Meridian Bancorp, Inc. (Form: 10-Q, Received: 11/10/2014 16:09:44)

Large Accelerated Filer

Accelerated Filer

Non-Accelerated Filer

Smaller Reporting Company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended September 30, 2014

¨	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission file number 001-36573

Meridian Bancorp, Inc.

(Exact name of registrant as specified in its charter)

Maryland

46-5396964

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

67 Prospect Street,

Peabody, Massachusetts

01960

(Address of Principal Executive Offices)

Zip Code

(617) 567-1500

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

At November 3, 2014, the registrant had 54,708,492 shares of common stock, par value $0.01 per share, outstanding.

MERIDIAN BANCORP, INC.

FORM 10-Q

INDEX


		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets at September 30, 2014 and December 31, 2013 (Unaudited)		3

	Consolidated Statements of Net Income for the three and nine months ended September 30, 2014 and 2013 (Unaudited)		4

	Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2014 and 2013 (Unaudited)		5

	Consolidated Statements of Changes in Stockholders’ Equity for the nine months ended September 30, 2014 and 2013 (Unaudited)		6

	Consolidated Statements of Cash Flows for the nine months ended September 30, 2014 and 2013 (Unaudited)		7

	Notes to Unaudited Consolidated Financial Statements		9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		30

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		48

Item 4.	Controls and Procedures		50

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings		51

Item 1A.	Risk Factors		51

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		51

Item 3.	Defaults Upon Senior Securities		51

Item 4.	Mine Safety Disclosures		51

Item 5.	Other Information		51

Item 6.	Exhibits		52

Signatures			54

Exhibit 10.4
Exhibit 10.5
Exhibit 10.6
Exhibit 10.7
Exhibit 10.9
Exhibit 10.10
Exhibit 10.13
Exhibit 10.15
Exhibit 10.16
Exhibit 21
Exhibit 31.1
Exhibit 31.2
Exhibit 32.0

PART I – FINANCIAL INFORMATION

I TEM 1.

FINANCIAL STATEMENTS

MERIDIAN BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	September 30, 2014			December 31, 2013
	(Dollars in thousands)
ASSETS
Cash and due from banks	$	388,273		$	86,271
Securities available for sale, at fair value		168,159			201,137
Federal Home Loan Bank stock, at cost		12,725			11,907
Loans held for sale		1,996			2,363

Loans, net of fees and costs		2,508,138			2,290,735
Less allowance for loan losses		(26,739	)		(25,335	)

Loans, net		2,481,399			2,265,400

Bank-owned life insurance		38,314			37,446
Foreclosed real estate, net		1,806			1,390
Premises and equipment, net		38,602			39,426
Accrued interest receivable		7,003			7,127
Deferred tax asset, net		14,410			13,478
Goodwill		13,687			13,687
Other assets		2,393			2,469

Total assets	$	3,168,767		$	2,682,101


LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Non interest-bearing	$	288,832		$	255,639
Interest-bearing		2,114,586			1,992,961

Total deposits		2,403,418			2,248,600

Long-term debt		172,687			161,903
Accrued expenses and other liabilities		21,623			22,393

Total liabilities		2,597,728			2,432,896

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 and 54,702,764 shares issued at September 30, 2014; no par value, 100,000,000 shares authorized and 56,313,200 shares issued at December 31, 2013 ⁽¹⁾		547			—
Additional paid-in capital		411,134			99,553
Retained earnings		178,678			162,388
Accumulated other comprehensive income		3,052			4,104
Treasury stock, at cost; 1,906,865 ⁽¹⁾ shares at December 31, 2013		—			(9,919	)
Unearned compensation - ESOP, 2,995,386 and 1,419,093 ⁽¹⁾ shares at September 30, 2014 and December 31, 2013, respectively		(21,548	)		(5,796	)
Unearned compensation - restricted shares, 204,049 and 254,168 ⁽¹⁾ at September 30, 2014 and December 31, 2013, respectively		(824	)		(1,125	)

Total stockholders’ equity		571,039			249,205

Total liabilities and stockholders’ equity	$	3,168,767		$	2,682,101

(1)	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). (See Note 1)

See accompanying notes to unaudited consolidated financial statements.

MERIDIAN BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF NET INCOME

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013 ⁽¹⁾			2014		2013 ⁽¹⁾
	(Dollars in thousands, except per share amounts)
Interest and dividend income:
Interest and fees on loans	$	26,617		$	22,889		$	76,164	$	65,413
Interest on debt securities:
Taxable		588			944			1,963		3,107
Tax-exempt		45			53			134		159
Dividends on equity securities		357			348			1,047		1,061
Other interest and dividend income		258			86			486		251

Total interest and dividend income		27,865			24,320			79,794		69,991

Interest expense:
Interest on deposits		4,513			4,427			13,325		12,516
Interest on borrowings		632			796			1,908		2,433

Total interest expense		5,145			5,223			15,233		14,949

Net interest income		22,720			19,097			64,561		55,042
Provision for loan losses		655			151			1,484		4,630

Net interest income, after provision for loan losses		22,065			18,946			63,077		50,412

Non-interest income:
Customer service fees		1,880			1,857			5,539		5,219
Loan fees		148			185			467		349
Mortgage banking gain (loss), net		19			(102	)		406		456
Gain on sales of securities, net		1,346			2,995			4,411		7,396
Income from bank-owned life insurance		294			299			868		886
Other income		—			—			17		9

Total non-interest income		3,687			5,234			11,708		14,315

Non-interest expenses:
Salaries and employee benefits		10,249			10,033			31,067		29,584
Occupancy and equipment		2,252			2,103			7,029		6,523
Data processing		1,201			1,089			3,271		3,159
Marketing and advertising		769			539			2,264		2,042
Professional services		588			453			1,888		1,591
Foreclosed real estate		(47	)		(31	)		163		161
Deposit insurance		515			525			1,597		1,522
Other general and administrative		1,180			876			3,130		2,892

Total non-interest expenses		16,707			15,587			50,409		47,474

Income before income taxes		9,045			8,593			24,376		17,253
Provision for income taxes		3,030			3,272			8,086		5,839

Net income	$	6,015		$	5,321		$	16,290	$	11,414


Income per share:
Basic	$	0.12		$	0.10		$	0.31	$	0.22
Diluted	$	0.11		$	0.10		$	0.30	$	0.21
Weighted average shares:
Basic		52,043,346			52,965,816			52,718,470		52,984,441
Diluted		53,156,287			53,866,034			53,801,448		53,795,975

(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). (See Note 1)

See accompanying notes to unaudited consolidated financial statements.

MERIDIAN BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
	(In thousands)
Net income	$	6,015		$	5,321		$	16,290		$	11,414

Other comprehensive loss:
Securities available for sale:
Unrealized holding gain (loss) on securities available for sale		(2,690	)		2,123			2,595			4,749
Reclassification adjustment for gain realized in income ⁽¹⁾		(1,346	)		(2,995	)		(4,411	)		(7,396	)

Net unrealized loss		(4,036	)		(872	)		(1,816	)		(2,647	)
Tax effect		1,603			343			764			1,041

Total other comprehensive loss		(2,433	)		(529	)		(1,052	)		(1,606	)


Comprehensive income	$	3,582		$	4,792		$	15,238		$	9,808

(1)

Amounts are included in gain on sales of securities, net in the Consolidated Statements of Net Income. Provision for income tax associated with the reclassification adjustment for the three months ended September 30, 2014 and 2013 was $535,000 and $903,000 and for the nine months ended September 30, 2014 and 2013 was $1.9 million and $2.9 million, respectively.

See accompanying notes to unaudited consolidated financial statements.

MERIDIAN BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Nine Months Ended September 30, 2014 and 2013

(Unaudited)


	Shares of Common Stock Outstanding ⁽¹⁾			Common Stock		Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Income			Treasury Stock			Unearned Compensation - ESOP			Unearned Compensation - Restricted Shares			Total
	(Dollars in thousands)
*Nine Months Ended September 30, 2013*
Balance at December 31, 2012		54,488,922		$	—	$	98,338		$	146,959	$	4,915		$	(8,331	)	$	(6,210	)	$	(1,728	)	$	233,943
Comprehensive income		—			—		—			11,414		(1,606	)		—			—			—			9,808
Purchase of treasury stock		(223,015	)		—		—			—		—			(1,698	)		—			—			(1,698	)
ESOP shares earned (76,023 shares)		—			—		271			—		—			—			311			—			582
Restricted stock awards, net of awards surrendered		97,373			—		513			—		—			—			—			468			981
Stock options exercised		20,221			—		(72	)		—		—			106			—			—			34

Balance at September 30, 2013		54,383,501		$	—	$	99,050		$	158,373	$	3,309		$	(9,923	)	$	(5,899	)	$	(1,260	)	$	243,650


*Nine Months Ended September 30, 2014*
Balance at December 31, 2013		54,406,335		$	—	$	99,553		$	162,388	$	4,104		$	(9,919	)	$	(5,796	)	$	(1,125	)	$	249,205
Comprehensive income		—			—		—			16,290		(1,052	)		—			—			—			15,238
ESOP shares earned (91,323 shares)		—			—		388			—		—			—			498			—			886
Restricted stock awards, net of awards surrendered		(1,861	)		—		345			—		—			—			—			301			646
Excess tax benefits in connection with share-based compensation		—			—		86			—		—			—			—			—			86
Stock options exercised		29,919			—		(93	)		—		—			150			—			—			57
Corporate Reorganization:
Conversion of Meridian Interstate Bancorp, Inc.		(1,356,629	)		531		301,750			—		—			—			—			—			302,281
Purchase by ESOP		1,625,000			16		16,234			—		—			—			(16,250	)		—			—
Treasury stock retired		—			—		(9,769	)		—		—			9,769			—			—			—
Contribution of Meridian Financial Services, MHC		—			—		2,640			—		—			—			—			—			2,640

Balance at September 30, 2014		54,702,764		$	547	$	411,134		$	178,678	$	3,052		$	—		$	(21,548	)	$	(824	)	$	571,039

(1)	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). (See Note 1)

See accompanying notes to unaudited consolidated financial statements.

MERIDIAN BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Nine Months Ended September 30,
	2014			2013
	(In thousands)
Cash flows from operating activities:
Net income	$	16,290		$	11,414
Adjustments to reconcile net income to net cash provided by operating activities:
Accretion of acquisition fair value adjustments		(31	)		(240	)
ESOP shares earned		886			582
Provision for loan losses		1,484			4,630
Accretion of net deferred loan origination costs/fees		(401	)		(50	)
Net accretion of securities available for sale		(20	)		(6	)
Capitalization of mortgage servicing rights		(28	)		(97	)
Amortization of mortgage servicing rights		173			248
Depreciation and amortization expense		1,794			1,706
Gain on sales of securities, net		(4,411	)		(7,396	)
Net loss and provision for foreclosed real estate		78			42
Deferred income tax benefit		(168	)		(92	)
Income from bank-owned life insurance		(868	)		(886	)
Share-based compensation expense		646			981
Excess tax benefits in connection with share-based compensation		(86	)		—
Net changes in:
Loans held for sale		367			8,208
Accrued interest receivable		124			(140	)
Other assets		(69	)		(595	)
Accrued expenses and other liabilities		(684	)		(43	)

Net cash provided by operating activities		15,076			18,266

Cash flows from investing activities:
Activity in securities available for sale:
Proceeds from maturities, calls and principal payments		36,873			31,607
Redemption of mutual funds, net		1,015			11,792
Proceeds from sales		24,311			45,826
Purchases		(26,631	)		(27,088	)
Loans originated, net of principal payments received		(218,822	)		(331,139	)
Purchases of premises and equipment		(908	)		(2,293	)
(Purchase) redemption of Federal Home Loan Bank stock		(818	)		157
Cash received in MHC merger		2,640			—
Proceeds from sales of foreclosed real estate		1,223			1,133

Net cash used in investing activities		(181,117	)		(270,005	)

MERIDIAN BANCORP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Nine Months Ended September 30,
	2014			2013
	(In thousands)
Cash flows from financing activities:
Net increase in deposits		154,835			339,693
Proceeds from Federal Home Loan Bank advances with maturities of three months or more		57,131			47,500
Repayment of Federal Home Loan Bank advances with maturities of three months or more		(46,347	)		(20,749	)
Stock options exercised		57			34
Excess tax benefits in connection with share-based compensation		86			—
Net proceeds from sale of common stock		302,281			—
Purchase of treasury stock		—			(1,698	)

Net cash provided by financing activities		468,043			364,780


Net change in cash and cash equivalents		302,002			113,041

Cash and cash equivalents at beginning of period		86,271			93,192


Cash and cash equivalents at end of period	$	388,273		$	206,233


Supplemental cash flow information:
Interest paid on deposits	$	13,331		$	12,503
Interest paid on borrowings		1,931			2,759
Income taxes paid, net of refunds		7,493			6,465
Non-cash investing and financing activities:
Transfers from loans to foreclosed real estate		1,717			353
Net change in amounts due to broker on security transactions		—			475

See accompanying notes to unaudited consolidated financial statements.

MERIDIAN BANCORP, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.	BASIS OF PRESENTATION

Meridian Bancorp, Inc. (the “Company”) is a Maryland corporation incorporated on March 6, 2014 to be the successor to Meridian Interstate Bancorp, Inc. (“Old Meridian”) upon completion of the second step mutual-to-stock conversion (the “Conversion”) of Meridian Financial Services, Incorporated, (the “MHC”), the top tier mutual holding company of Old Meridian. Old Meridian was the former mid-tier holding company for East Boston Savings Bank (the “Bank”). Prior to completion of the Conversion, approximately 59% of the shares of common stock of Old Meridian were owned by the MHC. In conjunction with the Conversion, the MHC and Meridian Interstate Funding Corporation were merged into Old Meridian (and ceased to exist), and Old Meridian merged into the Company and the Company became its successor under the name Meridian Bancorp, Inc. The Conversion was completed July 28, 2014. The Company raised gross proceeds of $325.0 million by selling a total of 32,500,000 shares of common stock at $10.00 per share in the second step stock offering. Concurrent with the completion of the stock offering, each share of Old Meridian common stock owned by public stockholders (stockholders other than the MHC) was exchanged for 2.4484 shares of Company common stock. A total of 22,200,316 shares of Company common stock were issued in the exchange. The Conversion was accounted for as a capital raising transaction by entities under common control. The historical financial results of the MHC are immaterial to the results of the Company and therefore the net assets of the MHC have been reflected as an increase to stockholders’ equity.

As a result of the Conversion, all share and per share information has been revised to reflect the 2.4484-to-one exchange ratio. Such revised financial information presented in this Form 10-Q is derived from the consolidated financial statements of Old Meridian and its subsidiaries.

The consolidated financial statements include the accounts of the Company and all other entities in which it has a controlling financial interest. The Company owns the Bank. The Bank’s subsidiaries include Prospect, Inc., which engages in securities transactions on its own behalf, EBOSCO, LLC and Berkeley Riverbend Estates LLC, both of which hold foreclosed real estate, and East Boston Investment Services, Inc., which is authorized for third-party investment sales and is currently inactive. All significant intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Such adjustments were of a normal recurring nature. The results of operations for the three and nine months ended September 30, 2014 are not necessarily indicative of the results that may be expected for the entire year or any other interim period. For additional information, refer to the consolidated financial statements and footnotes thereto of Old Meridian included in Old Meridian’s Form 10-K for the year ended December 31, 2013 which was filed with the Securities and Exchange Commission (“SEC”) on March 17, 2014, and is available through the SEC’s website at www.sec.gov .

In preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, the evaluation of goodwill for impairment, other-than-temporary impairment of securities and the valuation of deferred tax assets.

2.	RECENT ACCOUNTING PRONOUNCEMENT

In January 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (the “ASU”) No. 2014-04, Troubled Debt Restructurings by Creditors (Subtopic 310-40), Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure. This update is intended to reduce diversity in the application of guidance by clarifying when an in substance repossession or foreclosure occurs, that is, when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. Amendments in this update are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The adoption is not expected to have a material impact on the Company’s consolidated financial statements.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The objective of this ASU was to clarify the principles for recognizing revenue and to develop a common revenue standard for GAAP and International Financial Reporting Standards. The guidance in this ASU affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. The core principal of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. For public entities, the amendments in this update are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. The Company is currently reviewing this ASU to determine if it will have an impact on its consolidated financial statements.

3.	EARNINGS PER SHARE

Basic earnings per share excludes dilution and is calculated by dividing net income available to common stockholders by the weighted-average number of common shares outstanding during the period. If rights to dividends on unvested stock awards are non-forfeitable, these unvested stock awards are considered outstanding in the computation of basic earnings per share. Diluted earnings per share is computed in a manner similar to that of basic earnings per share except that the weighted-average number of common shares outstanding is increased to include the number of incremental common shares (computed using the treasury method) that would have been outstanding if all potentially dilutive common stock equivalents (such as options) were issued during the period. Unallocated common shares held by the ESOP are shown as a reduction in stockholders’ equity and are not included in the weighted-average number of common shares outstanding for either basic or diluted earnings per share calculations.

Basic and diluted earnings per share have been computed based on the following:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
	*(Dollars in thousands, except per share amounts)*

Net income available to common stockholders	$	6,015	$	5,321	$	16,290	$	11,414


Basic weighted average shares outstanding		52,043,346		52,965,816		52,718,470		52,984,441
Effect of dilutive stock options		1,112,941		900,218		1,082,978		811,534

Diluted weighted average shares outstanding		53,156,287		53,866,034		53,801,448		53,795,975


Earnings per share:
Basic	$	0.12	$	0.10	$	0.31	$	0.22
Diluted	$	0.11	$	0.10	$	0.30	$	0.21

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). There were no anti-dilutive options for the three and nine months ended September 30, 2014. For the three and nine months ended September 30, 2013, options for the exercise of 17,056 and 43,824, respectively, were not included in the calculation of diluted earnings per share because to do so would have been anti-dilutive.

4.	SECURITIES AVAILABLE FOR SALE

The amortized cost and fair values of securities available for sale, with gross unrealized gains and losses, follows:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
September 30, 2014
Debt securities:
Corporate bonds:
Financial services	$	42,829	$	715	$	(37	)	$	43,507
Industry and manufacturing		8,927		160		—			9,087
Healthcare		4,003		57		—			4,060
Other		1,006		26		—			1,032

Total corporate bonds		56,765		958		(37	)		57,686
Government-sponsored enterprises		34,552		1		(617	)		33,936
Municipal bonds		5,692		198		—			5,890
Residential mortgage-backed securities:
Government-sponsored enterprises		9,475		570		(6	)		10,039
Private label		1,455		89		—			1,544

Total debt securities		107,939		1,816		(660	)		109,095

Marketable equity securities:
Common stocks:
Financial services		10,534		662		(166	)		11,030
Industry and manufacturing		18,402		1,353		(850	)		18,905
Consumer products and services		12,996		1,423		(701	)		13,718
Technology		2,964		207		(12	)		3,159
Healthcare		5,234		1,445		—			6,679
Other		3,441		1,143		(23	)		4,561

Total common stocks		53,571		6,233		(1,752	)		58,052
Money market mutual funds		1,049		—		(37	)		1,012

Total marketable equity securities		54,620		6,233		(1,789	)		59,064

Total securities available for sale	$	162,559	$	8,049	$	(2,449	)	$	168,159

December 31, 2013
Debt securities:
Corporate bonds:
Financial services	$	58,166	$	1,148	$	(66	)	$	59,248
Industry and manufacturing		13,893		264		(16	)		14,141
Consumer products and services		7,234		32		—			7,266
Technology		2,503		18		—			2,521
Healthcare		9,009		149		—			9,158
Other		1,011		43		—			1,054

Total corporate bonds		91,816		1,654		(82	)		93,388
Government-sponsored enterprises		34,562		3		(1,417	)		33,148
Municipal bonds		5,721		137		—			5,858
Residential mortgage-backed securities:
Government-sponsored enterprises		11,138		592		—			11,730
Private label		1,578		86		—			1,664

Total debt securities		144,815		2,472		(1,499	)		145,788

Marketable equity securities:
Common stocks:
Financial services		6,909		614		—			7,523
Industry and manufacturing		18,092		2,413		(58	)		20,447
Consumer products and services		9,909		1,530		(3	)		11,436
Technology		3,442		132		(66	)		3,508
Healthcare		5,048		1,115		—			6,163
Other		3,441		807		—			4,248

Total common stocks		46,841		6,611		(127	)		53,325
Money market mutual funds		2,065		—		(41	)		2,024

Total marketable equity securities		48,906		6,611		(168	)		55,349

Total securities available for sale	$	193,721	$	9,083	$	(1,667	)	$	201,137

At September 30, 2014, securities with an amortized cost of $23.3 million and $1.8 million, respectively, were pledged as collateral for Federal Home Loan Bank of Boston borrowings and Federal Reserve Bank discount window borrowings.

The amortized cost and fair value of debt securities by contractual maturity at September 30, 2014 are as follows. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without prepayment penalties.


	One Year or Less				After One Year Through Five Years				After Five Years				Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
Corporate bonds:
Financial services	$	15,491	$	15,664	$	27,338	$	27,843	$	—	$	—	$	42,829	$	43,507
Industry and manufacturing		3,000		3,008		5,927		6,079		—		—		8,927		9,087
Healthcare		4,003		4,060		—		—		—		—		4,003		4,060
Other		1,006		1,032		—		—		—		—		1,006		1,032

Total corporate bonds		23,500		23,764		33,265		33,922		—		—		56,765		57,686
Government-sponsored enterprises		51		53		11,500		11,404		23,001		22,479		34,552		33,936
Municipal bonds		250		250		5,442		5,640		—		—		5,692		5,890
Residential mortgage-backed securities:
Government-sponsored enterprises		1		1		—		—		9,474		10,038		9,475		10,039
Private label		—		—		—		—		1,455		1,544		1,455		1,544

Total	$	23,802	$	24,068	$	50,207	$	50,966	$	33,930	$	34,061	$	107,939	$	109,095

For the three months ended September 30, 2014 and 2013, proceeds from sales of securities available for sale amounted to $9.5 million and $18.1 million, respectively. During the 2014 and 2013 periods, gross gains of $1.3 million and $3.0 million and gross losses of $11,000 and $0, respectively, were realized on those sales. For the nine months ended September 30, 2014 and 2013, proceeds from sales of securities available for sale amounted to $24.3 million and $45.8 million, respectively. During the 2014 and 2013 periods, gross gains of $4.4 million and $7.4 million and gross losses of $11,000 and $10,000, respectively, were realized on those sales.

