EBSB Posts Record Quarterly Earnings

East Boston Savings Bank’s parent company Meridian Bancorp, Inc. announced its quarterly earnings last week and net income in the first quarter of 2015 rose to a record $6.4 million.

The bank’s Chairman, President and Chief Executive Officer Richard J. Gavegnano he was pleased with the first quarter earnings.

“I am pleased to report a rise of 34 percent in our net income to a record $6.4 million for the first quarter of 2015 compared to the first quarter of last year,” said Gavegnano. “When gains on sales of securities for the same periods are excluded, our core pre-tax income increased $3.1 million, or 57 percent to $8.6 million reflecting an 18 percent rise in net interest income, an improvement to 67.61 percent in our efficiency ratio, an 8 percent decline in non-performing assets and negligible net loan charge-offs.”

Gavegnano said to further enhance the bank’s franchise footprint in the Boston market area EBSB is completing plans to add new branches in the Town of Brookline and the Boston neighborhoods of Dorchester and Chinatown that will bring total full-service locations to 30 by year end.

Mr. Gavegnano said the key driver to EBSB earnings growth is net interest income, which rose for the fifteenth consecutive quarter. Net interest income increased $3.8 million to $24.4 million for the quarter ended March 31, 2015 compared to $20.6 million for the quarter ended March 31, 2014.

“Loan yields remained stable, our cost of funds declined and our net interest margin rose for the second consecutive quarter following a slight decline in the margin during the third quarter as a result of the cash proceeds from our stock offering,” said Gavegnano. “We expect further improvement in our net interest margin as we continue to deploy the capital raised in last year’s stock offering into commercial loans.”

Gavegnano commented that he is especially pleased with the continued improvement in the bank’s asset quality trends during the first quarter of 2015.

“Due to the eight percent reduction in non-performing assets during the quarter, the ratio of non-performing assets to total assets declined to 0.89 percent at quarter end, the lowest level in over six years,” he said. “We remain focused on maintaining strong loan underwriting practices as we grow our commercial loan portfolio.”

Non-performing assets at March 31, 2015 were comprised of $13.4 million of one- to four-family mortgage loans, $7.3 million of construction loans, $5.3 million of commercial real estate loans, $2.0 million of home equity loans, $895,000 of commercial business loans and foreclosed real estate of $1.0 million.

However, Boston’s historic winter did have some impact on the bank’s loan portfolio.

“Following net loan growth of $167 million in the fourth quarter of 2014, our loan portfolio grew only slightly in the first quarter of 2015 due to the impact of this winter’s record snowfall here in the Boston area,” said Gavegnano. “Even so, our lenders remained busy and the pipeline of loan origination commitments grew by 25 percent since year end. Along with many businesses in the area, we expect to make up ground in the coming months.”

Total deposits at the bank also increased $90.3 million to $2.594 billion at March 31, 2015 compared to $2.504 billion at December 31, 2014.

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