1,046 1,046
Premises and equipment, net 38,700 38,512
Accrued interest receivable 8,054 7,748
Deferred tax asset, net 17,368 15,610
Goodwill 13,687 13,687
Other assets 4,785 6,456
Total assets$ 3,302,261 $ 3,278,526
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non interest-bearing$ 351,236 $ 285,990
Interest-bearing 2,199,930 2,217,945
Total deposits 2,551,166 2,503,935
Long-term debt 140,817 171,899
Accrued expenses and other liabilities 21,681 24,982
Total liabilities 2,713,664 2,700,816
Stockholders' equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized;
none issued - -
Common stock, $0.01 par value, 100,000,000 shares authorized;
54,965,555 and 54,708,066 shares issued at June 30, 2015
and December 31, 2014, respectively 550 547
Additional paid-in capital 412,367 411,476
Retained earnings 196,705 184,715
Accumulated other comprehensive income 364 2,898
Unearned compensation - ESOP, 2,861,446 and 2,922,328 shares
at June 30, 2015 and December 31, 2014, respectively (20,723) (21,164)
Unearned compensation - restricted shares, 193,595 and 138,838 shares
at June 30, 2015 and December 31, 2014, respectively (666) (762)
Total stockholders' equity 588,597 577,710
Total liabilities and stockholders' equity$ 3,302,261 $ 3,278,526

MERIDIAN BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Net Income
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2015 2014 (1) 2015 2014 (1)
(Dollars in thousands, except per share amounts)
Interest and dividend income:
Interest and fees on loans $ 28,546 $ 25,112 $ 56,878 $ 49,547
Interest on debt securities:
Taxable 434 630 945 1,375
Tax-exempt 41 44 83 89
Dividends on equity securities 421 377 808 690
Interest on certificates of deposit 157 - 293 -
Other interest and dividend income 188 138 358 228
Total interest and dividend income 29,787 26,301 59,365 51,929
Interest expense:
Interest on deposits 4,359 4,407 9,036 8,812
Interest on borrowings 482 655 990 1,276
Total interest expense 4,841 5,062 10,026 10,088
Net interest income 24,946 21,239 49,339 41,841
Provision for loan losses 3,651 696 3,711 829
Net interest income, after provision for loan losses 21,295 20,543 45,628 41,012
Non-interest income:
Customer service fees 2,003 1,860 3,760 3,659
Loan fees 230 106 396 319
Mortgage banking gains, net 268 267 378 387
Gain on sales of securities, net 1,424 1,505 2,444 3,065
Income from bank-owned life insurance 294 293 590 574
Other income - 6 1 17
Total non-interest income 4,219 4,037 7,569 8,021
Non-interest expenses:
Salaries and employee benefits 10,717 10,017 21,884 20,818
Occupancy and equipment 2,368 2,216 4,988 4,777
Data processing 1,249 909 2,512 2,070
Marketing and advertising 895 688 1,789 1,495
Professional services 664 659 1,337 1,300
Foreclosed real estate 15 199 29 210
Deposit insurance 479 531 940 1,082
Other general and administrative 960 1,062 1,936 1,950
Total non-interest expenses 17,347 16,281 35,415 33,702
Income before income taxes 8,167 8,299 17,782 15,331
Provision for income taxes 2,582 2,795 5,792 5,056
Net income $ 5,585 $ 5,504 $ 11,990 $ 10,275
Earnings per share:
Basic $ 0.11 $ 0.10 $ 0.23 $ 0.19
Diluted $ 0.11 $ 0.10 $ 0.23 $ 0.19
Weighted average shares:
Basic 52,074,889 53,047,448 51,969,106 53,029,783
Diluted 53,166,560 54,125,765 53,085,679 54,097,780
(1) Share and per share amounts related to periods prior to the date of completion of the Conversion (July 28, 2014) have been restated to give retroactive recognition to the exchange ratio applied in the Conversion (2.4484-to-one).