Information pertaining to securities available for sale as of September 30, 2014 and December 31, 2013, with gross unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:


	Less Than Twelve Months				Twelve Months or Longer
	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value
	(In thousands)
September 30, 2014
Debt securities:
Corporate bonds - financial services	$	—	$	—	$	37	$	1,463
Government-sponsored enterprises		—		—		617		33,884
Residential mortgage-backed securities:
Government-sponsored enterprises		6		224		—		—

Total debt securities		6		224		654		35,347

Marketable equity securities:
Common stocks:
Financial services		166		4,036		—		—
Industry and manufacturing		850		5,989		—		—
Consumer products and services		701		4,273		—		—
Technology		12		949		—		—
Other		23		444

Total common stocks		1,752		15,691		—		—
Money market mutual funds		—		—		37		1,012

Total marketable equity securities		1,752		15,691		37		1,012

Total temporarily impaired securities	$	1,758	$	15,915	$	691	$	36,359


	Less Than Twelve Months				Twelve Months or Longer
	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value
	(In thousands)
December 31, 2013
Debt securities:
Corporate bonds:
Financial services	$	19	$	6,981	$	47	$	1,453
Industry and manufacturing		16		984		—		—

Total corporate bonds		35		7,965		47		1,453
Government-sponsored enterprises		1,296		31,205		121		1,879

Total debt securities		1,331		39,170		168		3,332

Marketable equity securities:
Common stocks:
Industry and manufacturing		58		3,089		—		—
Consumer products and services		3		606		—		—
Technology		66		1,872		—		—

Total common stocks		127		5,567		—		—
Money market mutual funds		—		—		41		998

Total marketable equity securities		127		5,567		41		998

Total temporarily impaired securities	$	1,458	$	44,737	$	209	$	4,330

Management evaluates securities for other-than-temporary impairment on a quarterly basis, with more frequent evaluation for selected issuers or when economic or market concerns warrant such evaluations.

As of September 30, 2014, the net unrealized gain on the total debt securities portfolio was $1.2 million. At September 30, 2014, 29 debt securities had unrealized losses with aggregate depreciation of 1.8% from the Company’s amortized cost basis. In analyzing a debt issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, industry analysts’ reports and, to a lesser extent given the relatively insignificant levels of depreciation in the Company’s debt portfolio, spread differentials between the effective rates on instruments in the portfolio compared to risk-free rates. The unrealized losses are primarily caused by (a) recent declines in profitability and near-term profit forecasts by industry analysts resulting from a decline in the level of business activity (b) recent downgrades by several industry analysts and (c) recent increases in interest rates. The contractual terms of these investments do not permit the issuers to settle the security at a price less than the par value of the investment. The Company currently does not believe it is probable that it will be unable to collect all amounts due according to the contractual terms of the investments. Therefore, it is expected that the bonds would not be settled at a price less than the par value of the investment. Because (1) the Company does not intend to sell the securities; (2) the Company does not believe it is more likely than not that the Company will be required to sell the securities before recovery of its amortized cost basis; and (3) the present value of expected cash flows is sufficient to recover the entire amortized cost basis of the securities, the Company does not consider these investments to be other-than-temporarily impaired at September 30, 2014.

As of September 30, 2014, the net unrealized gain on the total marketable equity portfolio was $4.4 million. At September 30, 2014, 35 marketable equity securities had unrealized losses with aggregate depreciation of 9.7% from the Company’s cost basis. Although the issuers have shown declines in earnings as a result of the weakened economy, no credit issues have been identified that cause management to believe the decline in market value is other than temporary, and the Company has the ability and intent to hold these investments until a recovery of fair value. In analyzing an equity issuer’s financial condition, management considers industry analysts’ reports, financial performance and projected target prices of investment analysts within a one-year time frame. A decline of 10% or more in the value of an acquired equity security is generally the triggering event for management to review individual securities for liquidation and/or classification as other-than-temporarily impaired. Impairment losses are recognized when management concludes that declines in the value of equity securities are other than temporary, or when they can no longer assert that they have the intent and ability to hold depreciated equity securities for a period of time sufficient to allow for any anticipated recovery in fair value. Unrealized losses on marketable equity securities that are in excess of 25% of cost and that have been sustained for more than twelve months are generally considered other-than-temporary and charged to earnings as impairment losses, or realized through sale of the security.

LOANS

The Company’s loan portfolio consists primarily of residential real estate, commercial real estate, construction, commercial business and consumer segments. The residential real estate loans include classes for one-to four-family, multi-family and home equity lines of credit. There are no foreign loans outstanding. Interest rates charged on loans are affected principally by the demand for such loans, the supply of money available for lending purposes and the rates offered by our competitors. A summary of loans follows:


	September 30, 2014						December 31, 2013
	Amount			Percent			Amount			Percent
	(Dollars in thousands)
Real estate loans:
Residential real estate:
One- to four-family	$	467,426			18.6	%	$	454,148			19.8	%
Multi-family		365,033			14.6			288,172			12.6
Home equity lines of credit		49,738			2.0			54,499			2.4
Commercial real estate		1,079,707			43.0			1,032,408			45.0
Construction		226,566			9.0			208,799			9.1

Total real estate loans		2,188,470			87.2			2,038,026			88.9
Commercial business loans		312,917			12.5			247,005			10.8
Consumer		8,559			0.3			7,225			0.3

Total loans		2,509,946			100.0	%		2,292,256			100.0	%

Allowance for loan losses		(26,739	)					(25,335	)
Net deferred loan origination fees		(1,808	)					(1,521	)


Loans, net	$	2,481,399					$	2,265,400

The Company has transferred a portion of its originated commercial real estate loans to participating lenders. The amounts transferred have been accounted for as sales and are therefore not included in the Company’s accompanying balance sheets. The Company and participating lenders share ratably in any gains or losses that may result from a borrower’s lack of compliance with contractual terms of the loan. The Company continues to service the loans on behalf of the participating lenders and, as such, collects cash payments from the borrowers, remits payments to participating lenders and disburses required escrow funds to relevant parties. At September 30, 2014 and December 31, 2013, the Company was servicing loans for participants aggregating $79.7 million and $62.8 million, respectively.

As a result of the Mt. Washington Co-operative Bank acquisition in January 2010, the Company acquired loans at fair value of $345.3 million. Included in this amount was $27.7 million of loans with evidence of deterioration of credit quality since origination for which it was probable, at the time of the acquisition, that the Company would be unable to collect all contractually required payments receivable. The Company’s evaluation of loans with evidence of credit deterioration as of the acquisition date resulted in a nonaccretable discount of $7.6 million, which is defined as the loan’s contractually required payments receivable in excess of the amount of its cash flows expected to be collected. The Company considered factors such as payment history, collateral values, and accrual status when determining whether there was evidence of deterioration of the loan’s credit quality at the acquisition date.

The following is a summary of the outstanding balance of the acquired loans with evidence of credit deterioration:


	September 30, 2014			December 31, 2013
	(In thousands)
Real estate loans:
Residential real estate:
One- to four-family	$	5,821		$	6,494
Multi-family		828			846
Home equity lines of credit		506			509
Commercial real estate		688			720

Total real estate loans		7,843			8,569
Commercial business loans		—			78
Consumer		—			4

Outstanding principal balance		7,843			8,651
Discount		(2,004	)		(2,215	)


Carrying amount	$	5,839		$	6,436

A rollforward of accretable yield follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
	(In thousands)
Beginning balance	$	1,154		$	903		$	1,181		$	1,047
Accretion		(17	)		(6	)		(44	)		(20	)
Disposals		—			(31	)		—			(161	)

Ending balance	$	1,137		$	866		$	1,137		$	866

An analysis of the allowance for loan losses and related information follows:


	For the Three Months Ended September 30, 2014
	One- to four- family			Multi- family			Home equity lines of credit			Commercial real estate			Construction			Commercial business		Consumer			Unallocated		Total
	*(In thousands)*
Beginning balance	$	1,913		$	3,346		$	105		$	11,981		$	4,512		$	4,185	$	89		$	—	$	26,131
Provision (credit) for loan losses		(63	)		(87	)		(6	)		557			(61	)		293		22			—		655
Charge-offs		—			—			—			(36	)		(71	)		—		(40	)		—		(147	)
Recoveries		23			—			—			—			57			1		19			—		100

Ending balance	$	1,873		$	3,259		$	99		$	12,502		$	4,437		$	4,479	$	90		$	—	$	26,739


	For the Three Months Ended September 30, 2013
	One- to four- family			Multi- family		Home equity lines of credit			Commercial real estate		Construction			Commercial business		Consumer			Unallocated		Total
	*(In thousands)*
Beginning balance	$	1,885		$	1,308	$	160		$	12,181	$	5,247		$	2,586	$	83		$	—	$	23,450
Provision (credit) for loan losses		129			772		(7	)		174		(1,358	)		396		45			—		151
Charge-offs		(135	)		—		—			—		(369	)		—		(71	)		—		(575	)
Recoveries		88			—		—			—		537			4		24			—		653

Ending balance	$	1,967		$	2,080	$	153		$	12,355	$	4,057		$	2,986	$	81		$	—	$	23,679


	For the Nine Months Ended September 30, 2014
	One- to four- family			Multi- family		Home equity lines of credit			Commercial real estate			Construction			Commercial business		Consumer			Unallocated		Total
	*(In thousands)*
Beginning balance	$	1,991		$	2,419	$	155		$	12,831		$	4,374		$	3,433	$	132		$	—	$	25,335
Provision (credit) for loan losses		(131	)		840		(51	)		(281	)		56			1,039		12			—		1,484
Charge-offs		(54	)		—		(5	)		(48	)		(71	)		—		(126	)		—		(304	)
Recoveries		67			—		—			—			78			7		72			—		224

Ending balance	$	1,873		$	3,259	$	99		$	12,502		$	4,437		$	4,479	$	90		$	—	$	26,739


	For the Nine Months Ended September 30, 2013
	One- to four- family			Multi- family			Home equity lines of credit			Commercial real estate		Construction			Commercial business		Consumer			Unallocated		Total
	*(In thousands)*
Beginning balance	$	2,507		$	1,431		$	226		$	10,405	$	3,656		$	2,174	$	105		$	—	$	20,504
Provision (credit) for loan losses		(130	)		745			(73	)		1,950		1,215			791		132			—		4,630
Charge-offs		(531	)		(96	)		—			—		(1,362	)		—		(224	)		—		(2,213	)
Recoveries		121			—			—			—		548			21		68			—		758

Ending balance	$	1,967		$	2,080		$	153		$	12,355	$	4,057		$	2,986	$	81		$	—	$	23,679


	At September 30, 2014
	One- to four-family		Multi- family		Home equity lines of credit		Commercial real estate		Construction		Commercial business		Consumer		Unallocated		Total
	*(In thousands)*
Amount of allowance for loan losses for impaired loans	$	67	$	171	$	—	$	68	$	31	$	84	$	—	$	—	$	421
Amount of allowance for loan losses for non-impaired loans		1,806		3,088		99		12,434		4,406		4,395		90		—		26,318

	$	1,873	$	3,259	$	99	$	12,502	$	4,437	$	4,479	$	90	$	—	$	26,739

Amount of allowance for loan losses for loans acquired with deteriorated credit quality included above	$	29	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	29


Impaired loans	$	3,957	$	1,453	$	20	$	13,532	$	8,477	$	1,073	$	—			$	28,512
Non-impaired loans		463,469		363,580		49,718		1,066,175		218,089		311,844		8,559				2,481,434

	$	467,426	$	365,033	$	49,738	$	1,079,707	$	226,566	$	312,917	$	8,559			$	2,509,946


	At December 31, 2013
	One- to four-family		Multi- family		Home equity lines of credit		Commercial real estate		Construction		Commercial business		Consumer		Unallocated		Total
	*(In thousands)*
Amount of allowance for loan losses for impaired loans	$	132	$	—	$	—	$	190	$	54	$	—	$	—	$	—	$	376
Amount of allowance for loan losses for non-impaired loans		1,859		2,419		155		12,641		4,320		3,433		132		—		24,959

	$	1,991	$	2,419	$	155	$	12,831	$	4,374	$	3,433	$	132	$	—	$	25,335

Amount of allowance for loan losses for loans acquired with deteriorated credit quality included above	$	44	$	—	$	—	$	12	$	—	$	—	$	—	$	—	$	56


Impaired loans	$	4,089	$	4,002	$	21	$	10,820	$	13,308	$	1,232	$	—			$	33,472
Non-impaired loans		450,059		284,170		54,478		1,021,588		195,491		245,773		7,225				2,258,784

	$	454,148	$	288,172	$	54,499	$	1,032,408	$	208,799	$	247,005	$	7,225			$	2,292,256

The following table provides information about the Company’s past due and non-accrual loans:


	30-59 Days Past Due		60-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Loans on Non-accrual
	(In thousands)
September 30, 2014
Real estate loans:
Residential real estate:
One- to four-family	$	4,576	$	818	$	4,457	$	9,851	$	14,327
Home equity lines of credit		1,608		117		370		2,095		2,397
Commercial real estate		53		465		2,378		2,896		3,382
Construction		—		—		6,063		6,063		7,132

Total real estate loans		6,237		1,400		13,268		20,905		27,238
Commercial business loans		15		60		846		921		883
Consumer		566		334		—		900		—


Total	$	6,818	$	1,794	$	14,114	$	22,726	$	28,121


December 31, 2013
Real estate loans:
Residential real estate:
One- to four-family	$	6,203	$	1,185	$	6,714	$	14,102	$	17,622
Multi-family		75		—		85		160		—
Home equity lines of credit		2,504		178		744		3,426		2,689
Commercial real estate		314		—		2,742		3,056		8,972
Construction		497		—		11,297		11,794		11,298

Total real estate loans		9,593		1,363		21,582		32,538		40,581
Commercial business loans		284		50		852		1,186		949
Consumer		461		282		—		743		—


Total	$	10,338	$	1,695	$	22,434	$	34,467	$	41,530

At September 30, 2014 and December 31, 2013, the Company did not have any accruing loans past due 90 days or more. Delinquent loans at September 30, 2014 and December 31, 2013 included $1.2 million and $1.3 million, respectively, of loans acquired with evidence of credit deterioration. At September 30, 2014 and December 31, 2013, non-accrual loans included $724,000 and $1.2 million, respectively, of loans acquired with evidence of credit deterioration.

The following tables provide information with respect to the Company’s impaired loans:


	September 30, 2014						December 31, 2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
	(In thousands)
Impaired loans without a valuation allowance:
One- to four-family	$	3,233	$	3,656			$	2,399	$	2,699
Multi-family		—		—				4,002		4,002
Home equity lines of credit		20		20				21		21
Commercial real estate		11,259		11,271				9,327		10,014
Construction		7,986		8,666				12,930		15,926
Commercial business loans		524		855				1,232		1,635

Total		23,022		24,468				29,911		34,297

Impaired loans with a valuation allowance:
One- to four-family		724		724	$	67		1,690		1,806	$	132
Multi-family		1,453		1,453		171		—		—		—
Commercial real estate		2,273		2,500		68		1,493		1,493		190
Construction		491		491		31		378		389		54
Commercial business loans		549		549		84		—		—		—

Total		5,490		5,717		421		3,561		3,688		376

Total impaired loans	$	28,512	$	30,185	$	421	$	33,472	$	37,985	$	376


	Three Months Ended September 30,
	2014						2013
	Average Recorded Investment		Interest Income Recognized		Interest Income Recognized on Cash Basis		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized on Cash Basis
	(In thousands)
One- to four-family	$	4,169	$	54	$	49	$	4,484	$	54	$	42
Multi-family		1,456		14		14		4,331		81		80
Home equity lines of credit		20		—		—		21		—		—
Commercial real estate		13,525		129		84		10,373		141		95
Construction		8,142		119		103		16,160		274		41
Commercial business loans		1,097		23		7		887		49		19


Total impaired loans	$	28,409	$	339	$	257	$	36,256	$	599	$	277


	Nine Months Ended September 30,
	2014						2013
	Average Recorded Investment		Interest Income Recognized		Interest Income Recognized on Cash Basis		Average Recorded Investment		Interest Income Recognized		Interest Income Recognized on Cash Basis
	(In thousands)
One- to four-family	$	4,193	$	147	$	144	$	4,547	$	163	$	134
Multi-family		1,465		43		43		5,023		247		237
Home equity lines of credit		20		1		1		22		1		1
Commercial real estate		6,691		230		107		10,920		307		184
Construction		8,164		376		202		17,002		823		317
Commercial business loans		1,127		62		14		650		66		39


Total impaired loans	$	21,660	$	859	$	511	$	38,164	$	1,607	$	912

At September 30, 2014, additional funds of $3.6 million are committed to be advanced in connection with impaired construction loans.

The following table summarizes the troubled debt restructurings (“TDRs”) at the dates indicated:


	September 30, 2014		December 31, 2013
	(In thousands)
TDRs on accrual status:
One- to four-family	$	2,753	$	2,588
Multi-family		1,453		109
Home equity lines of credit		20		21
Commercial real estate		10,019		1,368
Commercial business loans		125		—

Total TDRs on accrual status		14,370		4,086

TDRs on non-accrual status:
One- to four-family		1,204		1,500
Commercial real estate		286		4,309
Construction		5,036		9,489
Commercial business loans		186		192

Total TDRs on non-accrual status		6,712		15,490

Total TDRs	$	21,082	$	19,576

The following is a summary of TDRs during the periods indicated:


	Three Months Ended September 30,
	2014						2013
	Number of Loans		Pre-Modification Balance		Post-Modification Balance		Number of Loans		Pre-Modification Balance		Post-Modification Balance
	(Dollars In thousands)
Real estate loans:
One- to four-family		—	$	—	$	—		1	$	126	$	126
Commercial real estate		1		10,037		10,037		—		—		—

Total		1	$	10,037	$	10,037		1	$	126	$	126


	Nine Months Ended September 30,
	2014						2013
	Number of Loans		Pre-Modification Balance		Post-Modification Balance		Number of Loans		Pre-Modification Balance		Post-Modification Balance
	(Dollars In thousands)
Real estate loans:
One- to four-family		1	$	228	$	228		2	$	391	$	391
Commercial real estate		3		10,322		10,322		—		—		—
Construction		1		568		568		—		—		—
Commercial business loans		2		143		143		1		207		207

Total		7	$	11,261	$	11,261		3	$	598	$	598

The following provides information on how loans were modified as TDRs for the periods indicated.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
	(In thousands)
Adjusted interest rates	$	—	$	126	$	228	$	391
Extended maturity dates		10,037		—		10,419		—
Combination of rate and maturity		—		—		614		207

Total	$	10,037	$	126	$	11,261	$	598

For loans modified as TDRs during the three months ended September 30, 2014, the Company extended the maturity date for one loan to 20 years. The loans modified as TDRs during the nine months ended September 30, 2014 consisted of two loans with rate reductions ranging from 1.50% to 2.00% and five loans with extended periods ranging from twelve months to 20 years.

The Company generally places loans modified as TDRs on non-accrual status for a minimum period of six months. Loans modified as TDRs qualify for return to accrual status once they have demonstrated performance with the modified terms of the loan agreement for a minimum of six months and future payments are reasonably assured. TDRs are reported as impaired loans with an allowance established as part of the allocated component of the allowance for loan losses when the discounted cash flows of the impaired loan is lower than the carrying value of that loan. TDRs may be removed from impairment disclosures in the year following the restructure if the borrower demonstrates compliance with the modified terms and the restructuring agreement specifies an interest rate equal to that which would be provided to a borrower with similar credit at the time of restructuring.

The following table is a summary of TDRs that defaulted (became 90 days past due) in the first twelve months after restructure during the periods presented.


	Three Months Ended September 30,								Nine Months Ended September 30,
	2014				2013				2014				2013
	Number of Loans		Recorded Investment		Number of Loans		Recorded Investment		Number of Loans		Recorded Investment		Number of Loans		Recorded Investment
	(Dollars In thousands)
Real estate loans:
One- to four-family		1	$	231		1	$	288		1	$	231		3	$	757
Commercial business loans		—		—		1		207		—		—		1		207

Total		1	$	231		2	$	495		1	$	231		4	$	964

The Company utilizes a nine grade internal loan rating system for multi-family, commercial real estate, construction and commercial loans as follows:

•

Loans rated 1, 2, 3 and 3A: Loans in these categories are considered “pass” rated loans with low to average risk.

•

Loans rated 4 and 4A: Loans in these categories are considered “special mention.” These loans are starting to show signs of potential weakness and are being closely monitored by management.

•

Loans rated 5: Loans in this category are considered “substandard.” Generally, a loan is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligors and/or the collateral pledged. There is a distinct possibility that the Company will sustain some loss if the weakness is not corrected.

•

Loans rated 6: Loans in this category are considered “doubtful.” Loans classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable.

•

Loans rated 7: Loans in this category are considered uncollectible (“loss”) and of such little value that their continuance as loans is not warranted.

On an annual basis, or more often if needed, the Company formally reviews the ratings on all multi-family, commercial real estate, construction and commercial business loans. The Company also engages an independent third-party to review a significant portion of loans within these segments on at least an annual basis. Management uses the results of these reviews as part of its annual review process.

The following tables provide information with respect to the Company’s risk rating:


	September 30, 2014								December 31, 2013
	Multi-family residential real estate		Commercial real estate		Construction		Commercial business		Multi-family residential real estate		Commercial real estate		Construction		Commercial business
	(In thousands)
Loans rated 1 - 3A	$	354,207	$	1,068,747	$	201,014	$	302,430	$	275,711	$	1,015,172	$	178,980	$	245,646
Loans rated 4 - 4A		2,172		5,684		—		9,414		1,665		4,315		—		4
Loans rated 5		8,654		5,276		25,552		1,073		10,796		12,921		29,819		1,355
Loans rated 6		—		—		—		—		—		—		—		—
Loans rated 7		—		—		—		—		—		—		—		—


Total	$	365,033	$	1,079,707	$	226,566	$	312,917	$	288,172	$	1,032,408	$	208,799	$	247,005

For one- to four-family real estate loans, home equity lines of credit and consumer loans, management uses delinquency reports as the key credit quality indicator.

6.	DEPOSITS

A summary of deposit balances, by type follows:


	September 30,		December 31,
	2014		2013
	(In thousands)
Demand deposits	$	288,832	$	255,639
NOW deposits		289,744		210,277
Money market deposits		893,907		847,360
Regular savings and other deposits		270,311		259,608

Total non-certificate accounts		1,742,794		1,572,884


Term certificates less than $100,000		275,748		296,525
Term certificates $100,000 and greater		384,876		379,191

Total term certificates		660,624		675,716


Total deposits	$	2,403,418	$	2,248,600

A summary of term certificates, by maturity, follows:


	September 30, 2014					December 31, 2013
Maturing	Amount		Weighted Average Rate			Amount		Weighted Average Rate
	(Dollars in thousands)
Within 1 year	$	436,761		0.98	%	$	440,178		1.08	%
Over 1 year to 2 years		139,868		1.55			140,466		1.48
Over 2 years to 3 years		45,196		1.39			55,628		1.75
Over 3 years to 4 years		16,831		1.50			18,703		1.82
Over 4 years to 5 years		18,806		1.52			17,685		1.47
Greater than 5 years		3,162		5.50			3,056		5.13


	$	660,624		1.18	%	$	675,716		1.27	%

7.	BORROWINGS

Long-term debt consists of FHLB advances as follows:


	September 30, 2014					December 31, 2013
Maturing	Amount		Weighted Average Rate			Amount		Weighted Average Rate
	(Dollars in thousands)
2014	$	—		—	%	$	4,000		2.37	%
2015		39,500		1.20			19,500		2.05
2016		41,500		1.20			16,500		1.97
2017		74,632		1.38			77,500		1.35
2018		—		—			25,000		1.19
2019		8,893		1.23			10,203		1.23
2020		8,162		1.22			9,200		1.22

	$	172,687		1.28	%	$	161,903		1.48	%

During the quarter ended September 30, 2014, the Company prepaid $40.0 million of FHLB advances with a weighted average interest rate of 1.12%. The advances had fixed interest rates with maturities ranging from July 2017 through April 2018 and did not result in an FHLB prepayment penalty.

