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Notable items for the quarter include the following:
* Total loans increased $34.4 million, or 4.8% from December 31, 2008. * Deposits increased by $62.4 million, or 7.8% from December 31, 2008. * The net interest margin improved for the fourth consecutive quarter, increasing from 2.97% for the quarter ended December 31, 2008 to 3.04% for the quarter ended March 31, 2009. * The Company continues to exceed all requirements for well-capitalized regulatory ratios by a significant margin.
"The Company continues to benefit from its strong capital position and ability to originate new loans to credit-worthy businesses and customers," noted Richard Gavegnano, CEO. "In addition, increases to our deposit balances are a reflection of our continued strong customer relationships."
Net Interest Income
* Net interest income for the quarter ended March 31, 2009 was $7.7 million, an increase of $1.8 million, or 31.1%, from the quarter ended March 31, 2008. * Interest expense on deposits decreased $1.6 million, or 23.8%, from $6.9 million to $5.3 million, as the average cost of deposits decreased from 3.61% to 2.77% for the quarters ended March 31, 2008 and 2009, respectively.
Non-interest Income
* Non-interest income for the first quarter of 2009 was $1.1 million, compared to $3.2 million, for the first quarter of 2008. * The Company recorded an impairment loss of $124,000 on securities determined to be other-than-temporarily impaired during the first quarter of 2009, compared to gains on sales of securities of $2.3 million for the first quarter of 2008. * The Company recorded $183,000 in gains on sale of mortgage loans during the first quarter of 2009, compared to $19,000 in the 2008 comparable quarter, as saleable residential loan origination volume has increased in 2009 due to lower rates.
Non-interest Expense
* Non-interest expenses increased $365,000, or 3.9%, from $9.3 million to $9.7 million for the quarters ended March 31, 2008, and 2009, respectively. * Salaries and benefits expense increased $2.2 million. In the first quarter of 2009, the Company recorded salary and benefit expense of $2.1 million related to the retirement of its CFO and an Executive Vice President, and to the settlement of an arbitration agreement with a former employee. The Company also incurred expenses relating to the Company's Equity Incentive Plan, pursuant to which initial grants were made during the fourth quarter of 2008. * Professional service fees increased $343,000 primarily as a result of legal expenses related to the settlement of employee benefit and litigation matters. * In the first quarter of 2008, the Company made a pre-tax $3.0 million contribution to the Company's charitable foundation in conjunction with its stock offering. * Other non-interest expense increased by $451,000, primarily as a result of increased FDIC insurance assessment in 2009.
Securities
* Securities available for sale increased $26.2 million, or 10.4%, from December 31, 2008, as the Company invested excess funds in money market mutual funds as an alternative to federal funds sold.
Loans
* Loan demand remained strong in the first quarter of 2009, with increases in all real estate loan types. * Multi-family loans increased by $15.3 million, or 49.2%, while the one- to four-family residential loan and commercial real estate loan portfolios increased by $9.8 million and $8.4 million, respectively.
Credit Quality
* The allowance for loan losses was $7.5 million, or 1.00% of total loans outstanding as of March 31, 2009, as compared to $6.9 million, or 0.97% of total loans outstanding as of December 31, 2008. The increase in the balance of the allowance for loan losses is due to growth in the loan portfolio and management's ongoing analysis of loan loss factors. * The percentage of non-performing assets to total assets was 1.61% at March 31, 2009, compared to 1.58% at December 31, 2008. Non-performing assets, which totaled $18.2 million at March 31, 2009, included foreclosed real estate of $2.4 million, $10.9 million of construction loans, $4.0 million of residential mortgage loans, and $850,000 of other loans.
Provision for Loan Losses
* Management made provisions for loan losses of $546,000, compared to $2.9 million recorded during the quarter ended December 31, 2008, and $131,000 for the quarter ended March 31, 2008. * The Company experienced $1,000 of loan charge-offs in the first quarter of 2009.
Deposits
* Deposits increased by $62.4 million, or 7.8%, from December 31, 2008, with increases in all deposit types, as local deposit competition has lessened. * Money market deposits increased by $31.9 million, or 18.4%, to $204.7 million at March 31, 2009. Certificates of deposit also increased by $20.2 million, or 4.9%, to $434.2 million.