MERIDIAN BANCORP, INC. AND SUBSIDIARIES
Net Interest Income Analysis
(Unaudited)
Three Months Ended June 30,
2015 2014
Average Yield/ Average Yield/
Balance Interest (1) Cost (1)(6) Balance Interest (1) Cost (1)(6)
(Dollars in thousands)
Assets:
Interest-earning assets:
Loans (2)$ 2,708,690 $ 29,346 4.35% $ 2,364,971 $ 25,734 4.36%
Securities and certificates of deposits 281,526 1,228 1.75 183,100 1,212 2.66
Other interest-earning assets (3) 172,820 188 0.44 147,456 138 0.38
Total interest-earning assets 3,163,036 30,762 3.90 2,695,527 27,084 4.03
Noninterest-earning assets 113,572 116,468
Total assets$ 3,276,608 $ 2,811,995
Liabilities and stockholders' equity:
Interest-bearing liabilities:
NOW deposits$ 283,429 381 0.54 $ 236,524 332 0.56
Money market deposits 941,219 1,914 0.82 855,929 1,887 0.88
Regular savings and other deposits 283,702 104 0.15 267,270 174 0.26
Certificates of deposit 693,054 1,960 1.13 677,827 2,014 1.19
Total interest-bearing deposits 2,201,404 4,359 0.79 2,037,550 4,407 0.87
Borrowings 142,867 482 1.35 204,460 655 1.28
Total interest-bearing liabilities 2,344,271 4,841 0.83 2,242,010 5,062 0.91
Noninterest-bearing demand deposits 322,701 293,776
Other noninterest-bearing liabilities 21,500 17,799
Total liabilities 2,688,472 2,553,585
Total stockholders' equity 588,136 258,410
Total liabilities and stockholders' equity$ 3,276,608 $ 2,811,995
Net interest-earning assets$ 818,765 $ 453,517
Fully tax-equivalent net interest income 25,921 22,022
Less: tax-equivalent adjustments (975) (783)
Net interest income $ 24,946 $ 21,239
Interest rate spread (1)(4) 3.07% 3.12%
Net interest margin (1)(5) 3.29% 3.28%
Average interest-earning assets to average
interest-bearing liabilities 134.93% 120.23%
Supplemental Information:
Total deposits, including noninterest-bearing
demand deposits$ 2,524,105 $ 4,359 0.69% $ 2,331,326 $ 4,407 0.76%
Total deposits and borrowings, including
noninterest-bearing demand deposits$ 2,666,972 $ 4,841 0.73% $ 2,535,786 $ 5,062 0.80%
(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, 2015 and 2014, yields on loans before tax-equivalent adjustments were 4.23% and 4.26%, respectively, yields on securities and certificates of deposit before tax-equivalent adjustments were 1.50% and 2.30%, respectively, and yields on total interest-earning assets before tax-equivalent adjustments were 3.78% and 3.91%, respectively. Interest rate spread before tax-equivalent adjustments for the three months ended June 30, 2015 and 2014 was 2.95% and 3.00%, respectively, while net interest margin before tax-equivalent adjustments for the three months ended June 30, 2015 and 2014 was 3.16% and 3.16%, 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 SUBSIDIARIES
Net Interest Income Analysis
(Unaudited)
Six Months Ended June 30,
2015 2014
Average Yield/ Average Yield/
Balance Interest (1) Cost (1)(6) Balance Interest (1) Cost (1)(6)
(Dollars in thousands)
Assets:
Interest-earning assets:
Loans (2)$ 2,697,590 $ 58,465 4.37% $ 2,339,074 $ 50,763 4.38%
Securities and certificates of deposits 284,144 2,469 1.75 189,151 2,452 2.61
Other interest-earning assets (3) 192,333 358 0.38 124,706 228 0.37
Total interest-earning assets 3,174,067 61,292 3.89 2,652,931 53,443 4.06
Noninterest-earning assets 113,297 113,970
Total assets$ 3,287,364 $ 2,766,901
Liabilities and stockholders' equity:
Interest-bearing liabilities:
NOW deposits$ 289,340 838 0.58 $ 226,714 633 0.56
Money market deposits 960,554 3,992 0.84 853,773 3,744 0.88