At September 30, 2014, advances amounting to $6.5 million are callable by the FHLB prior to maturity.

As of September 30, 2014, the Company also has an available line of credit of $9.4 million with the FHLB at an interest rate that adjusts daily. No amounts were drawn on the line of credit as of September 30, 2014 and December 31, 2013. All borrowings from the FHLB are secured by investment securities (see Note 4) and qualified collateral, consisting of a blanket lien on one- to four-family loans and certain multi-family and commercial real estate loans held in the Bank’s portfolio. At September 30, 2014, the Company pledged multi-family and commercial real estate loans with carrying values totaling $61.5 million and $217.2 million, respectively.

8.	COMMITMENTS AND DERIVATIVES

In the normal course of business, there are outstanding commitments which are not reflected in the accompanying consolidated financial statements.

Loan Commitments

The Company is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates. The instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the accompanying consolidated balance sheets. The contract amounts of those instruments reflect the extent of involvement the Company has in particular classes of financial instruments.

The Company’s exposure to credit loss in the event of nonperformance by the counterparty to the financial instrument for loan commitments is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments as it does for on-balance sheet instruments.

A summary of outstanding financial instruments whose contract amounts represent credit risk is as follows:


	September 30,		December 31,
	2014		2013
	*(In thousands)*
Unadvanced portion of existing loans:
Construction	$	299,269	$	239,977
Home equity line of credit		34,118		37,422
Other lines and letters of credit		122,421		104,956
Commitments to originate:
One- to four-family		12,291		11,592
Commercial real estate		61,492		92,526
Construction		119,038		83,439
Commercial business loans		18,294		39,928
Other loans		968		3,749


Total loan commitments outstanding	$	667,891	$	613,589

Commitments to originate loans are agreements to lend to a customer provided there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since a portion of the commitments are expected to expire without being drawn upon, the total commitments do not necessarily represent future cash requirements. The Company evaluates each customer’s credit worthiness on a case by case basis. The amount of collateral obtained, if deemed necessary by the Company for the extension of credit, is based upon management’s credit evaluation of the borrower. Collateral held includes, but is not limited to, residential real estate and deposit accounts.

Unfunded commitments under lines of credit are commitments for possible future extensions of credit to existing customers. These lines of credit are collateralized if deemed necessary and usually do not contain a specified maturity date and may not be drawn upon to the total extent to which the Company is committed. Letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Those letters of credit are primarily issued to support borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.

Interest Rate Swaps

The Company is a party to interest rate derivatives that are not designated as hedging instruments. These derivatives relate to interest rate swaps that the Company enters into with commercial business customers to synthetically convert their loans from a variable rate to a fixed rate. The Company pays interest to the customer at a floating rate on the notional amount and receives interest from the customer at a fixed rate for the same notional amount. Concurrently, the Company enters into an offsetting interest rate swap with a third party financial institution. In the offsetting swap, the Company pays the other financial institution interest at the same fixed rate on the same notional amount as the swap entered into with the customer, and receives interest from the financial institution for the same floating rate on the same notional amount. The changes in the fair value of the swaps offset each other, except for the credit risk of the counterparties, which is determined by taking into consideration the risk rating, probability of default and loss of given default for all counterparties. At September 30, 2014 and December 31, 2013, the Company had $700,000 and $300,000, respectively, in cash pledged as collateral on its interest rate swap with the third party financial institution.

Summary information regarding these derivatives is presented below:


						Fair Value
	Notional Amount		Maturity	Interest Rate Paid	Interest Rate Received	September 30, 2014			December 31, 2013
	*(In thousands)*
Customer interest rate swap	$	11,268	10/17/33	1 Mo. Libor + 175bp	Fixed (4.1052%)	$	567		$	57
Third party interest rate swap		11,268	10/17/33	Fixed (4.1052%)	1 Mo. Libor + 175bp		(567	)		(57	)

Derivative Loan Commitments

Residential real estate loan commitments are referred to as derivative loan commitments if the loan that will result from exercise of the commitment will be held for sale upon funding. The Company enters into commitments to fund residential real estate loans at specified times in the future, with the intention that these loans will subsequently be sold in the secondary market. A residential loan commitment requires the Company to originate a loan at a specific interest rate upon the completion of various underwriting requirements. Outstanding derivative loan commitments expose the Company to the risk that the price of the loans arising from the exercise of the loan commitment might decline from the inception of the rate lock to funding of the loan due to increases in loan interest rates. If interest rates increase, the value of these commitments decreases. Conversely, if interest rates decrease, the value of these loan commitments increases. Derivative loan commitments with a notional amount of $8.7 million and $4.8 million were outstanding at September 30, 2014 and December 31, 2013, respectively. The fair value of such commitments was a net asset of $58,000 and $13,000 at September 30, 2014 and December 31, 2013, respectively.

Forward Loan Sale Commitments

To protect against the price risk inherent in derivative loan commitments, the Company utilizes both “mandatory delivery” and “best efforts” forward loan sale commitments to mitigate the risk of potential decreases in the values of loans that would result from the exercise of the derivative loan commitments. Under a “mandatory delivery” contract, the Company commits to deliver a certain principal amount of mortgage loans to an investor at a specified price on or before a specified date. If the Company fails to deliver the amount of mortgages necessary to fulfill the commitment by the specified date, it is obligated to pay the investor a “pair-off” fee, based on then-current market prices, to compensate the investor for the shortfall. Under a “best efforts” contract, the Company commits to deliver an individual mortgage loan of a specified principal amount and quality to an investor and the investor commits to a price that it will purchase the loan from the Company if the loan to the underlying borrower closes. The Company generally enters into forward sale contracts on the same day it commits to lend funds to a potential borrower. The Company expects that these forward loan sale commitments will experience changes in fair value opposite to the change in fair value of derivative loan commitments. Forward loan sale commitments with a notional amount of $9.4 million and $7.0 million were outstanding at September 30, 2014 and December 31, 2013, respectively. The fair value of such commitments was a net asset of $35,000 and $75,000 at September 30, 2014 and December 31, 2013, respectively.

The following table presents the fair values of derivative instruments in the balance sheet.


	Assets			Liabilities
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
	*(In thousands)*
September 30, 2014
Derivative loan commitments	Other assets	$	80	Other liabilities	$	22
Forward loan sale commitments	Other assets		42	Other liabilities		7
Loan level interest rate swaps	Other assets		567	Other liabilities		567


Total		$	689		$	596


December 31, 2013
Derivative loan commitments	Other assets	$	38	Other liabilities	$	25
Forward loan sale commitments	Other assets		82	Other liabilities		7
Loan level interest rate swaps	Other assets		57	Other liabilities		57


Total		$	177		$	89

The following table presents information pertaining to gains (losses) on the Company’s derivative instruments included in the consolidated statement of income.


		Three Months Ended September 30,						Nine Months Ended September 30,
Derivative Instrument	Location of Gain/(Loss)	2014			2013			2014			2013
		*(In thousands)*
Derivative loan commitments	Mortgage banking gains, net	$	(96	)	$	685		$	45		$	(83	)
Forward loan sale commitments	Mortgage banking gains, net		69			(1,154	)		(40	)		(212	)

Total		$	(27	)	$	(469	)	$	5		$	(295	)

For the three months ended September 30, 2014, the Company recognized net mortgage banking gains of $19,000, consisting of $46,000 in net gains on sale of loans and $27,000 in net derivative mortgage banking losses. The Company recognized net mortgage banking losses of $102,000, consisting of $367,000 in net gains on sale of loans and $469,000 in net derivative mortgage banking losses for the three months ended September 30, 2013. For the nine months ended September 30, 2014, the Company recognized net mortgage banking gains of $406,000, consisting of $401,000 in net gains on sale of loans and $5,000 in net derivative mortgage banking gains. The Company recognized net mortgage banking gains of $456,000, consisting of $751,000 in net gains on sale of loans and $295,000 in net derivative mortgage banking losses for the nine months ended September 30, 2013.

Other Commitments

The Company has a contract with its core data processing provider through December 2017 with an outstanding commitment of $7.3 million as of September 30, 2014 and total annual payments of $2.2 million.

9.	FAIR VALUES OF ASSETS AND LIABILITIES

Determination of Fair Value

The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The fair value of assets and liabilities is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various assets and liabilities. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the asset or liability.

The following methods and assumptions were used by the Company in estimating fair value disclosures:

Cash and cash equivalents — The carrying amounts of cash and short-term instruments approximate fair values, based on the short-term nature of the assets.

Securities available for sale — All fair value measurements are obtained from a third party pricing service and are not adjusted by management. Marketable equity securities are measured at fair value utilizing quoted market prices (Level 1). Corporate bonds, obligations of government-sponsored enterprises, municipal bonds and mortgage-backed securities are determined by pricing models that consider standard input factors such as observable market data, benchmark yields, reported trades, broker/dealer quotes, credit spreads, benchmark securities, as well as new issue data, monthly payment information, and collateral performance, among others (Level 2).

Federal Home Loan Bank stock — The carrying value of Federal Home Loan Bank stock approximates fair value based on the redemption provisions of the Federal Home Loan Bank.

Loans held for sale — The fair value is based on commitments in effect from investors or prevailing market prices.

Loans — For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. Fair values for other loans are estimated using discounted cash flow analyses, using market interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Fair values for non-accrual loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable.

Deposits — The fair values disclosed for non-certificate accounts are, by definition, equal to the amount payable on demand at the reporting date which is their carrying amounts. Fair values for certificates of deposit are estimated using a discounted cash flow calculation that applies market interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits.

Borrowings — The fair value is estimated using discounted cash flow analyses based on the current incremental borrowing rates in the market for similar types of borrowing arrangements.

Accrued interest — The carrying amounts of accrued interest approximate fair value.

Forward loan sale commitments and derivative loan commitments — Forward loan sale commitments and derivative loan commitments are based on fair values of the underlying mortgage loans and the probability of such commitments being exercised. Management judgment and estimation is required in determining these fair value measurements.

Loan level interest rate swaps — The fair value is based on settlement values adjusted for credit risks associated with the counterparties and the Company and observable market interest rate curves.

Off-balance sheet credit-related instruments — Fair values for off-balance-sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The fair value of these instruments is considered immaterial.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized as follows:


	Level 1		Level 2		Level 3		Total Fair Value
	(In thousands)
September 30, 2014
Assets:
Debt securities	$	—	$	109,095	$	—	$	109,095
Marketable equity securities		59,064		—		—		59,064
Derivative loan commitments		—		—		80		80
Forward loan sale commitments		—		—		42		42
Loan level interest rate swaps		—		—		567		567


Total assets	$	59,064	$	109,095	$	689	$	168,848


Liabilities:
Derivative loan commitments	$	—	$	—	$	22	$	22
Forward loan sale commitments		—		—		7		7
Loan level interest rate swaps		—		—		567		567


Total liabilities	$	—	$	—	$	596	$	596


December 31, 2013
Assets:
Debt securities	$	—	$	145,788	$	—	$	145,788
Marketable equity securities		55,349		—		—		55,349
Derivative loan commitments		—		—		38		38
Forward loan sale commitments		—		—		82		82
Loan level interest rate swaps		—		—		57		57


Total assets	$	55,349	$	145,788	$	177	$	201,314


Liabilities:
Derivative loan commitments	$	—	$	—	$	25	$	25
Forward loan sale commitments		—		—		7		7
Loan level interest rate swaps		—		—		57		57


Total liabilities	$	—	$	—	$	89	$	89

For the nine months ended September 30, 2014 and 2013, there were no transfers in or out of Levels 1 and 2 and the changes in Level 3 assets and liabilities that are measured at fair value on a recurring basis are as follows:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014		2013
	(In thousands)
Derivative loan commitments and forward sale commitments, net:
Beginning balance	$	120		$	450		$	88	$	276
Total realized and unrealized losses included in net income		(27	)		(469	)		5		(295	)


Ending balance	$	93		$	(19	)	$	93	$	(19	)


Total realized gain (loss) relating to instruments still held at period end	$	93		$	(19	)	$	93	$	(19	)

Assets Measured at Fair Value on a Non-recurring Basis

The Company may also be required, from time to time, to measure certain other assets on a non-recurring basis in accordance with generally accepted accounting principles. These adjustments to fair value usually result from the application of lower-of-cost-or market accounting or write-downs of individual assets.

The following tables summarize the fair value hierarchy used to determine each adjustment and the carrying value of the related individual assets. The gain/loss represents the amount of write-down, charge-off or specific reserve recorded during the periods noted on the assets held at period end. There were no liabilities measured at fair value on a non-recurring basis.


	September 30, 2014						Three Months Ended September 30, 2014			Nine Months Ended September 30, 2014
	Level 1		Level 2		Level 3		Total Losses			Total Losses
	(In thousands)
Impaired loans	$	—	$	—	$	12,640	$	(82	)	$	(65	)
Foreclosed real estate		—		—		1,806		—			(78	)

	$	—	$	—	$	14,446	$	(82	)	$	(143	)


							Three Months Ended			Nine Months Ended
	December 31, 2013						September 30, 2013			September 30, 2013
	Level 1		Level 2		Level 3		Total Losses			Total Losses
	(In thousands)
Impaired loans	$	—	$	—	$	8,000	$	(226	)	$	(627	)
Foreclosed real estate		—		—		1,390		—			—

	$	—	$	—	$	9,390	$	(226	)	$	(627	)

Certain impaired loans were adjusted to fair value, less cost to sell, of the underlying collateral securing these loans resulting in losses. The loss is not recorded directly as an adjustment to current earnings, but rather as a component in determining the allowance for loan losses. Fair value was measured using appraised values of collateral and adjusted as necessary by management based on unobservable inputs for specific properties.

Certain properties in foreclosed real estate were adjusted to fair value using appraised values of collateral, less cost to sell, and adjusted as necessary by management based on unobservable inputs for specific properties. The loss on foreclosed assets represents adjustments in valuation recorded during the time period indicated and not for losses incurred on sales.

Summary of Fair Values of Financial Instruments

The estimated fair values, and related carrying amounts, of the Company’s financial instruments are as follows. Certain financial instruments and all nonfinancial instruments are exempt from disclosure requirements. Accordingly, the aggregate fair value amounts presented herein do not represent the underlying fair value of the Company.


	Carrying Amount		Fair Value
	Carrying Amount		Level 1		Level 2		Level 3		Total
	(In thousands)
September 30, 2014
Financial assets:
Cash and due from banks	$	388,273	$	388,273	$	—	$	—	$	388,273
Securities available for sale		168,159		59,064		109,095		—		168,159
Federal Home Loan Bank stock		12,725		—		—		12,725		12,725
Loans and loans held for sale, net		2,483,395		—		—		2,507,804		2,507,804
Accrued interest receivable		7,003		—		—		7,003		7,003
Financial liabilities:
Deposits		2,403,418		—		—		2,407,302		2,407,302
Borrowings		172,687		—		172,506		—		172,506
Accrued interest payable		806		—		—		806		806
On-balance sheet derivative financial instruments:
Assets:
Derivative loan commitments		80		—		—		80		80
Forward loan sale commitments		42		—		—		42		42
Loan level interest rate swaps		567		—		—		567		567
Liabilities:
Derivative loan commitments		22		—		—		22		22
Forward loan sale commitments		7		—		—		7		7
Loan level interest rate swaps		567		—		—		567		567

December 31, 2013
Financial assets:
Cash and due from banks	$	86,271	$	86,271	$	—	$	—	$	86,271
Securities available for sale		201,137		55,349		145,788		—		201,137
Federal Home Loan Bank stock		11,907		—		—		11,907		11,907
Loans and loans held for sale, net		2,267,763		—		—		2,298,488		2,298,488
Accrued interest receivable		7,127		—		—		7,127		7,127
Financial liabilities:
Deposits		2,248,600		—		—		2,253,543		2,253,543
Borrowings		161,903		—		160,581		—		160,581
Accrued interest payable		818		—		—		818		818
On-balance sheet derivative financial instruments:
Assets:
Derivative loan commitments		38		—		—		38		38
Forward loan sale commitments		82		—		—		82		82
Loan level interest rate swaps		57		—		—		57		57
Liabilities:
Derivative loan commitments		25		—		—		25		25
Forward loan sale commitments		7		—		—		7		7
Loan level interest rate swaps		57		—		—		57		57

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s discussion and analysis reflects our consolidated financial statements and other relevant statistical data, and is intended to enhance your understanding of our financial condition and results of operations. You should read the information in this section in conjunction with our business and financial information and the Consolidated Financial Statements and related notes included in Old Meridian’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013, filed with the Securities and Exchange Commission.

Forward Looking Statements

This report contains forward-looking statements that are based on assumptions and may describe future plans, strategies and expectations of the Company. These forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project” or similar expressions. The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations of the Company and its subsidiaries include, but are not limited to:

•

general economic conditions, either nationally or in our market area, that are worse than expected;

•

inflation and changes in the interest rate environment that reduce our interest margins or reduce the fair value of financial instruments;

•

increased competitive pressures among financial services companies;

•

changes in consumer spending, borrowing and savings habits;

•

our ability to enter new markets successfully and take advantage of growth opportunities, and the possible dilutive effect of potential acquisitions or de novo branches, if any;

•

legislative or regulatory changes that adversely affect our business;

•

adverse changes in the securities markets;

•

changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board or the Securities and Exchange Commission;

•

inability of third-party providers to perform their obligations to us; and

•

changes in our organization, compensation and benefit plans.

Management’s ability to predict results or the effect of future plans or strategies is inherently uncertain. These factors include, but are not limited to, general economic conditions, changes in the interest rate environment, legislative or regulatory changes that may adversely affect our business, changes in accounting policies and practices, changes in competition and demand for financial services, adverse changes in the securities markets and changes in the quality or composition of the Company’s loan or investment portfolios. Additional factors that may affect our results are discussed in the Company’s Prospectus dated May 9, 2014, filed with the Securities and Exchange Commission on May 20, 2014, under “Risk Factors,” which is available through the SEC’s website at www.sec.gov , as updated by subsequent filings with the SEC. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Except as required by applicable law or regulation, we do not undertake, and specifically disclaim any obligation, to release publicly the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of the statements or to reflect the occurrence of anticipated or unanticipated events.

Critical Accounting Policies

A summary of significant accounting policies is described in Note 1 to the Consolidated Financial Statements included in the 2013 Annual Report on Form 10-K for the year ended December 31, 2013. Critical accounting estimates are necessary in the application of certain accounting policies and procedures and are particularly susceptible to significant change. Critical accounting policies are defined as those involving significant judgments and assumptions by management that could have a material impact on the carrying value of certain assets or on income under different assumptions or conditions. Management believes that the most critical accounting policies are the allowance for loan losses, the evaluation of goodwill for impairment, other-than-temporary impairment of securities and the valuation of deferred tax assets.

Comparison of Financial Condition at September 30, 2014 and December 31, 2013

Assets . Our total assets increased $486.7 million, or 18.1%, to $3.169 billion at September 30, 2014 from $2.682 billion at December 31, 2013, reflecting net cash proceeds of $302.3 million raised in the Company’s second step common stock offering. Net loans increased $216.0 million, or 9.5%, to $2.481 billion at September 30, 2014 from $2.265 billion at December 31, 2013. Cash and due from banks increased $302.0 million, or 350.1%, to $388.3 million at September 30, 2014 from $86.3 million at December 31, 2013. Securities available for sale decreased $33.0 million, or 16.4%, to $168.2 million at September 30, 2014 from $201.1 million at December 31, 2013.

Loan Portfolio. At September 30, 2014, net loans were $2.481 billion, or 78.3% of total assets. During the nine months ended September 30, 2014, net loans increased $216.0 million, or 9.5%. The increase was primarily due to increases of $108.2 million in commercial real estate loans, $65.9 million in commercial business loans and $16.0 million in multi-family loans, excluding a reclassification during the first quarter of $60.9 million of commercial real estate loans to multi-family loans in accordance with regulatory guidance. Refer to Note 5 Loans in the Notes to the Unaudited Consolidated Financial Statements within this report for more detail regarding the loans held in the Company’s loan portfolio.

Credit Risk Management. Our strategy for credit risk management focuses on having well-defined credit policies and uniform underwriting criteria and providing prompt attention to potential problem loans. Management of asset quality is accomplished by internal controls, monitoring and reporting of key risk indicators, and both internal and independent third-party loan reviews. The primary objective of our loan review process is to measure borrower performance and assess risk for the purpose of identifying loan weakness in order to minimize loan loss exposure. From the time of loan origination through final repayment, multi-family, commercial real estate, construction and commercial business loans are assigned a risk rating based on pre-determined criteria and levels of risk. The risk rating is monitored annually for most loans; however, it may change during the life of the loan as appropriate.

Internal and independent third-party loan reviews vary by loan type, as well as the nature and complexity of the loan. Depending on the size and complexity of the loan, some loans may warrant detailed individual review, while other loans may have less risk based upon size, or be of a homogeneous nature reducing the need for detailed individual analysis. Assets with these characteristics, such as consumer loans and loans secured by residential real estate, may be reviewed on the basis of risk indicators such as delinquency or credit rating. In cases of significant concern, a total re-evaluation of the loan and associated risks are documented by completing a loan risk assessment and action plan. Some loans may be re-evaluated in terms of their fair market value or net realizable value in order to determine the likelihood of potential loss exposure and, consequently, the adequacy of specific and general loan loss reserves.

When a borrower fails to make a required loan payment, we take a number of steps to have the borrower cure the delinquency and restore the loan to current status, including contacting the borrower by letter and phone at regular intervals. When the borrower is in default, we may commence collection proceedings. If a foreclosure action is instituted and the loan is not brought current, paid in full, or refinanced before the foreclosure sale, the real property securing the loan generally is sold at foreclosure. Management informs the Executive Committee monthly of the amount of loans delinquent more than 30 days. Management provides detailed information to the Board of Directors on loans 60 or more days past due and all loans in foreclosure and repossessed property that we own.