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, general economic conditions, changes in interest rates, regulatory considerations, and competition and the risk factors described in the Company's filings 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.
Consolidated Balance Sheets
(Unaudited)
March 31, December 31,
------------ ------------
(Dollars in thousands) 2009 2008
--------------------------
ASSETS
Cash and due from banks $ 11,284 $ 10,354
Federal funds sold 18,521 9,911
--------------------------
Total cash and cash equivalents 29,805 20,265
Certificates of deposit - affiliate bank 2,000 7,000
Securities available for sale, at fair
value 278,707 252,529
Federal Home Loan Bank stock, at cost 4,303 4,303
Loans 745,378 711,016
Less allowance for loan losses (7,456) (6,912)
--------------------------
Loans, net 737,922 704,104
Bank-owned life insurance 23,045 22,831
Investment in affiliate bank 10,349 10,376
Premises and equipment, net 22,587 22,710
Accrued interest receivable 5,415 6,036
Foreclosed real estate, net 2,449 2,604
Deferred tax asset, net 10,462 10,057
Other assets 1,723 2,537
--------------------------
Total assets $ 1,128,767 $ 1,065,352
==========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non interest-bearing $ 60,560 $ 55,216
Interest-bearing 798,700 741,636
--------------------------
Total deposits 859,260 796,852
Short-term borrowings 7,546 7,811
Long-term debt 57,675 57,675
Accrued expenses and other liabilities 17,240 13,174
--------------------------
Total liabilities 941,721 875,512
--------------------------
Stockholders' equity:
Common stock, no par value 50,000,000
shares authorized; 23,000,000 shares
issued at March 31, 2009 and
December 31, 2008 -- --
Additional paid-in capital 100,779 100,684
Retained earnings 104,318 105,426
Accumulated other comprehensive loss (6,723) (6,205)
Unearned compensation - ESOP, 776,250 and
786,600 shares at March 31, 2009 and
December 31, 2008, respectively (7,762) (7,866)
Unearned compensation - restricted shares
- 414,000 and 250,000 shares at
March 31, 2009 and December 31, 2008,
respectively (3,566) (2,199)
--------------------------
Total stockholders' equity 187,046 189,840
--------------------------
Total liabilities and stockholders'
equity $ 1,128,767 $ 1,065,352
==========================
MERIDIAN INTERSTATE BANCORP, INC.
Consolidated Statements of Loss
(Unaudited)
Three Months Ended
March 31
--------------------------
(Dollars in thousands, except per share 2009 2008
amounts) --------------------------
Interest and dividend income:
Interest and fees on loans $ 10,645 $ 9,183
Interest on debt securities 2,455 2,612
Dividends on equity securities 293 265
Interest on certificates of deposit 42 --
Interest on federal funds sold 12 1,063
--------------------------
Total interest and dividend income 13,447 13,123
--------------------------
Interest expense:
Interest on deposits 5,263 6,911
Interest on short-term borrowings 35 62
Interest on long-term debt 497 312
--------------------------
Total interest expense 5,795 7,285
--------------------------
Net interest income 7,652 5,838
Provision for loan losses 546 131
--------------------------
Net interest income, after provision
for loan losses 7,106 5,707
--------------------------
Non-interest income:
Customer service fees 697 696
Loan fees 150 178
Gain on sales of loans, net 183 19
Gain (loss) on securities, net (124) 2,266
Income from bank-owned life insurance 214 185
Equity loss on investment in affiliate
bank (27) (168)
--------------------------
Total non-interest income 1,093 3,176
--------------------------
Non-interest expenses:
Salaries and employee benefits 6,314 4,092
Occupancy and equipment 864 780
Data processing 438 387
Marketing and advertising 234 246
Professional services 652 309
Contribution to the Meridian Charitable
Foundation -- 3,000
Foreclosed real estate expense 255 29
Other general and administrative 920 469
--------------------------
Total non-interest expenses 9,677 9,312
--------------------------
Loss before income taxes (1,478) (429)
Benefit for income taxes (370) (108)
--------------------------