Regular savings and other deposits 279,134 255 0.18 264,841 342 0.26
Certificates of deposit 695,495 3,951 1.15 678,315 4,093 1.22
Total interest-bearing deposits 2,224,523 9,036 0.82 2,023,643 8,812 0.88
Borrowings 146,881 990 1.36 194,221 1,276 1.32
Total interest-bearing liabilities 2,371,404 10,026 0.85 2,217,864 10,088 0.92
Noninterest-bearing demand deposits 309,185 275,550
Other noninterest-bearing liabilities 22,478 18,609
Total liabilities 2,703,067 2,512,023
Total stockholders' equity 584,297 254,878
Total liabilities and stockholders' equity$ 3,287,364 $ 2,766,901
Net interest-earning assets$ 802,663 $ 435,067
Fully tax-equivalent net interest income 51,266 43,355
Less: tax-equivalent adjustments (1,927) (1,514)
Net interest income $ 49,339 $ 41,841
Interest rate spread (1)(4) 3.04% 3.14%
Net interest margin (1)(5) 3.26% 3.30%
Average interest-earning assets to average
interest-bearing liabilities 133.85% 119.62%
Supplemental Information:
Total deposits, including noninterest-bearing
demand deposits$ 2,533,708 $ 9,036 0.72% $ 2,299,193 $ 8,812 0.77%
Total deposits and borrowings, including
noninterest-bearing demand deposits$ 2,680,589 $ 10,026 0.75% $ 2,493,414 $ 10,088 0.82%
(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, 2015 and 2014, yields on loans before tax-equivalent adjustments were 4.25% and 4.27%, respectively, yields on securities and certificates of deposits before tax-equivalent adjustments were 1.51% and 2.30%, respectively, and yield on total interest-earning assets before tax-equivalent adjustments were 3.77% and 3.95%, respectively. Interest rate spread before tax-equivalent adjustments for the six months ended June 30, 2015 and 2014 was 2.92% and 3.03%, respectively, while net interest margin before tax-equivalent adjustments for the six months ended June 30, 2015 and 2014 was 3.13% and 3.18%, 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 SUBSIDIARIES
Selected Financial Highlights
(Unaudited)
At or For the Three Months Ended At or For the Six Months Ended
June 30, June 30,
2015 2014 2015 2014
Key Performance Ratios
Return on average assets (1) 0.68% 0.78% 0.73% 0.74%
Return on average equity (1) 3.80 8.52 4.10 8.06
Interest rate spread (1) (2) 3.07 3.12 3.04 3.14
Net interest margin (1) (3) 3.29 3.28 3.26 3.30
Non-interest expense to average assets (1) 2.12 2.32 2.15 2.44
Efficiency ratio (4) 62.53 68.49 65.02 72.02
June 30, December 31, June 30,
2015 2014 2014 (5)
Asset Quality Ratios
Allowance for loan losses/total loans 1.10% 1.06% 1.09%
Allowance for loan losses/non-accrual loans 81.46 90.35 70.08
Non-accrual loans/total loans 1.35 1.18 1.56
Non-accrual loans/total assets 1.12 0.96 1.22
Non-performing assets/total assets 1.15 0.99 1.30
Capital and Share Related
Stockholders' equity to total assets 17.82% 17.62% 8.57%
Book value per share$ 10.71 $ 10.56 $ 4.81
Tangible book value per share$ 10.46 $ 10.31 $ 4.56
Market value per share$ 13.41 $ 11.22 $ 10.49
Shares outstanding 54,965,555 54,708,066 54,431,945
(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 represents non-interest expense divided by the sum of net interest income and non-interest income excluding gains or losses on securities.
(5) Share and per share amounts related to periods prior to the date of completion of the Conversion (July 28, 2014) have been restated to give retroactive recognition to the exchange ratio applied in the Conversion (2.4484-to-one).

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

Source:Meridian Bancorp, Inc.