Delinquencies. Total past due loans decreased $11.7 million, or 34.1%, to $22.7 million at September 30, 2014 from $34.5 million at December 31, 2013, reflecting decreases of $8.3 million in loans 90 days or greater past due and $3.4 million in loans 30 to 89 days past due. Delinquent loans at September 30, 2014 included $9.5 million of loans acquired in the Mt. Washington Co-operative Bank merger completed in January 2010, including $3.9 million that were 30 to 59 days past due, $345,000 that were 60 to 89 days past due and $5.3 million that were 90 days or greater past due. At September 30, 2014, non-accrual loans exceeded loans 90 days or greater past due primarily due to loans which were placed on non-accrual status based on a determination that the ultimate collection of all principal and interest due was not expected and certain loans that remain on non-accrual status until they attain a sustained payment history of six months.

Non-performing Assets. Non-performing assets include loans that are 90 or more days past due or on non-accrual status, including troubled debt restructurings on non-accrual status, and real estate and other loan collateral acquired through foreclosure and repossession. Loans 90 days or greater past due may remain on an accrual basis if adequately collateralized and in the process of collection. At September 30, 2014, we did not have any accruing loans past due 90 days or greater. For non-accrual loans, interest previously accrued but not collected is reversed and charged against income at the time a loan is placed on non-accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Real estate that we acquire as a result of foreclosure or by deed-in-lieu of foreclosure is classified as foreclosed real estate until it is sold. When property is acquired, it is initially recorded at the fair value less costs to sell at the date of foreclosure, establishing a new cost basis. Holding costs and declines in fair value after acquisition of the property result in charges against income.

The following table provides information with respect to our non-performing assets at the dates indicated.


	September 30,			December 31,
	2014			2013
	(Dollars in thousands)
Loans accounted for on a non-accrual basis:
Real estate loans:
Residential real estate:
One- to four-family	$	14,327		$	17,622
Home equity lines of credit		2,397			2,689
Commercial real estate		3,382			8,972
Construction		7,132			11,298

Total real estate loans		27,238			40,581
Commercial business loans		883			949

Total non-accrual loans (1)		28,121			41,530
Foreclosed assets		1,806			1,390

Total non-performing assets	$	29,927		$	42,920


Non-accrual loans to total loans		1.12	%		1.81	%
Non-accrual loans to total assets		0.89	%		1.55	%
Non-performing assets to total assets		0.94	%		1.60	%

(1)	TDRs on accrual status not included above totaled $14.4 million at September 30, 2014 and $4.1 million and December 31, 2013.

Non-performing assets decreased to $29.9 million or 0.94% of total assets, at September 30, 2014, from $42.9 million, or 1.60% of total assets, at December 31, 2013. Non-performing assets at September 30, 2014 included $11.9 million of assets acquired in the Mt. Washington merger, all of which were non-accrual loans. Interest income that would have been recorded for the nine months ended September 30, 2014 had non-accruing loans been current according to their original terms amounted to $398,000. We recognized $722,000 of interest income, on a cash basis, on such loans for the nine months ended September 30, 2014.

Non-accrual loans decreased $13.4 million, or 32.3%, to $28.1 million, or 1.12% of total loans outstanding at September 30, 2014, from $41.5 million, or 1.81% of total loans outstanding at December 31, 2013, primarily due to decreases of $5.6 million in non-accrual commercial real estate loans, $4.2 million in non-accrual construction loans and $3.3 million in non-accrual one- to four-family loans. The decrease in non-accrual commercial real estate loans resulted from one commercial TDR that was moved from non-accrual to accrual status during the quarter ended September 30, 2014. This TDR was structurally modified with additional collateral that improved the debt service coverage ratio and loan to value. The decrease in non-accrual construction loans for the quarter ended September 30, 2014 resulted from activity related to two construction loan relationships classified as TDRs. The note and loan documents for one loan relationship were sold to a third party and resulted in a charge off of $71,000 recorded against the allowance for loan losses during the quarter ended September 30, 2014. The second of these loan relationships remains; however due to liquidation of the portion of the collateral and additional payments made by the borrower, a recovery of $35,000 was realized in the allowance for loan losses. The decrease in non-accrual one- to-four family loans resulted from continued account monitoring, collection and workout efforts.

At September 30, 2014, our allowance for loan losses was $26.7 million, or 1.07% of total loans and 95.1% of non-accrual loans, compared to $25.3 million, or 1.11% of total loans and 61.0% of non-accrual loans at December 31, 2013. Included in our allowance at September 30, 2014 was a general component of $26.3 million, which is based upon our evaluation of various factors relating to loans not deemed to be impaired. We continue to believe our level of non-accrual loans and assets, which declined significantly during the past two years, is manageable and we believe that we have sufficient capital and human resources to manage the collection of our non-performing assets in an orderly fashion.

Foreclosed real estate increased $416,000, or 29.9%, to $1.8 million at September 30, 2014 from $1.4 million at December 31, 2013. At September 30, 2014, foreclosed real estate consisted of a townhouse construction development project, a single family residential construction development project and a one- to four-family loan. We continue to be actively engaged with our borrowers in resolving remaining problem assets and with the effective management of real estate owned as a result of foreclosures.

Troubled Debt Restructurings. In the course of resolving loans of borrowers with financial difficulties, we may choose to restructure the contractual terms of certain loans, with terms modified to fit the ability of the borrower to repay in line with its current financial status. A loan is considered a TDR if, for reasons related to the debtor’s financial difficulties, a concession is granted to the debtor that would not otherwise be considered.

Total TDRs increased $1.5 million, or 7.7%, to $21.1 million at September 30, 2014 from $19.6 million at December 31, 2013, primarily due to increases of $1.3 million in multi-family and $8.7 million in commercial real estate TDRs on accrual status, partially offset by decreases of $4.0 million in commercial real estate and $5.5 million in construction TDRs on non-accrual status. Modifications of TDRs consist of rate reductions, loan term extensions or provisions for interest-only payments for specified periods up to 12 months. We have generally been successful with the concessions we have offered to borrowers to date. We generally return TDRs to accrual status when they have sustained payments for six months based on the restructured terms and future payments are reasonably assured. Interest income that would have been recorded for the nine months ended September 30, 2014 had TDRs been current according to their original terms amounted to $121,000. We recognized $371,000 of interest income on TDRs for the nine months ended September 30, 2014.

Potential Problem Loans. Certain loans are identified during our loan review process that are currently performing in accordance with their contractual terms and we expect to receive payment in full of principal and interest, but it is deemed probable that we will be unable to collect all the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. This may result from deteriorating conditions such as cash flows, collateral values or creditworthiness of the borrower. These loans are classified as impaired but are not accounted for on a non-accrual basis.

Other potential problem loans are those loans that are currently performing, but where known information about possible credit problems of the borrowers causes us to have concerns as to the ability of such borrowers to comply with contractual loan repayment terms. These other potential problem loans are generally loans classified as “substandard” or 5-rated loans in accordance with our nine-grade internal loan rating system that is consistent with guidelines established by banking regulators. At September 30, 2014, other potential problem loans totaled $21.9 million, including $17.1 million of construction loans, $3.1 million of multi-family loans and $1.7 million of commercial real estate.

Allowance for Loan Losses. The allowance for loan losses is maintained at levels considered adequate by management to provide for probable loan losses inherent in the loan portfolio as of the consolidated balance sheet reporting dates. The allowance for loan losses is based on management’s assessment of various factors affecting the loan portfolio, including portfolio composition, delinquent and non-accrual loans, national and local business conditions and loss experience and an overall evaluation of the quality of the underlying collateral.

Changes in the allowance for loan losses during the periods indicated were as follows:


	Nine Months Ended September 30,
	2014			2013
	(Dollars in thousands)
Beginning balance	$	25,335		$	20,504
Provision for loan losses		1,484			4,630
Charge offs:
Residential real estate:
One- to four-family		(54	)		(531	)
Multi-family		—			(96	)
Home equity lines of credit		(5	)		—
Commercial real estate		(48	)		—
Construction		(71	)		(1,362	)
Consumer		(126	)		(224	)

Total charge-offs		(304	)		(2,213	)

Recoveries:
Residential real estate:
One- to four-family		67			121
Construction		78			548
Commercial business		7			21
Consumer		72			68

Total recoveries		224			758

Net charge-offs		(80	)		(1,455	)

Ending balance	$	26,739		$	23,679


Allowance to non-accrual loans		95.09	%		54.33	%
Allowance to total loans outstanding		1.07	%		1.11	%
Net charge-offs to average loans outstanding		0.00	%		0.10	%

Our provision for loan losses was $1.5 million for the nine months ended September 30, 2014 compared to $4.6 million for the nine months ended September 30, 2013. The changes in the provision for loan losses were based on management’s assessment of loan portfolio growth and composition changes, a decline in historical charge-off trends, an ongoing evaluation of credit quality and improving economic conditions. The allowance for loan losses was $26.7 million or 1.07% of total loans outstanding at September 30, 2014, compared to $23.7 million or 1.11% of total loans outstanding at September 30, 2013. The increase in the allowance for loan losses was primarily due to loan growth. We continue to assess the adequacy of our allowance for loan losses in accordance with established policies.

The following tables set forth the breakdown of the allowance for loan losses by loan category at the dates indicated:


	September 30, 2014								December 31, 2013
	Amount		Percent of Allowance to Total Allowance			Percent of Loans in Category of Total Loans			Amount		Percent of Allowance to Total Allowance			Percent of Loans in Category of Total Loans
	(Dollars in thousands)
Real estate loans:
Residential real estate:
One- to four-family	$	1,873		7.0	%		18.6	%	$	1,991		7.9	%		19.8	%
Multi-family		3,259		12.1			14.6			2,419		9.5			12.6
Home equity lines of credit		99		0.4			2.0			155		0.6			2.4
Commercial real estate		12,502		46.8			43.0			12,831		50.6			45.0
Construction		4,437		16.6			9.0			4,374		17.3			9.1

Total real estate loans		22,170		82.9			87.2			21,770		85.9			88.9
Commercial business loans		4,479		16.8			12.5			3,433		13.6			10.8
Consumer		90		0.3			0.3			132		0.5			0.3

Total loans	$	26,739		100.0	%		100.0	%	$	25,335		100.0	%		100.0	%

The allowance consists of general and allocated components. The general component relates to pools of non-impaired loans and is based on historical loss experience adjusted for qualitative factors. The allocated component relates to loans that are classified as impaired, whereby an allowance is established when the discounted cash flows, collateral value or observable market price of the impaired loan is lower than the carrying value of that loan.

We had impaired loans totaling $28.5 million and $33.5 million as of September 30, 2014 and December 31, 2013, respectively. A loan is considered impaired when, based on current information and events, it is probable that we will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Impairment is measured on a loan by loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. At September 30, 2014, impaired loans totaling $5.5 million had a valuation allowance of $421,000. Impaired loans totaling $3.6 million had a valuation allowance of $376,000 at December 31, 2013. Our average investment in impaired loans was $21.7 million and $38.2 million for the nine months ended September 30, 2014 and 2013, respectively.

Large groups of smaller balance homogeneous loans are collectively evaluated for impairment based on payment status. Accordingly, we do not separately identify individual one- to four-family residential and consumer loans for impairment disclosures, unless such loans are subject to a troubled debt restructuring. We periodically may agree to modify the contractual terms of loans. When a loan is modified and a concession is made to a borrower experiencing financial difficulty, the modification is considered a TDR. All TDRs are initially classified as impaired.

We review residential and commercial loans for impairment based on the fair value of collateral, if collateral-dependent, or the present value of expected cash flows. Management has reviewed the collateral value for all impaired and non-accrual loans as of September 30, 2014 and considered any probable loss in determining the allowance for loan losses.

For residential loans measured for impairment based on the collateral value, we will do the following:

•

When a loan becomes seriously delinquent, generally 60 days past due, we obtain third-party appraisals that are generally the basis for charge-offs when a loss is indicated, prior to the foreclosure sale, but usually no later than when such loans are 180 days past due. We generally are able to complete the foreclosure process within six to nine months from receipt of the third-party appraisal.

•

We make adjustments to appraisals based on updated economic information, if necessary, prior to the foreclosure sale. We review current market factors to determine whether, in management’s opinion, downward adjustments to the most recent appraised values may be warranted. If so, we use our best estimate to apply an estimated discount rate to the appraised values to reflect current market factors.

•

Appraisals we receive are based on comparable property sales.

For commercial loans measured for impairment based on the collateral value, we will do the following:

•

We obtain a third party appraisal at the time a loan is deemed to be in a workout situation and there is no indication that the loan will return to performing status, generally when the loan is 90 days or more past due. One or more updated third party appraisals are obtained prior to foreclosure depending on the foreclosure timeline. In general we order new appraisals annually on loans in the process of foreclosure.

•

We make downward adjustments to appraisals when conditions warrant. Adjustments are made by applying a discount to the appraised value based on occupancy, recent changes in condition to the property and certain other factors. Adjustments are also made to appraisals for construction projects involving residential properties based on recent sales of units. Losses are recognized if the appraised value less estimated costs to sell is less than our carrying value of the loan.

•

Appraisals we receive are generally based on a reconciliation of comparable property sales and income capitalization approaches. For loans on construction projects involving residential properties, appraisals are generally based on a discounted cash flow analysis assuming a bulk sale to a single buyer.

Loans that are partially charged off generally remain on non-accrual status until foreclosure or such time that they are performing in accordance with the terms of the loan and have a sustained payment history of at least six months. The accrual of interest is generally discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectability of principal or interest, even though the loan is currently performing. Loan losses are charged against the allowance when we believe the uncollectability of a loan balance is confirmed; for collateral-dependent loans, generally when appraised values (as adjusted values, if applicable) less estimated costs to sell are less than our carrying values.

Although we believe that we use the best information available to establish the allowance for loan losses, future adjustments to the allowance for loan losses may be necessary and our results of operations could be adversely affected if circumstances differ substantially from the assumptions used in making the determinations. Furthermore, while we believe we have established our allowance for loan losses in conformity with generally accepted accounting principles in the United States of America, there can be no assurance that regulators, in

reviewing our loan portfolio, will not require us to increase our allowance for loan losses. In addition, because future events affecting borrowers and collateral cannot be predicted with certainty, there can be no assurance that the existing allowance for loan losses is adequate or that increases will not be necessary should the quality of any loans deteriorate as a result of the factors discussed above. Any material increase in the allowance for loan losses may adversely affect our financial condition and results of operations.

Securities Portfolio. At September 30, 2014, our securities portfolio was $168.2 million, or 5.3% of total assets. At that date, 34.3% of the securities portfolio, or $57.7 million, was invested in corporate bonds. The amortized cost and fair value of corporate bonds in the financial services sector was $42.8 million, and $43.5 million, respectively. The remainder of the corporate bond portfolio includes companies from a variety of industries. Refer to Note 4 Securities Available for Sale in the Notes to the Unaudited Consolidated Financial Statements within this report for more detail regarding the investments held in the Company’s securities portfolio.

At September 30, 2014, we had no investments in a single company or entity, other than government-sponsored enterprises, that had an aggregate book value in excess of 10% of our equity.

Each reporting period, we evaluate all securities with a decline in fair value below the amortized cost of the investment to determine whether or not the impairment is deemed to be other-than-temporary (“OTTI”). OTTI is required to be recognized if (1) we intend to sell the security; (2) it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis; or (3) for debt securities, the present value of expected cash flows is not sufficient to recover the entire amortized cost basis. Marketable equity securities are evaluated for OTTI based on the severity and duration of the impairment and, if deemed to be other than temporary, the declines in fair value are reflected in earnings as realized losses. For impaired debt securities that we intend to sell, or more likely than not will be required to sell, the full amount of the depreciation is recognized as OTTI through earnings. For all other impaired debt securities, credit-related OTTI is recognized through earnings and non-credit related OTTI is recognized in other comprehensive income/loss, net of applicable taxes.

At September 30, 2014, unrealized losses in our debt portfolio ranged from 0% to 3.9% of amortized cost, and unrealized losses in our equity portfolio ranged from 0% to 28.4% of cost. As of September 30, 2014, the net unrealized gain on the total debt securities portfolio was $1.2 million. The most significant market valuation decrease related to any one debt security within the portfolio at September 30, 2014 is $78,000. We have no indication that the issuer will be unable to continue to service the obligations, and management does not intend to sell, and more likely than not will not be required to sell, such bond before the earlier of recovery or maturity. As a result, management considers the decline in market value to be temporary. No other debt securities had a market value decline greater than 3.9% of amortized cost.

As of September 30, 2014 the net unrealized gain on the total marketable equity securities portfolio was $4.4 million. The most significant market valuation decrease related to any one equity security within the portfolio at September 30, 2014 is $271,000. Although the issuers have shown declines in earnings as a result of the weakened economy, no credit issues have been identified that cause management to believe the decline in market value is other than temporary, and we have the ability and intent to hold these investments until a recovery of fair value. In analyzing an equity issuer’s financial condition, management considers industry analysts’ reports, financial performance and projected target prices of investment analysts within a one-year time frame.

Deposits. Deposits are a major source of our funds for lending and other investment purposes. Deposit inflows and outflows are significantly influenced by general interest rates and money market conditions. Our deposit base is comprised of demand, NOW, money market, regular savings and other deposits, and certificates of deposit. We consider demand, NOW, money market, and regular savings and other deposits to be core deposits. Total deposits increased $154.8 million, or 6.9%, to $2.403 billion at September 30, 2014 from $2.249 billion at December 31, 2013. Our continuing focus on the acquisition and expansion of core deposit relationships resulted in net growth in those non-term deposits of $169.9 million, or 10.8%, to $1.743 billion at September 30, 2014, or 72.5% of total deposits at that date. For further information about our deposits, refer to Note 6 Deposits in Notes to the Unaudited Consolidated Financial Statements within this report.

The following table sets forth the average balances of deposits for the periods indicated.


	Nine Months Ended September 30,
	2014								2013
	Average Balance		Average Rate			Percent of Total Deposits			Average Balance		Average Rate			Percent of Total Deposits
	(Dollars in thousands)
Demand deposits	$	305,732		—	%		12.0	%	$	218,061		—	%		11.1	%
NOW deposits		238,087		0.58			12.1			181,421		0.53			9.5
Money market deposits		864,656		0.89			37.2			677,728		0.91			36.6
Regular savings and other deposits		265,932		0.26			11.2			251,402		0.26			11.6
Certificates of deposit		675,388		1.20			27.5			674,883		1.33			31.2

Total	$	2,349,795		0.76	%		100.0	%	$	2,003,495		0.84	%		100.0	%

Borrowings. We use borrowings from the Federal Home Loan Bank of Boston to supplement our supply of funds for loans and investments. In addition, we may also purchase federal funds from local banking institutions as an additional short-term funding source for the Bank. Total borrowings increased $10.8 million, or 6.7%, to $172.7 million at September 30, 2014 from $161.9 million at December 31, 2013, reflecting new advances with the Federal Home Loan Bank of Boston totaling $57.1 million with terms of one to three years and fixed interest rates of 0.33% to 1.44% during the nine months ended September 30, 2014. At September 30, 2014 and December 31, 2013, Federal Home Loan Bank of Boston advances totaled $172.7 million and $161.9 million, respectively, with a weighted average rate of 1.28% and 1.48%, respectively. During the third quarter ended September 30, 2014, the Company prepaid $40.0 million of FHLB advances with a weighted average interest rate of 1.12%. The advances had fixed interest rates with maturities ranging from July 2017 through April 2018 and did not result in a FHLB prepayment penalty. At September 30, 2014, we also had an available line of credit of $9.4 million with the Federal Home Loan Bank of Boston at an interest rate that adjusts daily, none of which was outstanding at that date. For further information about our borrowings, refer to Note 7 Borrowings in Notes to the Unaudited Consolidated Financial Statements within this report.

Information relating to borrowings, including the federal funds purchased, is detailed in the following table.


	Nine Months Ended September 30,
	2014			2013
	(Dollars in thousands)
Balance outstanding at end of period	$	172,687		$	187,700
Average amount outstanding during the period	$	195,002		$	184,080
Weighted average interest rate during the period		1.31	%		1.77	%
Maximum outstanding at any month end	$	211,340		$	188,576
Weighted average interest rate at end of period		1.28	%		1.87	%

Stockholders’ Equity. Total stockholders’ equity increased $321.8 million, or 129.1%, to $571.0 million at September 30, 2014, from $249.2 million at December 31, 2013. The increase for the nine months ended September 30, 2014 was primarily the result of the Company’s second step stock offering and to $16.3 million in net income, partially offset by a decrease of $1.1 million in accumulated other comprehensive income reflecting a decrease in the fair value of available for sale securities. Stockholders’ equity to assets was 18.02% at September 30, 2014, compared to 9.29% at December 31, 2013. Book value per share increased to $10.44 at September 30, 2014 from $4.58 at December 31, 2013. Tangible book value per share increased to $10.19 at September 30, 2014 from $4.33 at December 31, 2013. At September 30, 2014, the Company and the Bank continued to exceed all regulatory capital requirements. For further information regarding regulatory capital requirements and the actual capital amounts and ratios for the Bank and the Company, refer to “Capital Management .”

Average Balance Sheets and Related Yields and Rates. The following tables present information regarding average balances of assets and liabilities, the total dollar amounts of interest income and dividends from average interest-earning assets, the total dollar amounts of interest expense on average interest-bearing liabilities and the resulting annualized average yields and costs. The yields and costs for the periods indicated are derived by dividing income or expense by the average balances of assets or liabilities, respectively, for the periods presented. For purposes of the tables, average balances have been calculated using daily average balances, and non-accrual loans are included in average balances but are not deemed material. Loan fees are included in interest income on loans but are not material.