Net loss $ (1,108) $ (321)
==========================
Loss per share:
Basic $ (0.05) N/A
Diluted $ (0.05) N/A
Weighted Average Shares:
Basic 21,868,565 N/A
Diluted 22,050,960 N/A
MERIDIAN INTERSTATE BANCORP, INC. AND SUBSIDIARIES
Net Interest Income Analysis
(Unaudited)
For The Three Months Ended March 31,
-----------------------------------------------------
2009 2008
----------------------------------------------------------------------
Interest Interest
(Dollars in Average Earned/ Yield/ Average Earned/ Yield/
thousands) Balance Paid Cost(4) Balance Paid Cost(4)
-----------------------------------------------------
Assets:
Interest-earning
assets:
Loans(1) $ 726,851 $ 10,645 5.94% $ 567,832 $ 9,183 6.50%
Securities and
certificates
of deposit 262,955 2,790 4.30 259,907 2,877 4.45
Other interest-
earning assets 30,361 12 0.16 138,471 1,063 3.09
------------------- -------------------
Total
interest-
earning
assets 1,020,167 13,447 5.35 966,210 13,123 5.46
-------- --------
Noninterest-
earning assets 75,208 74,585
---------- ----------
Total assets $1,095,375 $1,040,795
========== ==========
Liabilities and
stockholders'
equity:
Interest-bearing
liabilities:
NOW deposits $ 36,610 46 0.51% $ 37,511 68 0.72%
Money market
deposits 183,199 1,027 2.27 140,123 1,153 3.30
Savings and
other deposits 122,990 302 1.00 145,970 395 1.09
Certificates of
deposit 427,534 3,888 3.69 445,869 5,295 4.78
------------------- -------------------
Total interest-
bearing
deposits 770,333 5,263 2.77 769,473 6,911 3.61
FHLB advances
and other
borrowings 67,752 532 3.19 35,913 374 4.19
------------------- -------------------
Total interest-
bearing
liabilities 838,085 5,795 2.80 805,386 7,285 3.64
-------- --------
Noninterest-
bearing demand
deposits 58,705 51,801
Other
noninterest-
bearing
liabilities 9,078 24,033
---------- ----------
Total
liabilities 905,868 881,220
Total
stockholders'
equity 189,507 159,575
---------- ----------
Total
liabilities
and
stockholders'
equity $1,095,375 $1,040,795
========== ==========
Net interest
income $ 7,652 $ 5,838
======== ========
Interest rate
spread(2) 2.55% 1.82%
Net interest
margin(3) 3.04% 2.43%
Average
interest-
earning assets
to average
interest-
bearing
liabilities 121.73% 119.97%
----------------------------------------------------------------------
(1) Loans on non-accrual status are included in average balances.
(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) Annualized.
MERIDIAN INTERSTATE BANCORP, INC. AND SUBSIDIARIES
Financial Ratios
(Unaudited)
---------------------------------------------------------------------
Three Months Ended
March 31,
2009 2008
-------- --------
Key Performance Ratios
Return on average assets(4) (0.40)% (0.12)%
Return on average equity(4) (2.34) (0.80)
Interest rate spread(1)(4) 2.55 1.82
Net interest margin(2)(4) 3.04 2.43
Noninterest expense to average assets(4) 3.53 3.58
Efficiency ratio(3) 110.66 103.31
Average interest-earning assets to average
interest-bearing liabilities 121.73 119.97
(1) Interest rate spread represents the difference between the yield
on interest-earning assets and the cost of interest-bearing
liabilities.
(2) Net interest margin represents net interest income divided by
average interest-earning assets.
(3) The efficiency ratio represents non-interest expense, divided by
the sum of net interest income plus non-interest income.
(4) Annualized for the quarterly data.
At At At
March 31, March 31, December 31,
2009 2008 2008
----------------------------------------------------------------------
Asset Quality Ratios
Allowance for loan losses/total
loans 1.00% 0.64% 0.97%
Allowance for loan losses/
nonperforming loans 47.27 127.95 48.57
Non-performing loans/total loans 2.11 0.50 2.00
Non-performing loans/total assets 1.40 0.28 1.34
Non-performing assets /total assets 1.61 0.39 1.58
----------------------------------------------------------------------
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: Meridian Interstate Bancorp
Meridian Interstate Bancorp, Inc.
Richard J. Gavegnano, Chairman and Chief Executive Officer
(978) 977-2211
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