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Commercial loan payoffs, the conversion of construction loans and reductions in overhead expenses contributed to higher third quarter earnings for Meridian Bancorp Inc., the holding company for East Boston Savings Bank.
EBSB had net income of $19.7 million, or $0.38 per diluted share, for the quarter, up from $15.2 million in the second quarter, or $0.29 per diluted share, and $17.4 million for the third quarter of last year, or $0.33 per diluted share. Net income through the end of September was $49.9 million, or $0.97 per diluted share, up from $43.4 million, or $0.82 per diluted share, for the same period in 2018.
Richard J. Gavegnano, the bank’s chairman, president and CEO, said the increased earnings reflected the reversal of a $3 million loan loss provision resulting from over $200 million of commercial loan pay-offs and another $200 million of construction loans that converted to permanent status. Reductions in overhead expenses were also reflected in the earnings.
“While the strong commercial real estate market conditions in the metropolitan Boston area that resulted in the sale of several large underlying properties and the challenging interest rate environment that impacted market lending rates contributed to the volume of our loan payoffs, our loan origination pipelines remain strong,” Gavegnano said in a statement.
He added that based on current and expected earnings trends, the board of directors intended to increase in the quarterly dividend by $0.01 per share, or 14 percent, to $0.08 per share in the fourth quarter.
Total deposits at EBSB were $4.956 billion at the end of the third quarter down $62.6 million, or 1.2 percent, from $5.018 billion at the end of the second quarter and up $71.5 million, or 1.5 percent, from $4.884 billion at the end of 2018. The net decrease in deposits for the third quarter reflected a $108.3 million reduction in brokered deposits. Core deposits, which exclude certificates of deposit, increased $117.3 million, or 3.7 percent through the end of September to $3.315 billion, or 66.9 percent of total deposits. Total borrowings were $636.6 million, up 6.1 percent to $36.5 million from the end of the second quarter and $49.7 million, or 8.5 percent, from the end of last year.