	Three Months Ended September 30,
	2014									2013
	Average Balance			Interest (1)			Yield/ Cost (1)(2)			Average Balance			Interest (1)			Yield/ Cost (1)(2)
	(Dollars in thousands)
Assets:
Interest-earning assets:
Loans (3)	$	2,463,012		$	27,343			4.40	%	$	2,070,990		$	23,224			4.45	%
Securities and certificates of deposits		179,407			1,144			2.53			219,907			1,499			2.70
Other interest-earning assets (4)		383,152			258			0.27			160,150			86			0.21

Total interest-earning assets		3,025,571			28,745			3.77			2,451,047			24,809			4.02

Noninterest-earning assets		119,532									118,162

Total assets	$	3,145,103								$	2,569,209


Liabilities and stockholders’ equity:
Interest-bearing liabilities:
NOW deposits	$	260,461			394			0.60		$	191,192			254			0.53
Money market deposits		886,068			1,986			0.89			754,841			1,770			0.93
Regular savings and other deposits		268,078			174			0.26			254,401			168			0.26
Certificates of deposit		669,629			1,959			1.16			688,478			2,235			1.29

Total interest-bearing deposits		2,084,236			4,513			0.86			1,888,912			4,427			0.93
Borrowings		196,537			632			1.28			188,032			796			1.68

Total interest-bearing liabilities		2,280,773			5,145			0.89			2,076,944			5,223			1.00

Noninterest-bearing demand deposits		365,112									233,893
Other noninterest-bearing liabilities		19,943									16,165

Total liabilities		2,665,828									2,327,002
Total stockholders’ equity		479,275									242,207

Total liabilities and stockholders’ equity	$	3,145,103								$	2,569,209


Net interest-earning assets	$	744,798								$	374,103

Fully tax-equivalent net interest income					23,600									19,586
Less: tax-equivalent adjustments					(880	)								(489	)

Net interest income				$	22,720								$	19,097

Interest rate spread (1)(5)								2.88	%								3.02	%
Net interest margin (1)(6)								3.09	%								3.17	%
Average interest-earning assets to average interest-bearing liabilities		132.66	%								118.01	%

Supplemental Information:
Total deposits, including noninterest-bearing demand deposits	$	2,449,348		$	4,513			0.73	%	$	2,122,805		$	4,427			0.83	%
Total deposits and borrowings, including noninterest-bearing demand deposits	$	2,645,885		$	5,145			0.77	%	$	2,310,837		$	5,223			0.90	%

(footnotes begin on following page)

(footnotes from previous page)

(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 September 30, 2014 and 2013, yields on loans before tax-equivalent adjustments were 4.29% and 4.38%, respectively, yields on securities and certificates of deposit before tax-equivalent adjustments were 2.19% and 2.43%, respectively, and yield on total interest-earning assets before tax-equivalent adjustments were 3.65% and 3.94%, respectively. Interest rate spread before tax-equivalent adjustments for the three months ended September 30, 2014 and 2013 was 2.76% and 2.94%, respectively, while net interest margin before tax-equivalent adjustments for the three months ended September 30, 2014 and 2013 was 2.98% and 3.09%, respectively.

(2)	Annualized.

(3)	Loans on non-accrual status are included in average balances.

(4)	Includes Federal Home Loan Bank stock and associated dividends.

(5)	Interest rate spread represents the difference between the tax-equivalent yield on interest-earning assets and the cost of interest-bearing liabilities.

(6)	Net interest margin represents net interest income (tax-equivalent basis) divided by average interest-earning assets.


	Nine Months Ended September 30,
	2014									2013
	Average Balance			Interest (1)			Yield/ Cost (1)(2)			Average Balance			Interest (1)			Yield/ Cost (1)(2)
	(Dollars in thousands)
Assets:
Interest-earning assets:
Loans (3)	$	2,380,840		$	78,106			4.39	%	$	1,946,945		$	66,310			4.55	%
Securities and certificates of deposits		185,867			3,597			2.59			234,989			4,796			2.73
Other interest-earning assets (4)		211,801			486			0.31			143,639			251			0.23

Total interest-earning assets		2,778,508			82,189			3.95			2,325,573			71,357			4.10

Noninterest-earning assets		115,846									118,802

Total assets	$	2,894,354								$	2,444,375


Liabilities and stockholders’ equity:
Interest-bearing liabilities:
NOW deposits	$	238,087			1,027			0.58		$	181,421			713			0.53
Money market deposits		864,656			5,730			0.89			677,728			4,615			0.91
Regular savings and other deposits		265,932			515			0.26			251,402			495			0.26
Certificates of deposit		675,388			6,053			1.20			674,883			6,693			1.33

Total interest-bearing deposits		2,044,063			13,325			0.87			1,785,434			12,516			0.94
Borrowings		195,002			1,908			1.31			184,080			2,433			1.77

Total interest-bearing liabilities		2,239,065			15,233			0.91			1,969,514			14,949			1.01

Noninterest-bearing demand deposits		305,732									218,061
Other noninterest-bearing liabilities		19,058									17,263

Total liabilities		2,563,855									2,204,838
Total stockholders’ equity		330,499									239,537

Total liabilities and stockholders’ equity	$	2,894,354								$	2,444,375


Net interest-earning assets	$	539,443								$	356,059

Fully tax-equivalent net interest income					66,956									56,408
Less: tax-equivalent adjustments					(2,395	)								(1,366	)

Net interest income				$	64,561								$	55,042

Interest rate spread (1)(5)								3.04	%								3.09	%
Net interest margin (1)(6)								3.22	%								3.24	%
Average interest-earning assets to average interest-bearing liabilities		124.09	%								118.08	%

Supplemental Information:
Total deposits, including noninterest-bearing demand deposits	$	2,349,795		$	13,325			0.76	%	$	2,003,495		$	12,516			0.84	%
Total deposits and borrowings, including noninterest-bearing demand deposits	$	2,544,797		$	15,233			0.80	%	$	2,187,575		$	14,949			0.91	%

(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 nine months ended September 30, 2014 and 2013, yields on loans before tax-equivalent adjustments were 4.28% and 4.49%, respectively, yields on securities and certificates of deposit before tax-equivalent adjustments were 2.26% and 2.46%, respectively, and yield on total interest-earning assets before tax-equivalent adjustments were 3.84% and 4.02%, respectively. Interest rate spread before tax-equivalent adjustments for the nine months ended September 30, 2014 and 2013 was 2.93% and 3.01%, respectively, while net interest margin before tax-equivalent adjustments for the nine months ended September 30, 2014 and 2013 was 3.11% and 3.16%, respectively.

(2)	Annualized.

(3)	Loans on non-accrual status are included in average balances.

(4)	Includes Federal Home Loan Bank stock and associated dividends.

(5)	Interest rate spread represents the difference between the tax-equivalent yield on interest-earning assets and the cost of interest-bearing liabilities.

(6)	Net interest margin represents net interest income (tax-equivalent basis) divided by average interest-earning assets.

Rate/Volume Analysis. The following table sets forth the effects of changing rates and volumes on our fully tax-equivalent net interest income. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The net column represents the sum of the prior columns. For purposes of this table, changes attributable to changes in both rate and volume that cannot be segregated have been allocated proportionally based on the changes due to rate and the changes due to volume.


	Three Months Ended September 30, 2014 Compared to 2013 Increase (Decrease) Due to									Nine Months Ended September 30, 2014 Compared to 2013 Increase (Decrease) Due to
	Volume			Rate			Net			Volume			Rate			Net
	(In thousands)
Interest Income:
Loans	$	4,354		$	(235	)	$	4,119		$	14,311		$	(2,515	)	$	11,796
Securities and certificates of deposits		(263	)		(92	)		(355	)		(961	)		(238	)		(1,199	)
Other interest-earning assets		145			27			172			142			93			235

Total		4,236			(300	)		3,936			13,492			(2,660	)		10,832
Interest Expense:
Deposits		347			(261	)		86			1,514			(705	)		809
Borrowings		35			(199	)		(164	)		137			(662	)		(525	)

Total		382			(460	)		(78	)		1,651			(1,367	)		284

Change in fully tax-equivalent net interest income	$	3,854		$	160		$	4,014		$	11,841		$	(1,293	)	$	10,548

Results of Operations for the Three and Nine Months Ended September 30, 2014 and 2013

Net Income. Our primary source of income is net interest income. Net interest income is the difference between interest income, which is the income that we earn on our loans and investments, and interest expense, which is the interest that we pay on our deposits and borrowings. Changes in levels of interest rates affect our net interest income. A secondary source of income is non-interest income, which includes revenue that we receive from providing products and services. The majority of our non-interest income generally comes from customer service fees, loan fees, bank-owned life insurance, mortgage banking gains and gains on sales of securities.

Net income information is as follows (annualized where appropriate):


	Three Months Ended September 30,						Change						Nine Months Ended September 30,						Change
	2014			2013			Amount			Percent			2014			2013			Amount			Percent
	(Dollars in thousands)
Net interest income	$	22,720		$	19,097		$	3,623			19.0	%	$	64,561		$	55,042		$	9,519			17.3	%
Provision for loan losses		655			151			504			333.8			1,484			4,630			(3,146	)		(67.9	)
Non-interest income		3,687			5,234			(1,547	)		(29.6	)		11,708			14,315			(2,607	)		(18.2	)
Non-interest expenses		16,707			15,587			1,120			7.2			50,409			47,474			2,935			6.2
Net income		6,015			5,321			694			13.0			16,290			11,414			4,876			42.7
Return on average assets		0.76	%		0.83	%		(0.07	)		(8.4	)		0.75	%		0.62	%		0.13			21.0
Return on average equity		5.02	%		8.79	%		(3.77	)		(42.9	)		6.57	%		6.35	%		0.22			3.5

Net Interest Income. Net interest income increased $3.6 million, or 19.0%, to $22.7 million for the quarter ended September 30, 2014 from $19.1 million for the quarter ended September 30, 2013. The net interest rate spread and net interest margin were 2.76% and 2.98%, respectively, for the quarter ended September 30, 2014 compared to 2.94% and 3.09%, respectively, for the quarter ended September 30, 2013. For the nine months ended September 30, 2014, net interest income increased $9.5 million, or 17.3%, to $64.6 million from $55.0 million for the nine months ended September 30, 2013. The net interest rate spread and net interest margin were 2.93% and 3.11%, respectively, for the nine months ended September 30, 2014 compared to 3.01% and 3.16%, respectively, for the nine months ended September 30, 2013. 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 quarter and nine months ended September 30, 2014 compared to the same periods in 2013.

The Company’s yield on interest-earning assets declined 29 basis points to 3.65% for the quarter ended September 30, 2014 compared to 3.94% for the quarter ended September 30, 2013, while the cost of funds declined 13 basis points to 0.77% for the quarter ended September 30, 2014 compared to 0.90% for the quarter ended September 30, 2013. For the nine months ended September 30, 2014, the yield on interest-earning assets declined by 18 basis points to 3.84% compared to 4.02% for the nine months ended September 30, 2013, while the cost of funds declined by 11 basis points to 0.80% for the nine months ended September 30, 2014 compared to 0.91% for the nine months ended September 30, 2013.

The average balance of the Company’s loan portfolio increased $392.0 million, or 18.9%, to $2.463 billion, which was partially offset by the decline in the yield on loans of nine basis points to 4.29% for the quarter ended September 30, 2014 compared to the quarter ended September 30, 2013. For the nine months ended September 30, 2014, the average balance of the loan portfolio increased $433.9 million, or 22.3%, to $2.381 billion, which was partially offset by the decrease in the yield on loans of 21 basis points to 4.28% compared to the nine months ended September 30, 2013.

The Company’s average balance of total deposits increased $326.5 million, or 15.4%, to $2.449 billion, which was partially offset by the decline in the cost of total deposits of 10 basis points to 0.73% for the quarter ended September 30, 2014 compared to the quarter ended September 30, 2013. For the nine months ended September 30, 2014, the average balance of total deposits increased $346.3 million, or 17.3%, to $2.350 billion, which as partially offset by the decline in cost of total deposits of eight basis points to 0.76% compared to the nine months ended September 30, 2013.

Provision for Loan Losses. Our provision for loan losses was $655,000 for the three months ended September 30, 2014 compared to $151,000 for the three months ended September 30, 2013. For the nine months ended September 30, 2014, the provision for loan losses was $1.5 million compared to $4.6 million for the nine months ended September 30, 2013. For further discussion of the changes in the provision and allowance for loan losses, refer to “Asset Quality—Allowance for Loan Losses.”

Non-Interest Income. Non-interest income information is as follows:


	Three Months Ended September 30,					Change						Nine Months Ended September 30,				Change
	2014		2013			Amount			Percent			2014		2013		Amount			Percent
	(Dollars in thousands)
Customer service fees	$	1,880	$	1,857		$	23			1.2	%	$	5,539	$	5,219	$	320			6.1	%
Loan fees		148		185			(37	)		(20.0	)		467		349		118			33.8
Mortgage banking gain (loss), net		19		(102	)		121			118.6			406		456		(50	)		(11.0	)
Gain on sales of securities, net		1,346		2,995			(1,649	)		(55.1	)		4,411		7,396		(2,985	)		(40.4	)
Income from bank-owned life insurance		294		299			(5	)		(1.7	)		868		886		(18	)		(2.0	)
Other income		—		—			—			—			17		9		8			88.9

Total non-interest income	$	3,687	$	5,234		$	(1,547	)		(29.6	)%	$	11,708	$	14,315	$	(2,607	)		(18.2	)%

Non-interest income decreased $1.5 million, or 29.6%, to $3.7 million for the quarter ended September 30, 2014 from $5.2 million for the quarter ended September 30, 2013, primarily due to a decrease of $1.6 million in gain on sales of securities, net. For the nine months ended September 30, 2014, non-interest income decreased $2.6 million, or 18.2%, to $11.7 million from $14.3 million for the nine months ended September 30, 2013, primarily due to a decrease of $3.0 million in gain on sales of securities, net partially offset by an increase of $320,000 in customer service fees.

Non-Interest Expense. Non-interest expense information is as follows:


	Three Months Ended September 30,						Change						Nine Months Ended September 30,				Change
	2014			2013			Amount			Percent			2014		2013		Amount		Percent
	(Dollars in thousands)
Salaries and employee benefits	$	10,249		$	10,033		$	216			2.2	%	$	31,067	$	29,584	$	1,483		5.0	%
Occupancy and equipment		2,252			2,103			149			7.1			7,029		6,523		506		7.8
Data processing		1,201			1,089			112			10.3			3,271		3,159		112		3.5
Marketing and advertising		769			539			230			42.7			2,264		2,042		222		10.9
Professional services		588			453			135			29.8			1,888		1,591		297		18.7
Foreclosed real estate		(47	)		(31	)		(16	)		(51.6	)		163		161		2		1.2
Deposit insurance		515			525			(10	)		(1.9	)		1,597		1,522		75		4.9
Other general and administrative		1,180			876			304			34.7			3,130		2,892		238		8.2

Total non-interest expenses	$	16,707		$	15,587		$	1,120			7.2	%	$	50,409	$	47,474	$	2,935		6.2	%

Non-interest expenses increased $1.1 million, or 7.2%, to $16.7 million for the quarter ended September 30, 2014 from $15.6 million for the quarter ended September 30, 2013, primarily due to increases of $216,000 in salaries and employee benefits, $149,000 in occupancy and equipment, $112,000 in data processing, $230,000 in marketing and advertising, $135,000 in professional services and $304,000 in other general and administrative expenses. For the nine months ended September 30, 2014, non-interest expenses increased $2.9 million, or 6.2%, to $50.4 million from $47.5 million for the nine months ended September 30, 2013, primarily due to increases of $1.5 million in salaries and employee benefits, $506,000 in occupancy and equipment, $112,000 in data processing, $222,000 in marketing and advertising, $297,000 in professional services and $238,000 in other general and administrative expenses. The increases in salaries and employee benefits and occupancy and equipment expenses were primarily associated with the opening of three new branches in 2013 and costs associated with the expansion of residential and commercial lending capacity. The Company’s efficiency ratio was 66.67% for the quarter ended September 30, 2014 compared to 73.05% for the quarter ended September 30, 2013. For the nine months ended September 30, 2014, the efficiency ratio was 70.15% compared to 76.62% for the nine months ended September 30, 2013.

Income Tax Provision. We recorded a provision for income taxes of $3.0 million for the quarter ended September 30, 2014, reflecting an effective tax rate of 33.5%, compared to $3.3 million, or 38.1%, for the quarter ended September 30, 2013. For the nine months ended September 30, 2014, the provision for income taxes was $8.1 million, reflecting an effective tax rate of 33.2%, compared to $5.8 million, or 33.8%, for the nine months ended September 30, 2013. The change in the effective tax rate was primarily due to changes in the components of pre-tax income.

Liquidity Management. Liquidity is the ability to meet current and future financial obligations of a short-term nature. Our primary sources of funds consist of deposit inflows, loan repayments, maturities of and payments on investment securities and borrowings from the Federal Home Loan Bank of Boston. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition.

We regularly adjust our investments in liquid assets based upon our assessment of (1) expected loan demand, (2) expected deposit flows, (3) yields available on interest-earning deposits and securities and (4) the objectives of our asset/liability management policy.

Our most liquid assets are cash and cash equivalents. The levels of these assets depend on our operating, financing, lending and investing activities during any given period. At September 30, 2014, cash and due from banks totaled $388.3 million, including $302.3 million of net cash proceeds raised in the Company’s second step common stock offering. In addition, at September 30, 2014, we had $218.5 million of available borrowing capacity with the Federal Home Loan Bank of Boston, including a $9.4 million line of credit. On September 30, 2014, we had $172.7 million of advances outstanding.

A significant use of our liquidity is the funding of loan originations. At September 30, 2014, we had total loan commitments outstanding of $667.9 million. Historically, many of the commitments expire without being fully drawn; therefore the total amount of commitments does not necessarily represent future cash requirements.

Another significant use of our liquidity is the funding of deposit withdrawals. Certificates of deposit due within one year of September 30, 2014 totaled $436.8 million, or 66.1% of total certificates of deposit. If these maturing deposits do not remain with us, we will be required to utilize other sources of funds. Historically, a significant portion of certificates of deposit that mature have remained with us. We have the ability to attract and retain deposits by adjusting the interest rates offered.

Our primary investing activities are the origination of loans and the purchase of securities. Our primary financing activities consist of activity in deposit accounts and Federal Home Loan Bank advances. Deposit flows are affected by the overall level of interest rates, the interest rates and products offered by us and our local competitors and other factors. We generally manage the pricing of our deposits to be competitive. Occasionally, we offer promotional rates on certain deposit products to attract deposits.

We have a contract with our core data processing provider through December 2017, with a related outstanding commitment of $7.3 million as of September 30, 2014 and with total annual payments of $2.2 million.

The net proceeds from the stock offering significantly increased our liquidity and capital resources. Over time, our level of liquidity may be reduced as the net proceeds from the stock offering are used for general corporate purposes, including the funding of loans. Our financial condition and results of operations are expected to be enhanced and result in increases in net interest-earning assets and net interest income. However, due to the increase in equity from the stock offering proceeds, our return on equity will initially be lower but is expected to increase over time.

Capital Management. Both the Company and the Bank are subject to various regulatory capital requirements administered by the Federal Reserve Board and the Federal Deposit Insurance Corporation, respectively, including a risk-based capital measure. The risk-based capital guidelines include both a definition of capital and a framework for calculating risk-weighted assets by assigning balance sheet assets and off-balance sheet items to broad risk categories. At September 30, 2014, both the Company and the Bank exceeded all of their respective regulatory capital requirements. The Bank is considered “well capitalized” under regulatory guidelines.

The Company’s and the Bank’s actual capital amounts and ratios follow:


	Actual					Minimum Capital Requirement					Minimum To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
September 30, 2014
Total Capital (to Risk Weighted Assets):
Company	$	582,982		21.9	%	$	213,395		8.0	%		N/A		N/A
Bank		407,513		15.4			211,342		8.0		$	264,177		10.0	%

Tier 1 Capital (to Risk Weighted Assets):
Company		554,243		20.8			106,697		4.0			N/A		N/A
Bank		378,774		14.3			105,671		4.0			158,506		6.0

Tier 1 Capital (to Average Assets):
Company		554,243		17.6			125,690		4.0			N/A		N/A
Bank		378,774		12.1			124,787		4.0			155,983		5.0

December 31, 2013
Total Capital (to Risk Weighted Assets):
Company	$	259,577		10.8	%	$	192,797		8.0	%		N/A		N/A
Bank		246,100		10.2			192,511		8.0		$	240,639		10.0	%

Tier 1 Capital (to Risk Weighted Assets):
Company		231,342		9.6			96,398		4.0			N/A		N/A
Bank		217,865		9.1			96,256		4.0			144,383		6.0

Tier 1 Capital (to Average Assets):
Company		231,342		8.7			105,999		4.0			N/A		N/A
Bank		217,865		8.2			105,702		4.0			132,127		5.0

A reconciliation of the Company’s and Bank’s stockholders’ equity to regulatory capital follows:


	September 30, 2014						December 31, 2013
	Consolidated			Bank			Consolidated			Bank
	(In thousands)
Total stockholders’ equity per financial statements	$	571,039		$	395,570		$	249,205		$	235,728
Adjustments to Tier 1 capital:
Accumulated other comprehensive income		(3,052	)		(3,052	)		(4,104	)		(4,104	)
Goodwill disallowed		(13,687	)		(13,687	)		(13,687	)		(13,687	)
Servicing assets disallowed		(57	)		(57	)		(72	)		(72	)

Total Tier 1 capital		554,243			378,774			231,342			217,865


Adjustments to total capital:
Allowance for loan losses		26,739			26,739			25,335			25,335
45% of net unrealized gains on marketable equity securities		2,000			2,000			2,900			2,900


Total regulatory capital	$	582,982		$	407,513		$	259,577		$	246,100

In July 2013, the FDIC and the other federal bank regulatory agencies issued a final rule that will revise their leverage and risk-based capital requirements and the method for calculating risk-weighted assets to make them

consistent with agreements that were reached by the Basel Committee on Banking Supervision and certain provisions of the Dodd-Frank Act. Among other things, the rule establishes a new common equity Tier 1 minimum capital requirement (4.5% of risk-weighted assets), increases the minimum Tier 1 capital to risk-based assets requirement (from 4% to 6% of risk-weighted assets), sets the leverage ratio at a uniform 4% of total assets and assigns a higher risk weight (150%) to exposures that are more than 90 days past due or are on nonaccrual status and to certain commercial real estate facilities that finance the acquisition, development or construction of real property. The final rule also requires unrealized gains and losses on certain “available-for-sale” securities holdings to be included for purposes of calculating regulatory capital requirements unless a one-time opt-out is exercised. The Bank has elected to exercise its one-time option to opt-out of the requirement under the final rule to include certain “available-for-sale” securities holdings for purposes of calculating its regulatory capital requirements. The rule limits a banking organization’s capital distributions and certain discretionary bonus payments to executive officers if the banking organization does not hold a “capital conservation buffer” consisting of 2.5% of common equity Tier 1 capital to risk-weighted assets in addition to the amount necessary to meet its minimum risk-based capital requirements. The final rule is effective January 1, 2015. The “capital conservation buffer” will be phased in from January 1, 2016 to January 1, 2019, when the full capital conservation buffer will be effective.

Consolidated regulatory capital requirements identical to those applicable to the Bank will apply to bank holding companies such as the Company as of January 1, 2015. As is the case with institutions themselves, the capital conservation buffer will be phased in between 2016 and 2019.

The Company may use capital management tools such as cash dividends and common share repurchases. Pursuant to Federal Reserve Board regulations, we may not repurchase shares for at least one year following the second step conversion. In addition, Massachusetts regulations restrict repurchases for the first three years following the second step conversion. We are also subject to the Federal Reserve Board’s notice provisions for stock repurchases.

Off-Balance Sheet Arrangements. In the normal course of operations, we engage in a variety of financial transactions that, in accordance with generally accepted accounting principles in the United States of America are not recorded in our financial statements. These transactions involve, to varying degrees, elements of credit, interest rate and liquidity risk. Such transactions are used primarily to manage customers’ requests for funding and take the form of loan commitments and lines of credit.

