The economic downturn and slowing economy due to the COVID-19 pandemic has taken its toll on many businesses and some banks.
However, despite the uncertain economic times Meridian Bancorp, Inc., the holding company for East Boston Savings Bank (EBSB) has remained on top and announced net income of $17.3 million for the quarter ended June 30, 2020. This represented an increase from the $13.0 million reported for the quarter ended March 31, 2020.
“Despite the unprecedented challenges brought on by COVID-19, I am pleased to report record net income of $17.3 million for the second quarter of 2020, up $2.1 million, or 14 percent, from the prior second quarter record in 2019,” said EBSB Chairman, President and CEO Richard Gavegnano. “This improvement in quarterly results reflects continued growth in net interest income, a $4.2 million gain on sale of a Bank property in South Boston and a decline in operating expenses, despite bolstering our reserves with a $9.6 million provision for loan losses. We are experiencing one of the most unique periods in our long history and management has shifted their focus and allocated available resources to minimizing COVID-19’s impact on the Bank and our customers, community and shareholders. We have kept our branches available, supported our loan customers with temporary modifications and ensured our employees did this in the safest manner possible.”
Gavegnano said EBSB began working with loan customers in March, making accommodations for their existing loans to help ease them through the pandemic. As government mandated shutdowns took effect and more people were unemployed, primarily in April and May, EBSB maintained an active understanding of evolving government programs and suspended accounting rules to ensure its customers were taking advantage of opportunities as needed.
“This includes successfully executing the Small Business Administration’s Paycheck Protection Program (“PPP”) and providing modifications to existing commercial and residential loans,” said Gavegnano. “I was happy with the Bank’s execution in assisting our customers when they needed it most.”
According to the report EBSB’s net interest income was $47.4 million for the quarter ended June 30, 2020, up $2.3 million, or 5.0 percent, from the quarter ended March 31, 2020. Non-interest income was $8.7 million for the quarter ended June 30, 2020, up from a loss of $831,000 for the quarter ended March 31, 2020.
““We have reserved $9.6 million this quarter through the provision for loan losses, increasing our coverage ratio to 1.06 percent,” said Gavegnano. “We have been prudently adjusting our reserves throughout the quarter to incorporate the modifications being executed in support of our customers. As of June 30, 2020, we had applied COVID-19 related modifications to approximately 13 percent of our loan portfolio. Management’s focus over the next several quarters will be on monitoring these modified loans through constant analysis and communication with the customer. These efforts will allow us to quantify our exposure and apply the results to determine a reasonable provision for loan losses.”
EBSB’s total assets were $6.418 billion at June 30, 2020, up $69.4 million, or 1.1 percent, from $6.349 billion at March 31, 2020.
Total deposits were $4.820 billion at June 30, 2020, down $1.6 million, or less than 0.01 percent, from $4.822 billion at March 31, 2020. The net decrease in deposits for the six months ended June 30, 2020 reflects a $338.8 million decrease in certificates of deposit, including a $239.4 million reduction in brokered deposits.
“COVID-19 has brought unprecedented challenges to the financial services industry,” said Gavegnano. “We are well-equipped with capital and liquidity and will leverage our resources to steer the Bank and our customers through these difficult times.”
EBSB’s total stockholders’ equity increased $14.7 million, or 2.0 percent, to $734.3 million at June 30, 2020 from $719.6 million at March 31, 2020, and increased $7.7 million, or 1.1 percent, from $726.6 million at December 31, 2019.