For the nine months ended September 30, 2014, we engaged in no off-balance sheet transactions reasonably likely to have a material effect on our financial condition, results of operations or cash flows.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk Management. Our earnings and the market value of our assets and liabilities are subject to fluctuations caused by changes in the level of interest rates. We manage the interest rate sensitivity of our interest-bearing liabilities and interest-earning assets in an effort to minimize the adverse effects of changes in the interest rate environment. Deposit accounts typically react more quickly to changes in market interest rates than mortgage loans because of the shorter maturities of deposits. As a result, sharp increases in interest rates may adversely affect our earnings while decreases in interest rates may beneficially affect our earnings. To reduce the potential volatility of our earnings, we have sought to improve the match between asset and liability maturities and rates, while maintaining an acceptable interest rate spread. Our strategy for managing interest rate risk emphasizes: originating loans with adjustable interest rates; selling the residential real estate fixed-rate loans with terms greater than 10 years that we originate; promoting core deposit products; and adjusting the interest rates and maturities of funding sources, as necessary.

We have an Asset/Liability Management Committee to coordinate all aspects of asset/liability management. The committee establishes and monitors the volume, maturities, pricing and mix of assets and funding sources with the objective of managing assets and funding sources to provide results that are consistent with liquidity, growth, risk limits and profitability goals.

Net Interest Income Simulation Analysis. We analyze our interest rate sensitivity position to manage the risk associated with interest rate movements through the use of interest income simulation. The matching of assets and liabilities may be analyzed by examining the extent to which such assets and liabilities are “interest sensitive.” An asset or liability is said to be interest rate sensitive within a specific time period if it will mature or reprice within that time period.

Our goal is to manage asset and liability positions to moderate the effects of interest rate fluctuations on net interest income. Interest income simulations are completed quarterly and presented to the Asset/Liability Committee and the Board of Directors. The simulations provide an estimate of the impact of changes in interest rates on net interest income under a range of assumptions. The numerous assumptions used in the simulation process are reviewed by the Asset/Liability Committee and the Executive Committee on a quarterly basis. Changes to these assumptions can significantly affect the results of the simulation. The simulation incorporates assumptions regarding the potential timing in the repricing of certain assets and liabilities when market rates change and the changes in spreads between different market rates. The simulation analysis incorporates management’s current assessment of the risk that pricing margins will change adversely over time due to competition or other factors.

Simulation analysis is only an estimate of our interest rate risk exposure at a particular point in time. We continually review the potential effect changes in interest rates could have on the repayment of rate sensitive assets and funding requirements of rate sensitive liabilities.

The simulation uses projected repricing of assets and liabilities on the basis of contractual maturities, anticipated repayments and scheduled rate adjustments. Prepayment rates can have a significant impact on interest income simulation. Because of the large percentage of loans we hold, rising or falling interest rates have a significant impact on the prepayment speeds of our earning assets that in turn affect the rate sensitivity position. When interest rates rise, prepayments tend to slow. When interest rates fall, prepayments tend to rise. Our asset sensitivity would be reduced if prepayments slow and vice versa. While we believe such assumptions to be reasonable, there can be no assurance that assumed prepayment rates will approximate actual future mortgage-backed security and loan repayment activity.

The following table reflects changes in estimated net interest income for the Bank due to immediate non-parallel changes in interest rates at October 1, 2014 through September 30, 2015.


Increase (Decrease) in Market Interest Rates	Net Interest Income
Increase (Decrease) in Market Interest Rates	Amount		Change			Percent
	(Dollars in Thousands)
300	$	86,758	$	(1,895	)		(2.14	)%
Flat		88,653
-100		89,477		824			0.93

ITEM 4.

CONTROLS AND PROCEDURES

(a)

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures. The Company’s management, including the Company’s principal executive officer and principal financial officer, have evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon their evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (the “SEC”) (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (2) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

(b)

Changes in Internal Controls over Financial Reporting. There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

Periodically, there have been various claims and lawsuits against us, such as claims to enforce liens, condemnation proceedings on properties in which we hold security interests, claims involving the making and servicing of real property loans and other issues incident to our business. We are not a party to any pending legal proceedings that we believe would have a material adverse effect on our financial condition, results of operations or cash flows.

ITEM 1A.

RISK FACTORS

For information regarding our risk factors, see “Risk Factors,” in the Company’s Prospectus dated May 9, 2014, filed with the SEC on May 20, 2014, which is available through the SEC’s website at www.sec.gov . As of September 30, 2014, our risk factors have not changed materially from those reported in the prospectus. The risks described in the annual report are not the only risks that we face. Additional risks not presently known to us, or that we currently deem immaterial, may also adversely affect our business, financial condition or results of operations.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a.)

Not applicable.

(b.)

On July 28, 2014, the Company completed the sale of 32,500,000 shares of its common stock par value $0.01 per share, in connection with the second step mutual-to-stock Conversion of Meridian Financial Services, Incorporated.

The effective date of the Company’s registration statement (Commission No. 333-194454) was May 9, 2014. The Company registered for offer and sale shares of common stock, par value $0.01, at a sales price of $10.00 per share.

The selling agent who assisted the Company in the sale of its common stock was Sterne, Agee & Leach. For their services, Sterne, Agee & Leach received a fee of $4.6 million, including a sales fee equal to 0.75% of the dollar amount of the shares of common stock sold in the subscription and community offerings and a sales fee equal to 5.0% of the dollar amount of the shares of common stock sold in the syndicated offering, except that no fee was payable to Sterne, Agee & Leach with respect to shares purchased by officers, directors and employees or their immediate families, or shares purchased by the Company’s tax-qualified and non-qualified employee benefit plans. In addition, Sterne, Agee & Leach was reimbursed for expenses, including attorney fees.

From the effective date of the registration statement until September 30, 2014 the Company utilized $16.3 million to fund the new ESOP loan and incurred expenses in connection with the offer and sale of the common stock totaling $6.5 million, resulting in net cash proceeds to the Company of $302.3 million. As of September 30, 2014, the Company had invested $159.3 million of the net proceeds it received from the sale into the Bank’s operations and has retained the remaining amount for general corporate purposes.

(c.)

There were no repurchases of common stock during the quarter ended September 30, 2014.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.

OTHER INFORMATION

Not applicable.

ITEM 6.

EXHIBITS


3.1		Articles of Incorporation of Meridian Bancorp, Inc. (Incorporated by reference to the Registration Statement on Form S-1 of Meridian Bancorp, Inc. (File No. 333-194454), originally filed with the Securities and Exchange Commission on March 10, 2014)

3.2		Bylaws of Meridian Bancorp, Inc. (Incorporated by reference to the Registration Statement on Form S-1 of Meridian Bancorp, Inc. (File No. 333-194454), originally filed with the Securities and Exchange Commission on March 10, 2014)

4		Form of Common Stock Certificate of Meridian Bancorp, Inc. (Incorporated by reference to the Registration Statement on Form S-1 of Meridian Bancorp, Inc. (File No. 333-194454), originally filed with the Securities and Exchange Commission on March 10, 2014)

10.1		[Reserved]

10.2		[Reserved]

10.3		[Reserved]

10.4		Amended and Restated Employment Agreement with Richard J. Gavegnano and East Boston Savings Bank dated July 28, 2014

10.5		East Boston Savings Bank Amended and Restated Employee Severance Compensation Plan

10.6		Form of Amended and Restated Supplemental Executive Retirement Agreements with Directors Vincent D. Basile, Domenic A. Gambardella, Edward L. Lynch, Gregory F. Natalucci, and James G. Sartori

10.7		Amended and Restated Supplemental Executive Retirement Agreement with Richard J. Gavegnano

10.8		2008 Equity Incentive Plan (Incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement for its 2008 Annual Meeting, as filed with the Securities and Exchange Commission on July 11, 2008)

10.9		Amended and Restated Employment Agreement between Edward J. Merritt and East Boston Savings Bank dated July 28, 2014

10.10		Amended and Restated Supplemental Executive Retirement Agreement between East Boston Savings Bank and Edward J. Merritt dated July 28, 2014

10.11		Joint Beneficiary Designation Agreement between Edward J. Merritt and Mt. Washington Co-operative Bank (Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 16, 2010)

10.12		First Amendment to Joint Beneficiary Designation Agreement between Edward J. Merritt and Mt. Washington Co-operative Bank (Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 16, 2010)

10.13		Amended and Restated Two-Year Change in Control Agreement between Mark Abbate and East Boston Savings Bank dated July 28, 2014

10.14		Incentive Compensation Plan filed as an exhibit to Form 10-K filed on March 17, 2014

10.15		Amended and Restated Two-Year Change in Control Agreement between John Migliozzi and East Boston Savings Bank dated July 28, 2014

10.16		East Boston Non-Qualified Supplemental Employee Stock Ownership Plan dated October 1, 2014



21		Subsidiaries of Registrant

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.0		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101		The following financial statements for the three and nine months ended September 30, 2014, formatted in XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Net Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Stockholders’ Equity (v) Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Labels Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	MERIDIAN BANCORP, INC. (Registrant)

Date: November 10, 2014	By:	/s/ Richard J. Gavegnano
		Richard J. Gavegnano Chairman, President and Chief Executive Officer (Principal Executive Officer)

Date: November 10, 2014	By:	/s/ Mark L. Abbate
		Mark L. Abbate Senior Vice President, Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer)

Exhibit 10.4

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into as of July 28, 2014 by and between EAST BOSTON SAVINGS BANK, a bank organized under the laws of the Commonwealth of Massachusetts with its headquarters located in East Boston, Massachusetts (the “Bank”), and Richard J. Gavegnano (the “Executive”). The Agreement is effective as of January 8, 2009 (the “Effective Date”).

WHEREAS , the Executive originally entered into an employment agreement with the Bank on January 8, 2009 (the “Original Agreement”); and

WHEREAS , in connection with the conversion of Meridian Financial Services, Incorporated (the “MHC”) from the mutual holding company to the stock holding company form of organization, the Bank desires to amend and restate the Original Agreement in order to remove any reference to the MHC structure and to make certain other changes; and

WHEREAS , the Original Agreement may be amended in accordance with Section 18 of the Original Agreement; and

WHEREAS , the Executive has agreed to such amendment and restatement of the Original Agreement; and

WHEREAS , the Board of Directors of the Bank and the Executive believe it is in the best interests of the Bank to enter into the Agreement in order to reinforce and reward the Executive for his service and dedication to the continued success of the Bank.

NOW, THEREFORE , in consideration of the mutual covenants contained in this Agreement, the Bank and the Executive agree as follows:

1 . Employment . The Bank agrees to employ the Executive and the Executive agrees to be employed by the Bank on the terms and conditions set forth in this Agreement.

2. Capacity . The Executive shall serve the Bank as President and Chief Executive Officer, and as Chairman of the Board of Directors. The Executive shall also serve the Bank in such other or additional offices as the Executive may be requested to serve by the Board of Directors of the Bank (the “Board of Directors”). In such capacity or capacities, the Executive shall perform such services and duties in connection with the business, affairs and operations of the Bank as may be assigned or delegated to the Executive from time to time by or under the authority of the Board of Directors, and the Executive shall adhere to all policies established by the Board of Directors or Committees thereof at all times. If as a result of the Board of Directors directing the Executive to serve in such “other” office(s) the Executive would have a right to terminate his employment for Good Reason pursuant to Section 6(b)(i) below, then he will be entitled to the benefits as are provided to him under Section 7(e) below.

3. Term .

(a) The term of this Agreement shall be (i) the initial term, consisting of the period commencing on the Effective Date and ending on the second anniversary of the Effective Date, plus (ii) any and all extensions of the initial term made pursuant to this Section 3, unless terminated at an earlier date pursuant to Section 6 below.

(b) The term of this Agreement shall be extended for one day each day so that a constant twenty-four (24) calendar month term shall remain in effect, until such time as the Board of Directors or the Executive elects not to extend the term of the Agreement by giving written notice to the other party in accordance with the terms of this Agreement, in which case the term of this Agreement shall be fixed and shall end on the second anniversary of the date of such written notice.

4. Compensation and Benefits . The regular compensation and benefits payable to the Executive under this Agreement shall be as follows:

(a) Salary . For all services rendered by the Executive under this Agreement, the Bank shall pay the Executive a salary (the “Salary”) at the annual rate of $600,000, subject to increase from time to time in the discretion of the Board of Directors. The Salary shall be payable in periodic installments in accordance with the Bank’s usual practice for its senior executives.

(b) Bonus . The Executive shall be entitled to participate in an annual incentive program established by the Board of Directors with such terms as may be established in the sole discretion of the Board of Directors.

(c) Regular Benefits . The Executive shall also be entitled to participate in any employee benefit plans, medical insurance plans, life insurance plans, disability income plans, retirement plans, vacation plans, expense reimbursement plans and other benefit plans which the Bank may from time to time have in effect for all or most of its senior executives, and for which the Executive is eligible. Such participation shall be subject to the terms of the applicable plan documents, generally applicable policies of the Bank, and applicable law. Nothing contained in this Agreement shall be construed to create any obligation on the part of the Bank to establish any such plan or to maintain the effectiveness of any such plan which may be in effect from time to time.

(d) Taxation of Payments and Benefits . The Bank shall undertake to make deductions, withholdings and tax reports with respect to payments and benefits under this Agreement to the extent that it reasonably and in good faith believes that it is required to make such deductions, withholdings and tax reports. Payments under this Agreement shall be in amounts net of any such deductions or withholdings. Nothing in this Agreement shall be construed to require the Bank to make any payments to compensate the Executive for any adverse tax effect associated with any payments or benefits or for any deduction or withholding from any payment or benefit.

(e) Exclusivity of Salary and Benefits . The Executive shall not be entitled to any payments or benefits other than those provided under this Agreement.

5. Extent of Service . During the Executive’s employment under this Agreement, the Executive shall, subject to the direction and supervision of the Board of Directors, devote the Executive’s full business time, best efforts and business judgment, skill and knowledge to the advancement of the Bank’s interests and to the discharge of the Executive’s duties and responsibilities under this Agreement. The Executive shall not engage in any other business activity, except as may be approved by the Board of Directors; provided that nothing in this Agreement shall be construed as preventing the Executive from:

(a) investing the Executive’s assets in any company or other entity in a manner not prohibited by Section 9(d) and in such form or manner as shall not require any material activities on the Executive’s part in connection with the operations or affairs of the companies or other entities in which such investments are made; or

(b) engaging in religious, charitable or other community or non-profit activities that do not impair the Executive’s ability to fulfill the Executive’s duties and responsibilities under this Agreement.

6. Termination . The Executive’s employment under this Agreement shall terminate under the following circumstances set forth in this Section 6.

(a) Termination by the Bank for Cause . The Executive’s employment under this Agreement may be terminated for Cause without further liability on the part of the Bank effective immediately upon a vote of the Board of Directors and written notice to the Executive. Only the following shall constitute “Cause” for such termination:

(i) the conviction of, the Executive for any felony involving deceit, dishonesty or fraud;

(ii) a material act or acts of dishonesty in connection with the performance of the Executive’s duties, including without limitation, material misappropriation of funds or property;

(iii) an act or acts of gross misconduct by the Executive; or

(iv) continued, willful and deliberate non-performance by the Executive of duties (other than by reason of illness or disability) which has continued for more than 30 days following written notice of non-performance from the Board of Directors (or Executive Committee) which specifically describes the alleged non-performance.

A determination of whether the Executive’s employment shall be terminated for Cause shall be made at a meeting of the Board of Directors called and held for such purpose, at which the Board of Directors makes a finding that in the good faith opinion of the Board of Directors an event set

forth in subclauses (i), (ii), (iii) or (iv) has occurred and specifying the particulars thereof in detail. The Executive shall be permitted to appear before the Board of Directors prior to any such determination, without legal counsel, to explain his position on whether there is Cause for his termination. If the Executive disputes the Board’s determination of Cause, he may request arbitration pursuant to Section 10 below. The fact that the Board may have acted in good faith in making the determination of Cause is not determinative of whether in fact the Board had Cause to terminate the Executive.

(b) Termination by the Executive . The Executive’s employment under this Agreement may be terminated by the Executive by written notice to the Board of Directors within sixty (60) days following an event constituting “Good Reason.” The Executive’s termination of employment shall become effective on the thirty-first (31 ^st ) day following such notice, provided the Bank has not remedied the condition giving rise to the event of “Good Reason.” For purposes of this Agreement, “Good Reason” shall mean:

(i) a material diminution or other substantial adverse change, not consented to by Executive, in the nature or scope of the Executive’s responsibilities and authorities;

(ii) any demotion of the Executive from his current title of Chief Executive Officer or removal from his seat on the Board of Directors;

(iii) a material reduction in the Executive’s base salary except for across-the-board reductions similarly affecting all or substantially all officers;

(iv) involuntary relocation of the Bank’s offices in which the Executive is principally employed by more than 50 miles (10 miles in the event of a Change in Control); or

(v) failure of the Bank to comply with material terms of this Agreement or the Executive’s executive supplemental retirement agreement.

(c) Termination by the Bank Without Cause . The Executive’s employment under this Agreement may be terminated by the Bank without Cause (which, for purposes of clarification, shall not include a termination of Executive’s employment under this Agreement due to Executive’s death or Disability) upon written notice to the Executive. A determination of whether the Executive’s employment shall be terminated without Cause will be made solely by the Executive Committee of the Board of Directors.

(d) Termination by the Executive Other Than For Good Reason. The Executive may terminate his employment other than for Good Reason by giving 30 days advance notice to the Bank.

(e) Disability . If the Executive shall be disabled so as to be unable to perform the essential functions of the Executive’s then existing position or positions under this

Agreement with or without reasonable accommodation, for a total of more than 90 days in any calendar year, the Board of Directors may terminate the Executive’s employment upon written notice to the Executive. If any question shall arise as to whether during any period the Executive is disabled so as to be unable to perform the essential functions of the Executive’s then existing position or positions with or without reasonable accommodation, the Executive may, and at the request of the Bank shall, submit to the Bank a certification in reasonable detail by a physician selected by the Bank to whom the Executive or the Executive’s guardian has no reasonable objection as to whether the Executive is so disabled, and such certification shall for the purposes of this Agreement be conclusive of the issue. The physician shall be board-certified in the area of medicine applicable to the particular disability involved. The Executive shall cooperate with any reasonable request of the physician in connection with such certification. If such question shall arise and the Executive shall fail to submit such certification (unless the failure results from matters beyond the control of the Executive), the Bank’s determination will determine the issue of whether the Executive is disabled. Nothing in this Section 6(d) shall be construed to waive the Executive’s rights, if any, under existing law including, without limitation; the Family and Medical Leave Act of 1993, 29 U.S.C. §2601 et seq. , the Americans with Disabilities Act, 42 U.S.C. §12101 et seq , Massachusetts General Laws Chapter 151B, and Section 10 below.

(f) Death . The Executive’s employment hereunder shall terminate upon his death.

(g) Termination and Board Membership . To the extent Executive is a member of the board of directors or trustees of the Bank or any of its affiliates on the date of termination of employment with the Bank (other than a termination due to normal retirement), Executive will resign from all of the boards of directors and trustees immediately following such termination of employment with the Bank. Executive will be obligated to tender this resignation regardless of the method or manner of termination (other than termination due to normal retirement), and such resignation will not be conditioned upon any event or payment.

7. Certain Compensation Upon Termination .

(a) Compensation Upon Voluntary Termination . If the Executive shall resign (including by retirement) and voluntarily terminate employment without Good Reason, the Bank shall pay to the Executive the Executive’s accrued and unpaid salary, accrued and unpaid vacation pay and all rights and benefits that the Executive is entitled to receive under the terms of the Bank’s benefit plans or arrangements, including the Executive’s rights under any Supplemental Executive Retirement Agreement in effect between the Bank and the Executive (the “Accrued Obligations”), including the agreement originally effective July 1, 2007 and subsequently amended and restated.

(b) Compensation Upon Death . In the event the Executive’s employment shall terminate in the event of his death, his surviving spouse (or estate if there is no surviving spouse) shall be entitled to receive the Accrued Obligations, including a pro-rata bonus through the date of his death. His surviving spouse (or estate if there is no surviving spouse) shall also be entitled to any death benefit provided under the Bank’s life insurance plans and any Endorsement Split Dollar Agreement in effect between the Bank and the Executive, including the agreement effective January 8, 2009.

(c) Compensation Upon Disability . In the event the Executive’s employment shall terminate by reason of disability as provided in Section 6(d) above, he shall be entitled to his Accrued Obligations, including a pro-rata bonus through the date of his disability, and such disability benefits as determined in accordance with any short or long-term disability plans then in effect for executives of the Bank.

(d) Compensation Upon Termination by the Bank for Cause . In the event the Executive’s employment shall be terminated by the Bank for Cause as provided by Section 6(a) above, he shall be entitled to receive his Accrued Obligations only.

(e) Compensation Upon Termination of the Bank Without Cause or by the Executive for Good Reason . In the event the Executive’s employment shall be terminated by the Bank without Cause as provided in Section 6(c) above, or by the Executive for Good Reason as provided in Section 6(b) above, he shall be entitled to receive the Accrued Obligations. In addition, subject to the Executive’s agreement to a release of any and all legal claims in a form satisfactory to the Bank and the expiration of the applicable revocation period and subject to compliance with the provisions of Section 9 hereof, the Bank shall pay the Executive an amount equivalent to the sum of (i) two (2) times the Executive’s Salary at the rate then in effect pursuant to Section 4(a); and (ii) the value of 24 months of health insurance premiums for health insurance coverage provided by the Bank, based on the coverage provided to the Executive immediately prior to his termination. The Bank shall make this in a single lump sum cash payment within ten (10) days following the termination of employment, provided, however, if Executive is a “specified employee” (as defined below) of a publicly traded company, the payment may be delayed and paid to the Executive on the first day of the seventh month following termination of employment if required to avoid penalty under Section 409A of the Internal Revenue Code (“Code”). For purposes of this Section 7(e), the Executive shall not have a “termination of employment” until he has a “separation from service” within the meaning of Code Section 409A and the regulations promulgated thereunder. Also for purposes of this Section 7(e), Executive is a specified employee if Executive is a “key employee” within the meaning of Code Section 416(i) (without regard to paragraph (i) thereof). The form of release referenced above is annexed hereto as Exhibit A.

(f) No mitigation . To the extent that the Executive receives any payments pursuant to this Section 7, he shall not be required to seek to mitigate any such payments by seeking other employment, and the Bank shall not be entitled to offset any income earned by the Executive following his termination against any money owed to the Executive to the Bank pursuant to this Section 7.

8. Termination in Connection with a Change in Control .

(a) For purposes of this Agreement, a “Change in Control” means a change in control of the Bank or Meridian Bancorp, Inc., a Maryland corporation, (the “Company”) as defined in Section 409A of the Internal Revenue Code of 1986 (the “Code”), as amended, and rules, regulations, and guidance of general application thereunder, including the following:

i. Change in ownership : A change in ownership of the Bank or the Company occurs on the date any one person or group of persons accumulates ownership of more than 50% of the total fair market value or total voting power of the Bank or the Company; or

ii. Change in effective control : A change in effective control occurs when either (i) any one person or more than one person acting as a group acquires within a 12-month period ownership of stock of the Company possessing 30% or more of the total voting power of the Company; or (ii) a majority of the Bank’s or Company’s Board of Directors is replaced during any 12-month period by Directors whose appointment or election is not endorsed in advance by a majority of the Bank’s or Company’s Board of Directors (as applicable), or

iii. Change in ownership of a substantial portion of assets : A change in the ownership of a substantial portion of the Company’s assets occurs if, in a 12 month period, any one person or more than one person acting as a group acquires assets from the Company having a total gross fair market value equal to or exceeding 40% of the total gross fair market value of the Company’s entire assets immediately before the acquisition or acquisitions. For this purpose, “gross fair market value” means the value of the Company’s assets, or the value of the assets being disposed of, determined without regard to any liabilities associated with the assets.

(b) Termination . If within the period ending one year after a Change in Control, (i) the Bank terminates the Executive’s employment without Cause, or (ii) the Executive voluntarily terminates his employment with Good Reason, the Bank will, within ten (10) calendar days of the termination of the Executive’s employment, make a lump-sum cash payment to him equal to 2.99 times his “base amount” (as defined for purposes of Section 280G of the Code) less any other “parachute payments” (as also defined for purposes of Section 280G of the Code) made to the Executive. The cash payment made under this Section 8(b) shall be made in lieu of any payment also required under Section 7 of this Agreement because of the Executive’s termination of employment. For purposes of this Section 8)(b), the Executive shall not have a “termination of employment” until he has a “separation from service” within the meaning of Section 409A of the Internal Revenue Code (“Code”) and the regulations promulgated thereunder.

(c) The provisions of Section 9 , including the defined terms used in such sections, shall continue in effect until the later of the expiration of this Agreement or one year following a Change in Control, except the non-compete provisions in Section 9(d) shall not be applicable in the event of a Change in Control.

(d) Limitation of Benefits Under Certain Circumstances . If the payments and benefits pursuant to this Section 8 of this Agreement, either alone or together with other payments and benefits the Executive has the right to receive from the Bank, would constitute a “parachute payment” under Section 280G of the Code, the payments and benefits shall be reduced or revised, by the amount, if any, which is the minimum necessary to result in no portion of the payments and benefits under this Agreement or otherwise being non-deductible to the Bank pursuant to Section 280G of the Code and subject to the excise tax imposed under Section 4999 of the Code. The reduction will be made in the manner determined by the Executive, unless it is determined that permitting the Executive to make the determination would violate Code Section 409A. In such case, the reduction will be made first from the cash severance payment payable under this Section 8 . The Bank’s independent public accountants will determine any reduction in the payments and benefits to be made pursuant to this Agreement or otherwise; the Bank will pay for the accountant’s opinion. If the Bank and/or the Executive do not agree with the accountant’s opinion, the Bank will pay to the Executive the maximum amount of payments and benefits pursuant to this Section 8, as selected by the Executive, that the opinion indicates have a high probability of not causing any of the payments and benefits to be non-deductible to the Bank and subject to the excise tax imposed under Section 4999 of the Code. The Bank may also request, and the Executive has the right to demand that the Bank request, a ruling from the Internal Revenue Service (“IRS”) as to whether the disputed payments and benefits pursuant to this Section 8 have such tax consequences. The Bank will promptly prepare and file the request for a ruling from the IRS, but in no event will the Bank make this filing later than thirty (30) days from the date of the accountant’s opinion referred to above. The request will be subject to the Executive’s approval prior to filing; the Executive shall not unreasonably withhold his approval. The Bank and the Executive agree to be bound by any ruling received from the IRS and to make appropriate payments to each other to reflect any IRS rulings, together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code. Nothing contained in this Agreement shall result in a reduction of any payments or benefits to which the Executive may be entitled upon termination of employment other than pursuant to this Section 8, or a reduction in the payments and benefits specified in this Section 8, below zero.

9. Confidential Information, Noncompetition and Cooperation .

(a) Confidential Information . As used in this Agreement, “Confidential Information” means information belonging to the Bank which is of value to the Bank in the course of conducting its business and the disclosure of which could result in a competitive or other disadvantage to the Bank. Confidential Information includes, without limitation, financial information, reports, and forecasts; inventions, improvements and other intellectual property; trade secrets; know-how; designs, processes or formulae; software; market or sales information or plans; customer lists; and business plans, prospects and opportunities (such as possible acquisitions or dispositions of businesses or facilities) which have been discussed or considered by the management of the Bank. Confidential Information includes information developed by the Executive in the course of the Executive’s employment by the Bank, as well as other information to which the Executive may have access in connection with the Executive’s employment. Confidential Information also includes the confidential information of others with which the

Bank has a business relationship. Notwithstanding the foregoing, Confidential Information does not include information in the public domain, unless due to breach of the Executive’s duties under Section 9(b).

(b) Confidentiality . The Executive understands and agrees that the Executive’s employment creates a relationship of confidence and trust between the Executive and the Bank with respect to all Confidential Information. At all times, both during the Executive’s employment with the Bank and after its termination, the Executive will keep in confidence and trust all such Confidential Information, and will not use or disclose any such Confidential Information without the written consent of the Bank, except as may be necessary in the ordinary course of performing the Executive’s duties to the Bank.

(c) Documents, Records, etc . All documents, records, data, apparatus, equipment and other physical property, whether or not pertaining to Confidential Information, which are furnished to the Executive by the Bank or are produced by the Executive in connection with the Executive’s employment will be and remain the sole property of the Bank. The Executive will return to the Bank all such materials and property as and when requested by the Bank. In any event, the Executive will return all such materials and property within ten business days of the termination of the Executive’s employment for any reason. The Executive will not retain with the Executive any such material or property or any copies thereof after such termination except for a copy of his personnel file and any documents pertaining to his termination of employment.

(d) Noncompetition and Nonsolicitation . During the period in which the Executive is employed by the Bank and for two (2) years thereafter, the Executive (i) will not, directly or indirectly, whether as owner, partner, shareholder, consultant, agent, employee, co-venturer or otherwise, engage, participate, assist or invest in any Competing Business (as hereinafter defined); (ii) will refrain from directly or indirectly employing, attempting to employ, recruiting or otherwise soliciting, inducing or influencing any person to leave employment with the Bank (other than terminations of employment of subordinate employees undertaken in the course of the Executive’s employment with the Bank); and (iii) will refrain from soliciting or encouraging any customer or supplier to terminate or otherwise modify adversely its business relationship with the Bank. Notwithstanding the foregoing, in the event that the Bank terminates the Executive with Cause, or the Executive terminates his employment other than for Good Reason, the restrictions in subsection (d)(i) will not apply to the Executive. The intent of the parties is to avoid restricting the ability of the Executive to obtain other employment if his employment with the Bank terminates and he is not being paid during the period of the noncompetition obligation. The Executive understands that the restrictions set forth in this Section 9(d) are intended to protect the Bank’s interest in its Confidential Information and established employee, customer and supplier relationships and goodwill, and agrees that such restrictions are reasonable and appropriate for this purpose. For purposes of this Agreement, the term “Competing Business” shall mean a business conducted anywhere in Suffolk, Middlesex, Essex and Norfolk Counties, or within a 30-mile radius of the Bank’s headquarters (other than the State of New Hampshire), which is competitive with any business which the Bank or any of its affiliates conducts or proposes to conduct at any time during the employment of the Executive. Notwithstanding the foregoing, the Executive may own up to one percent (1%) of the outstanding stock of a publicly held corporation which constitutes or is affiliated with a Competing Business and may serve on the Board of Directors of the entities listed on Appendix B.

(e) Litigation and Regulatory Cooperation . During and after the Executive’s employment, the Executive shall cooperate fully with the Bank in the defense or prosecution of any claims or actions now in existence or which may be brought in the future against or on behalf of the Bank which relate to events or occurrences that transpired while the Executive was employed by the Bank. The Executive’s full cooperation in connection with such claims or actions shall include, but not be limited to, being available to meet with counsel to prepare for discovery or trial and to act as a witness on behalf of the Bank at mutually convenient times. During and after the Executive’s employment, the Executive also shall cooperate fully with the Bank in connection with any investigation or review of any federal, state or local regulatory authority as any such investigation or review relates to events or occurrences that transpired while the Executive was employed by the Bank. The Bank shall reimburse the Executive for any reasonable out-of-pocket expenses incurred in connection with the Executive’s performance of obligations pursuant to this Section 9(e).

Agreement, the Bank shall be entitled, in addition to all other remedies that it may have, to seek an injunction or other appropriate equitable relief to restrain any such breach without showing or proving any actual damage to the Bank.

10. Arbitration of Disputes. Any controversy or claim arising out of or relating to this Agreement or the breach thereof or otherwise arising out of the Executive’s employment or the termination of that employment (including, without limitation, any claims of unlawful employment discrimination whether based on age or otherwise) shall, to the fullest extent permitted by law, be settled by binding arbitration under the auspices of JAMS (Judicial Arbitration and Mediation Service), One Beacon Street, Boston, Massachusetts in accordance with the Employment Arbitration Rules and Procedures Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. This Section 10 shall be specifically enforceable. Notwithstanding the foregoing, this Section 10 shall not preclude either party from pursuing a court action for the sole purpose of obtaining a temporary restraining order or a preliminary injunction in circumstances in which such relief is appropriate; provided that any other relief shall be pursued through an arbitration proceeding pursuant to this Section 10, and the arbitrator shall have the power to revoke, revise, or otherwise modify any preliminary ruling by a court. The cost of all arbitration proceedings shall be paid equally by the parties. Each party shall initially bear his or its own attorney’s fees in connection with any arbitration, but the arbitrator shall have the power to allocate the final payment of legal fees so as to do substantial justice.

11. Consent to Jurisdiction . To the extent that any court action is permitted consistent with or to enforce Section 10 of this Agreement, the parties hereby consent to the jurisdiction of the Superior Court of the Commonwealth of Massachusetts and the United States District Court for the District of Massachusetts. Accordingly, with respect to any such court action, the Executive (a) submits to the personal jurisdiction of such courts; (b) consents to service of process; and (c) waives any other requirement (whether imposed by statute, rule of court, or otherwise) with respect to personal jurisdiction or service of process.

12. Integration . This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements between the parties with respect to any related subject matter.

13. Assignment; Successors and Assigns, etc . Neither the Bank nor the Executive may make any assignment of this Agreement or any interest herein, by operation of law or otherwise, without the prior written consent of the other party; provided that the Bank may assign its rights under this Agreement without the consent of the Executive in the event that the Bank shall effect a reorganization, consolidate with or merge into any other corporation, partnership, organization or other entity, or transfer all or substantially all of its properties or assets to any other corporation, partnership, organization or other entity. In the event of such assignment, the Bank will require the reorganized, consolidated, or merged entity to assume the Bank’s obligations to the Executive pursuant to this Agreement, and to recognize that the Executive is a third-party beneficiary of any such action.This Agreement shall inure to the benefit of and be binding upon the Bank and the Executive, their respective successors (whether in the case of the Bank by merger or otherwise), executors, administrators, heirs and permitted assigns.

14. Enforceability . If any portion or provision of this Agreement (including, without limitation, any portion or provision of any section of this Agreement) shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

15. Indemnification . In the event that the Executive is sued for any actions arising out of or relating to his employment with the Bank, the Bank will indemnify the Executive and hold him harmless against any money damages which the Executive is ordered to pay as a result of the litigation, and will indemnify the Executive for his reasonable attorney’s fees incurred in connection with the defense of any such action by paying the Executive’s reasonable attorney’s fees on an ongoing basis until the claim or litigation is resolved.

16. Waiver . No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party. The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach.

17. Notices . Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient if in writing and delivered in person or sent by a nationally recognized overnight courier service or by registered or certified mail, postage prepaid, return receipt requested, to the Executive at the last address the Executive has filed in writing with the Bank or, in the case of the Bank, at its main offices, attention of the Board of Directors, and shall be effective on the date of delivery in person or by courier or three (3) days after the date mailed.

18. Amendment . This Agreement may be amended or modified only by a written instrument signed by the Executive and by a duly authorized representative of the Bank.

19. Governing Law . This is a Massachusetts contract and shall be construed under and be governed in all respects by the laws of the Commonwealth of Massachusetts, without giving effect to the conflict of laws principles of such Commonwealth. With respect to any disputes concerning federal law, such disputes shall be determined in accordance with the law as it would be interpreted and applied by the United States Court of Appeals for the First Circuit.

20. Federal Deposit Insurance Act Compliance . All payments made by the Bank to the Executive under any provision of this Agreement shall be subject to and conditioned upon compliance with Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. § 1828(k) and any regulations promulgated hereunder.

21. Counterparts . This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be taken to be an original; but such counterparts shall together constitute one and the same document.

22. Entire Agreement . This Agreement constitutes the entire agreement between the Bank and the Executive concerning the subject matter hereof and supersedes the Original Agreement. No right is granted to the Executive under this Agreement other than those specifically set forth herein. No agreement or representation, oral or otherwise, expressed or implied, concerning the subject matter of this Agreement has been made by either party that is not set forth expressly in this Agreement.

IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by the Bank, by its duly authorized officer, and by the Executive, as of the date first above written.


EAST BOSTON SAVINGS BANK

By:		/s/ Domenic A. Gambardella
		Duly Authorized

EXECUTIVE

/s/ Richard J. Gavegnano
Richard J. Gavegnano
Chairman of the Board, President and Chief Executive Officer

Exhibit 10.5

EAST BOSTON SAVINGS BANK

AMENDED AND RESTATED

EMPLOYEE SEVERANCE COMPENSATION PLAN

This East Boston Savings Bank Amended and Restated Employee Severance Compensation Plan is dated this 28th day of July, 2014, by East Boston Savings Bank, a corporation organized and existing under the laws of the Commonwealth of Massachusetts (the “Bank”).

WITNESSETH

WHEREAS , the Board of Directors of the Bank (the “Board”) adopted an employee severance compensation plan on April 21, 2008 (the “Original Plan”); and

WHEREAS , in connection with the conversion of Meridian Financial Services, Incorporated (the “MHC”) from the mutual holding company to the stock holding company form of organization, the Bank desires to amend and restate the Original Plan in order to remove any reference to the MHC structure and to make certain other changes; and

WHEREAS , the Original Plan may be amended by the Board.

NOW, THEREFORE , effective April 21, 2008, the Bank hereby amends and restates the Original Plan in its entirety.

A.	Purpose .

The primary purpose of the East Boston Savings Bank Amended and Restated Employee Severance Compensation Plan (the “Plan”) is to ensure the successful continuation of the business of the Bank and the fair and equitable treatment of the Bank’s employees following a Change in Control (as defined below).

B.	Covered Employees .

Subject to paragraph C below, any employee of the Bank with at least one year of service as of his or her termination date shall be eligible to receive a Change in Control Severance Benefit (as defined below) if, within the period beginning on the effective date of a Change in Control and ending on the first anniversary of such date, (i) the employee’s employment with the Bank is involuntarily terminated or (ii) the employee terminates employment with the Bank voluntarily after being offered continued employment in a position that is not a Comparable Position (as defined below).

C.	Limitations on Eligibility for Change in Control Severance Benefits or Management Restructuring Benefits .

(1)

No employee shall be eligible for a Change in Control Severance Benefit if (a) his or her employment is terminated for “Cause,” (b) he or she is offered a Comparable Position and declines to accept such position, or (c) the employee is, at the time of termination of employment, a party to an individual employment agreement or change in control agreement with the Bank and/or Meridian Bancorp, Inc., a Maryland corporation (the “Company”).

(2)

For purposes of this Plan, a termination of employment for “Cause” shall include termination because of the employee’s personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule, or regulation (other than traffic violations or similar offenses) or final cease-and-desist order, or material breach of any provision of the Plan.

(3)

For purposes of this Plan, a “Comparable Position” shall mean a position that would (a) provide the employee with base compensation and benefits that are comparable in the aggregate to those provided to the employee prior to the Change in Control; (b) provide the employee with an opportunity for variable bonus compensation that is comparable to the opportunity provided to the employee prior to the Change in Control; (c) be in a location that would not require the employee to increase his or her daily one way commuting distance by more than thirty-five (35) miles as compared to the employee’s commuting distance immediately prior to the Change in Control; and (d) have job skill requirements and duties that are comparable to the requirements and duties of the position held by the employee prior to the Change in Control.

D.	Definitions of Change in Control .

For purposes of this Plan, “Change in Control” means the occurrence of any one of the following events:

(1)

Merger : The Company merges into or consolidates with another corporation, or merges another corporation into the Company, and as a result, less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by persons who were stockholders of the Company immediately before the merger or consolidation;

(2)

Acquisition of Significant Share Ownership : A report on Schedule 13D or another form or schedule (other than Schedule 13G) is filed or required to be filed under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, if the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner(s) of 25% or more of a class of the Company’s voting securities, but this clause (2) shall not apply to beneficial ownership of Company voting shares held in a fiduciary capacity by an entity of which the Company directly or indirectly beneficially owns 50% or more of its outstanding voting securities;

(3)

Change in Board Composition : During any period of two consecutive years, individuals who constitute the Company’s Board of Directors at the beginning of the two-year period cease for any reason to constitute at least a majority of the Company’s Board of Directors; provided, however, that for purposes of this clause (3), each director who is first elected by the Board of Directors (or first nominated by the Board of Directors for election by the stockholders) by a vote of at least two-thirds ( ² ⁄ ₃ ) of the directors who were directors at the beginning of the two-year period shall be deemed to have also been a director at the beginning of such period; or

(4)

Sale of Assets : The Company or the Bank sells to a third party all or substantially all of its assets.

E.	Determination of the Change in Control Severance Benefit .

(1)

The Change in Control Severance Benefit payable to an eligible employee under this Plan shall be determined under the following schedule:

(a)

An eligible employee who does not receive a benefit pursuant to paragraph (b) of this Section shall receive a Change in Control Severance Benefit equal to the product of (i) the employee’s years of service from his or her hire date (including partial years) through the termination date and (ii) an amount equal to two (2) weeks of the employee’s Base Compensation (as defined below). A “year of service” shall mean each 12-month period of service following an employee’s hire date determined without regard the number of hours worked during such period(s). The minimum payment to an eligible employee under this paragraph shall be an amount equal to two (2) weeks of Base Compensation and the maximum payment to an eligible employee shall be an amount equal to one hundred four (104) weeks of Base Compensation.

(b)

An eligible employee-officer designated by the Board of Directors prior to a Change in Control shall receive a Change in Control Severance Benefit equal to the greater of the benefit in paragraph E(1)(a) or fifty-two (52) weeks of Base Compensation.

(c)

The Change in Control Severance Benefit shall be paid in a lump sum not later than five (5) business days after the date of the employee’s termination of employment.

(2)

For purpose of determinations under this paragraph E, “Base Compensation” shall mean:

(a)

For salaried employees, the employee’s annual base salary at the rate in effect on his or her termination date or, if greater, the rate in effect on the date immediately preceding the Change in Control.

(b)

For employees whose compensation is determined in whole or in part on the basis of commission income, the employee’s base salary at termination (or, if greater, the employee’s base salary on the date immediately preceding the effective date of the Change in Control), if any, plus the commissions earned by the employee in the twelve (12) full calendar months preceding his or her termination date (or, if greater, the commissions earned in the twelve (12) full calendar months immediately preceding the effective date of the Change in Control).

(c)

For hourly employees, the employee’s total hourly wages for the twelve (12) full calendar months preceding his or her termination date or, if greater, the twelve (12) full calendar months preceding the effective date of the Change in Control.

F.	Withholding .

All payments will be subject to customary withholding for federal, state and local tax purposes.

G.	Parachute Payment .

Notwithstanding anything in this Plan to the contrary, if a Change in Control Severance Benefit to an employee who is a “Disqualified Individual” shall be in an amount which includes an “Excess Parachute Payment,” taking into account payments under this Plan and otherwise, the benefit payable under this Plan shall be reduced to the maximum amount which does not include an Excess Parachute Payment. The terms “Disqualified Individual” and “Excess Parachute Payment” shall have the same meanings as under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), or any successor provision thereto.

H.	Administration .

The Plan is administered by the Board of Directors, which shall have the discretion to interpret the terms of the Plan and to make all determinations about eligibility and payment of benefits. All decisions of the Board of Directors, any action taken by the Board of Directors with respect to the Plan and within the powers granted to the Board of Directors under the Plan, and any interpretation by the Board of Directors of any term or condition of the Plan, are conclusive and binding on all persons, and will be given the maximum possible deference allowed by law. The Board of Directors may delegate and reallocate any authority and responsibility with respect to the Plan.

I.	Source of Payments .

Unless otherwise determined by the Board of Directors, all payments and benefits provided under this Agreement shall be paid solely by the Bank. Notwithstanding anything in this Agreement to the contrary, no provision of this Agreement shall be construed so as to result in the duplication of any payment or benefit.

J.	Inalienability .

In no event may any Employee sell, transfer, anticipate, assign or otherwise dispose of any right or interest under the Plan. At no time will any such right or interest be subject to the claims of creditors, nor liable to attachment, execution or other legal process.

K.	Governing Law .

The provisions of the Plan will be construed, administered and enforced in accordance with the laws of the Commonwealth of Massachusetts, except to the extent that federal law applies.

L.	Severability .

If any provision of the Plan is held invalid or unenforceable, its invalidity or unenforceability will not affect any other provision of the Plan, and the Plan will be construed and enforced as if such provision had not been included.

M.	No Employment Rights .

Neither the establishment nor the terms of this Plan shall be held or construed to confer upon any employee the right to a continuation of employment by the Bank, nor constitute a contract of employment, express or implied. The Bank reserves the right to dismiss or otherwise deal with any employee to the same extent and on the same basis as though this Plan had not been adopted. Nothing in this Plan is intended to alter the at-will status of the Bank’s employees, it being understood that, except to

the extent otherwise expressly set forth to the contrary in an individual employment-related agreement, the employment of any employee may be terminated at any time by either the Bank or the employee with or without cause.

N.	Amendment and Termination .

The Plan may be terminated or amended in any respect by resolution adopted by a majority of the Board of Directors, unless a Change in Control has previously occurred. If a Change in Control occurs, the Plan no longer shall be subject to amendment, change, substitution, deletion, revocation or termination in any respect whatsoever. The form of any proper amendment or termination of the Plan shall be a written instrument signed by a duly authorized officer or officers of the Bank, certifying that the amendment or termination has been approved by the Board of Directors. A proper amendment of the Plan automatically shall effect a corresponding amendment to each Participant’s rights hereunder. A proper termination of the Plan automatically shall effect a termination of all employees’ rights and benefits hereunder.

O.	Required Provisions .

(1)

In the event any of the provisions of this Section P are in conflict with the terms of this Plan, this Section P shall prevail.

(2)

The Bank’s Board of Directors may terminate an employee’s employment at any time, but any termination by the Bank, other than termination for Cause, shall not prejudice an employee’s right to compensation or other benefits under this Plan. An employee shall not have the right to receive compensation or other benefits for any period after Termination for Cause.

(3)

Any payments made to employees pursuant to this Plan, or otherwise, are subject to and conditioned upon their compliance with 12 U.S.C. §1828(k) and FDIC regulation 12 C.F.R. Part 359, Golden Parachute and Indemnification Payments.

(4)

An employee shall not have a “termination of employment” until he or she has a “separation from service” within the meaning of Section 409A of the Code and the regulations promulgated thereunder. If an employee is a “specified employee,” the payment may be delayed and paid to the employee on the first day of the seventh month following termination of employment if required to avoid penalty under Section 409A of the Code.

Exhibit 10.6

FORM OF AMENDED AND RESTATED

SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT

This Amended and Restated Supplemental Executive Retirement Agreement (the “Agreement”) is dated this 28 ^th day of July, 2014, by and between East Boston Savings Bank, a corporation organized and existing under the laws of the Commonwealth of Massachusetts (the “Bank”) and (the “Director”). The Agreement is effective January 1, 2005.

WHEREAS , the Director originally entered into a supplemental executive retirement agreement with the Bank on December 9, 2004, effective as of January 1, 2005 (the “Original Agreement”); and

WHEREAS , in connection with the conversion of Meridian Financial Services, Incorporate (the “MHC”) from the mutual holding company to the stock holding company form of organization, the Bank desires to amend and restate the Original Agreement in order to (i) incorporate the First Amendment, effective April 18, 2006, and the Second Amendment, effective January 1, 2008, and (ii) remove any reference to the MHC structure and to make certain other changes; and

WHEREAS , the Director has agreed to such amendment and restatement of the Original Agreement; and

WHEREAS , the Board of Directors of the Bank and the Director believe it is in the best interests of the Bank to enter into the Agreement in order to reinforce and reward the Director for his service and dedication to the continued success of the Bank.

NOW, THEREFORE , in consideration of the mutual covenants herein contained, the parties hereby agree as follows:

1.	Definitions.

(a) “Actuarial Equivalent” means a benefit of equivalent value when computed on the basis of an interest rate of 6.5% and the 1983 Group Annuity Mortality Table, Unisex (50% male, 50% female), with no setback; provided, however, that for purposes of determining the value of a lump sum distribution, the following assumptions will be used:


Interest:		Applicable interest rate under Section 417(e)(3) of the Code, as determined for the month of November of the preceding year.

Mortality:		Applicable mortality table under Section 417(e)(3) of the Code.

(b) “Accrued Benefit” means 50% of the Director’s Final Average Compensation if the Director has completed 120 Months of Service. If the Director has not completed 120 Months of Service, his Accrued Benefit shall be determined by multiplying 50% of his Final Average Compensation by a fraction, the numerator of which shall be his actual Months of Service and the denominator of which shall be 120.

(d) “Final Average Compensation” means the average of the Director’s total annual fees from the Bank and Meridian Bancorp, Inc., a Maryland corporation (and its predecessor Meridian Financial Services, Inc.) (the “Holding Company”) and all their subsidiaries and affiliates, as reported on Form 1099, for the three calendar years during the Director’s service, whether or not consecutive, for which the Director’s annual fees were the highest.

(e) “Months of Service” means months (including partial months) of service as a Director of the Bank or the Holding Company. The date the Director was first elected is January 15, 2002.

(f) “Normal Form” means an unreduced life annuity with 50% spousal survivor annuity.

(g) Normal Retirement Date” shall mean December 31 of the calendar year in which the Director attains age 72.

(h) “Separation from Service” is deemed to occur when the Bank and the Director reasonably anticipate that no further services would be performed by the Director for the Bank after a certain date or that the level of bona fide service the Director would perform for the Bank after such date (whether as an employee or as an independent contractor) would permanently decrease to no more than 20 percent of the average level of bona fide services performed by the Director for the Bank over the immediately preceding 36-month period (or period of employment, if less than 36 months).

2.	Payments to Director.

(a) Retirement . If the Director continues to provide service to the Bank until his retirement at his Normal Retirement Date, the Bank will pay to the Director annually, a benefit payable in the Normal Form in equal monthly installments commencing on the first day of the month next following the Director’s Separation from Service, an amount equal to his Accrued Benefit.

(b) Death of the Director .

(i) If the Director dies while in service, the Bank will pay to the Director’s surviving spouse a benefit payable for her life assuming that the Director had retired the day before his death and had elected to receive his Accrued Benefit (as reduced by 2.5% each year and pro-rated for a partial year if the death occurs before the Director’s Normal Retirement Date) in the form of a joint and 100% spousal survivor annuity. The Director may elect that payment of the death benefit be made in a lump sum or a life annuity with 120 monthly benefits guaranteed on an Actuarially Equivalent basis. If there is no surviving spouse, the Bank shall pay the Director’s estate a lump sum which is the Actuarial Equivalent value of the Accrued Benefit payable over ten (10) years.

(ii) If the Director dies following the commencement of the payment of benefits under this Agreement, death benefits, if any, will be determined pursuant to the form of benefit payment in effect at the time of death.

(c) Disability of the Director . If the Director becomes permanently and totally disabled, as determined by a physician mutually acceptable to the Bank and the Director, and is unable to continue to serve as a Director, the Director shall be entitled to receive the benefit that would be payable under Section 2(a) above if the Director had retired at his Normal Retirement Date with 120 Months of Service. Payments shall commence on the first day of the month next following the Director’s disability.

(d) Other Termination . If the Director ceases to provide services to the Bank prior to his Normal Retirement Datefor any reason, other than death or disability, the Bank will pay to the Director annually, a benefit payable in the Normal Form in equal monthly installments commencing on the first day of the month next following the Director’s Separation from Service, an amount equal to his Accrued Benefit, reduced by 2.5% for each year (and pro-rated for a partial year) benefits commence before the Director’s Normal Retirement Date.

(e) Optional Form of Payment . In lieu of the Normal Form provided by the foregoing provisions of this Paragraph 2, with the consent of the Bank, the Director may elect in advance an optional form of payment which is the Actuarial Equivalent of the Normal Form to which the Director is entitled, which optional form of payment may be a lump sum or a life annuity with 120 monthly benefits guaranteed. Such election shall be made within 30 days of the date of this Agreement.

3.	Nonassignable Rights.

Except as otherwise provided by the Agreement, neither the Director nor his surviving spouse shall have any right to commute, sell, assign, transfer or otherwise convey the right to receive any payments hereunder, which payments and the right thereto are expressly declared to be nonassignable and nontransferable.

4.	General Obligation of the Bank.

The benefits provided under the Agreement constitute a mere promise by the Bank to make payments in the future, and the rights of the Director hereunder shall be those of a general unsecured creditor of the Bank. Nothing contained herein shall be construed to create a trust of any kind or to render the Bank a fiduciary with respect to the Director. The Bank shall not be required to maintain any fund or segregate any amount or in any other way currently fund the future payment of any benefit provided under the Agreement, and nothing contained herein shall be construed to give the Director or any other person any right to any specific assets of the Bank or of any other person.

5.	Governing Law.

The Agreement shall be construed under and governed by the laws of the Commonwealth of Massachusetts.

6.	Entire Agreement .

This Agreement constitutes the entire agreement between the Bank and the Director concerning the subject matter hereof and supersedes the Original Agreement; provided, however, that the payment election form previously executed shall remain in full force and effect.

EXECUTED under seal as of the day and year first above written, in the case of the Bank by its duly authorized officer.


	EAST BOSTON SAVINGS BANK

ATTEST:	BY:
		Richard J. Gavegnano
		President and Chief Executive Officer

WITNESS:	BY:
		Director

This Agreement is joined in by Meridian Bancorp, Inc., a Maryland corporation, for purposes of fulfilling the obligations of the Bank under Paragraph 2 hereof.


MERIDIAN BANCORP, INC.

BY:
		Richard J. Gavegnano
		President and Chief Executive Officer

Exhibit 10.7

AMENDED AND RESTATED

SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT

THIS AMENDED AND RESTATED SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT (the “Agreement”) is dated as of July 28, 2014, by and between MERIDIAN BANCORP, INC., a Maryland corporation (the “Company”) and RICHARD J. GAVEGNANO (the “Executive”). This Agreement is effective as of July 1, 2007.

WHEREAS , the Executive originally entered into a supplemental executive retirement agreement with Meridian Interstate Bancorp, Inc., a Massachusetts corporation, on July 1, 2007 (the “Prior Agreement”); and

WHEREAS , in connection with the conversion of Meridian Financial Services, Incorporated (the “MHC”) from the mutual holding company to the stock holding company form of organization, the Company desires to amend and restate the Prior Agreement in order to remove any reference to the MHC structure and to make certain other changes; and

WHEREAS , the Executive has agreed to such amendment and restatement of the Prior Agreement; and

WHEREAS , the Board of Directors of the Company and the Executive believe it is in the best interests of the Company to enter into the Agreement in order to reinforce and reward the Executive for his service and dedication to the continued success of East Boston Savings Bank and the Company.

NOW, THEREFORE , in consideration of the mutual covenants herein contained, the parties hereby agree as follows:

1.	Definitions .


Interest:		Applicable interest rate under Section 417(e)(3) of the Code, as determined for the month of November of the preceding year.

Mortality:		Applicable mortality table under Section 417(e)(3) of the Code.

(b) “Accrued Benefit” means 70% of the Executive’s Final Average Salary, multiplied by the Executive’s Non-forfeitable Percentage set forth in Paragraph 2(b) if the Executive has less than 8 years of service.

(i) the conviction of the Executive for any felony involving moral turpitude, deceit, dishonesty or fraud;

(ii) a material act or acts of dishonesty in connection with the performance of the Executive’s duties, including without limitation, material misappropriation of funds or property;

(iii) an act or acts of gross misconduct (including sexual harassment) by the Executive exposing the Company to potential material liability or loss; or

(d) For purposes of this Agreement, a “Change in Control” means a change in control of Company as defined in Section 409A of the Internal Revenue Code of 1986 (the “Code”), as amended, and rules, regulations, and guidance of general application thereunder, including the following:

(i) Change in ownership : A change in ownership of the Company occurs on the date any one person or group of persons accumulates ownership of more than 50% of the total fair market value or total voting power of the Company; or

(ii) Change in effective control : A change in effective control occurs when either (i) any one person or more than one person acting as a group acquires within a 12-month period ownership of stock of the Company possessing 35% or more of the total voting power of the Company; or (ii) a majority of the Company’s Board of Directors is replaced during any 12-month period by Directors whose appointment or election is not endorsed in advance by a majority of the Company’s Board of Directors (as applicable); or

(iii) Change in ownership of a substantial portion of assets : A change in the ownership of a substantial portion of the Company’s assets occurs if, in a 12 month period, any one person or more than one person acting as a group acquires assets from the Company having a total gross fair market value equal to or exceeding 40% of the total gross fair market value of the Company’s entire assets immediately before the acquisition or acquisitions. For this purpose, “gross fair market value” means the value of the Company’s assets, or the value of the assets being disposed of, determined without regard to any liabilities associated with the assets.

(e) “Code” means the Internal Revenue Code of 1986, as amended from time to time.

(f) “Final Average Compensation” means the average of the Executive’s annual base salary (prior to any salary reduction contributions to any Section 401(k) plan) or nay other pre-tax salary reductions, excluding bonuses, for the three calendar years during the Executive’s employment with the Company for which the Executive’s annual base salary was the highest.

(g) “Normal Form” means an unreduced life annuity with 50% spousal survivor annuity.

(h) “Separation from Service” means a termination of the Executive’s services (whether as an employee or as an independent contractor) to the Company. Whether a Separation from Service has occurred shall be determined in accordance with the requirements of Section 409A of the Code based on whether the facts and circumstances indicate that the Company and the Participant reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the Executive would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to no more than twenty percent (20%) of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding thirty-six (36) month period.

2.	Payments to Executive .

(a) Upon his Separation from Service the Company will pay to the Executive annually, a benefit payable in the Normal Form in equal monthly installments commencing on the first day of the month next following his Separation from Service, an amount equal to 70% of the average of the Executive’s Final Average Compensation, adjusted as provided in clause (b) of this Paragraph 2.

(b) The Executive’s benefits under the Agreement shall become non-forfeitable in accordance with the following schedule:


Years of Service	Non-forfeitable Percentage
1		12.5
2		25.0
3		37.5
4		50.0
5		62.5
6		75.0
7		87.5
8		100.0

Notwithstanding the foregoing, the Executive shall become fully vested immediately upon his death prior to a Separation from Service, a Change in Control or upon any involuntary termination of his employment by the Company other than for Cause.

(c) In lieu of the Normal Form provided by the foregoing provisions of this Paragraph 2, with the consent of the Company, the Executive may elect an optional form of payment which is the Actuarial Equivalent of the Normal Form to which the Executive is entitled, which optional form of payment may be any optional form provided under the SBERA Plan sponsor by East Boston Savings Bank (whether or not the Executive participates in that plan), including a lump sum. On or after January 1, 2009, if the Executive wishes to change his payment election as to the form of payment, the Executive may do so by completing a payment election form approved by the Board of Directors, provided that any such election (i) must be made prior to the Executive’s Separation from Service, (ii) must be made at least 12 months before the date on which any benefit payments are scheduled to commence, (iii) shall not take effect until at least 12 months after the date the election is made, and (iv) for payments to be made other than upon death or disability, must provide an additional deferral period of at least five years from the date such payment would otherwise have been made (or in the case of any installment payments treated as a single payment, five years from the date the first amount was scheduled to be paid). For purposes of this Agreement and clause (iv) above, all installment payments under this Agreement shall be treated as a single payment. On or before December 31, 2008, if the Executive wishes to change his payment election as to the form of payment, the Participant may do so by completing a payment election form, provided that any such election (i) must be made prior to the Executive’s Separation from Service, (ii) shall not take effect before the date that is 12 months after the date the election is made, (iii) made in 2008 cannot apply to amounts that would otherwise be payable in 2008 and may not cause an amount to be paid in 2008 that would otherwise be paid in a later year. A lump sum payment shall be made within sixty (60) days following the date the Participant becomes entitled to receive a benefit under the Plan.

(d) Notwithstanding anything to the contrary set forth herein, in no event shall the Executive be entitled to receive any benefits under this Agreement if he is terminated by the Board of Directors or Executive Committee of the Company for Cause. A determination of whether the Executive’s

employment is terminated for Cause shall be made at a meeting of the Board of Directors called and held for such purpose, at which the Board of Directors makes a finding that in their good faith opinion an event set forth in Section 1(c) of this Agreement has occurred and specifying the particulars thereof in detail.

(e) Notwithstanding any provision of this Agreement to the contrary, if the Executive is considered a Specified Employee at Separation from Service under such procedures as established by the Company in accordance with Section 409A of the Code, benefit distributions that are made upon Separation from Service may not commence earlier than six (6) months after the date of such Separation from Service. Therefore, in the event this Section 2(e) is applicable to the Executive, any distribution which would otherwise be paid to the Executive within the first six months following the Separation from Service shall be accumulated and paid (with interest calculated at the Prime Rate reported in the Wall Street Journal as of the date the benefit first became payable) to the Executive in a lump sum on the first day of the seventh month following the Separation from Service. All subsequent distributions shall be paid in the manner specified under this Section 2 of the Plan with respect to the applicable benefit. A Specified Employee means a key employee (as defined in Section 416(i) of the Code without regard to paragraph 5 thereof) of the Company if any stock of the Company is publicly traded on an established securities market or otherwise.

3.	Death of the Executive .

(a) If the Executive dies while employed by the Company, the Company will pay to the Executive’s Accrued Benefit to his beneficiary, as designated in a form acceptable to the Company.

(b) If the Executive dies following the commencement of the payment of benefits under this Agreement, death benefits, if any, will be determined pursuant to the form of benefit payment in effect at the time of death.

4.	Disability Benefits .

If the Executive becomes permanently and totally disabled, as determined by a physician mutually acceptable to the Company and the Executive, from any cause while in the employ of the Company and prior to the commencement of payments under Paragraph 2 above, the Executive shall be entitled to receive the Accrued Benefit that would be payable to the Executive pursuant to Paragraph 2 above if the Executive had terminated his employment on the date of his disability with eight (8) years of service. Disability payments may be subject to a six (6) month waiting period, in which case during such time the Company shall continue to pay the Executive his base salary. For purposes of this Agreement, “Disabilities” shall mean the Executive is unable to engage in any substantial activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months.

5.	Claims Procedure .

(a) In the event the Executive (or his beneficiary in the case of the Executive’s death) or their authorized representative (hereinafter the “Claimant”) asserts a right to a benefit under this Agreement which has not been received, the Claimant must file a claim for such benefit with the Company on forms provided by the Company. The Company shall render its decision on the claim within 90 days after its receipt of the claim. If special circumstances apply, the 90-day period may be extended by an additional 90 days; provided, written notice of the extension is provided to the Claimant during the initial 90-day period and such notice indicates the special circumstances requiring an extension of time and the date by which the Company expects to render its decision on the claim. If the Company wholly or partially denies the claim, the Company shall provide written notice to the Claimant within the time limitations of the immediately preceding paragraph. Such notice shall set forth:

(i) the specific reasons for the denial of the claim;

(ii) specific reference to pertinent provisions of the Agreement on which the denial is based;

(iii) a description of any additional material or information necessary to perfect the claim and an explanation of why such material or information is necessary;

(iv) a description of the Agreement’s claims review procedures, and the time limitations applicable to such procedures; and

(v) a statement of the Claimant’s right to bring a civil action under Section 502(a) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), if the claim denial is appealed to the Company and the Company fully or partially denies the claim.

(b) A Claimant whose application for benefits is denied may request a full and fair review of the decision denying the claim by filing, in accordance with such procedures as the Company may establish, a written appeal which sets forth the documents, records and other information relating to the claim within 60 days after receipt of the notice of the denial from the Company. In connection with such appeal and upon request by the Claimant, a Claimant may review (or receive free copies of) all documents, records or other information relevant to the Claimant’s claim for benefit, all in accordance with such procedures as the Company may establish. If a Claimant fails to file an appeal within such 60-day period, he shall have no further right to appeal.

(c) A decision on the appeal by the Company shall include a review by the Company that takes into account all comments, documents, records and other information submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial claim determination. The Company shall render its decision on the appeal not later than 60 days after the receipt by the Company of the appeal. If special circumstances apply, the 60-day period may be extended by an additional 60 days; provided, written notice of the extension is provided to the Claimant during the initial 60-day period and such notice indicates the special circumstances requiring an extension of time and the date by which the Company expects to render its decision on the claim on appeal. If the Company wholly or partly denies the claim on appeal, the Company shall provide written notice to the Claimant within the time limitations of the immediately preceding paragraph. Such notice shall set forth:

(i) the specific reasons for the denial of the claim;

(ii) specific reference to pertinent provisions of the Agreement on which the denial is based;

(iii) a statement of the Claimant’s right to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the Claimant’s claim for benefits; and

(iv) a statement of the Claimant’s right to bring a civil action under Section 502(a) of ERISA.

6.	Violation of Agreement .

In the event of the violation of any of any material terms of the Agreement by the Executive, the Company, in addition to any other rights which it may have, shall be relieved of the liability to make any further payments under the Agreement to, or on behalf of, the Executive so long as such violation continues, and shall have the right to specific enforcement of the Agreement by proceedings in equity.

7.	Nonassignable Rights .

Except as otherwise provided by the Agreement, neither the Executive nor his surviving spouse shall have any right to commute, sell, assign, transfer or otherwise convey the right to receive any payments hereunder, which payments and the right thereto are expressly declared to be nonassignable and nontransferable.

8.	Independence of Agreement .

The benefits payable under the Agreement shall be independent of, and in addition to, any other employment agreement that may exist from time to time between the parties hereto, or any compensation payable by the Company to the Executive, whether as salary, bonus or otherwise. The Agreement shall not be deemed to constitute a contract of employment between the parties hereto, and no provision hereof shall restrict the right of the Company to discharge the Executive for adequate cause, or restrict the right of the Executive to terminate his employment. This Agreement shall replace in its entirety the Supplemental Executive Retirement Agreement entered in by and between the Executive and East Boston Savings Bank, dated December 9, 2004.

9.	General Obligation of the Company .

The benefits provided under the Agreement constitute a mere promise by the Company to make payments in the future, and the rights of the Executive hereunder shall be those of a general unsecured creditor of the Company. Nothing contained herein shall be construed to create a trust of any kind or to render the Company a fiduciary with respect to the Executive. The Company shall not be required to maintain any fund or segregate any amount or in any other way currently fund the future payment of any benefit provided under the Agreement, and nothing contained herein shall be construed to give the Executive or any other person any right to any specific assets of the Company or of any other person. This Agreement shall replace in its entirety.

10.	Governing Law .

The Agreement shall be construed under and governed by the laws of the Commonwealth of Massachusetts.

11.	Entire Agreement

This Agreement constitutes the entire agreement between the Company and the Executive concerning the subject matter hereof and supersedes the Prior Agreement. No right is granted to the Executive under this Agreement other than those specifically set forth herein. No agreement or representation, oral or otherwise, expressed or implied, concerning the subject matter of this Agreement has been made by either party that is not set forth expressly in this Agreement.

EXECUTED under seal as of the day and year first above written, in the case of the Company by its duly authorized officer.


	MERIDIAN BANCORP, INC.

ATTEST: /s/ Eric M. Heath	BY:	/s/ Domenic A. Gambardella
		Chairperson Compensation Committee

WITNESS: /s/ Eric M. Heath	BY:	/s/ Richard J. Gavegnano
		Executive

Exhibit 10.9

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into as of the 28th day of July, 2014 by and between EAST BOSTON SAVINGS BANK, a bank organized under the laws of the Commonwealth of Massachusetts with its headquarters located in East Boston, Massachusetts (the “Bank”), and Edward J. Merritt (the “Executive”). The Agreement is effective as of July 20, 2009 (the “Effective Date”).

WITNESSETH

WHEREAS , the Executive originally entered into an employment agreement with the Bank on July 20, 2009 (the “Original Agreement”); and

WHEREAS , the Original Agreement may be amended in accordance with Section 18 of the Original Agreement; and

WHEREAS , the Executive has agreed to such amendment and restatement of the Original Agreement; and

NOW THEREFORE , in consideration of the mutual agreements herein contained, and upon the other terms and conditions hereinafter provided, the parties hereby agree as follows:

1. Employment . The Bank agrees to employ the Executive and the Executive agrees to be employed by the Bank on the terms and conditions set forth in this Agreement, effective as of the Merger Effective Time.

2. Duties and Responsibilities . The Executive shall serve the Bank as President, Mt. Washington Division, and as a member of the senior management team and shall serve under the direction of the Board of Directors of the Bank (the “Board of Directors”) and under the direction of and report to the President and Chief Executive Officer of the Bank. The Executive shall also serve the Bank in additional services, duties and responsibilities as the Executive may be requested by the President and Chief Executive Officer or Board of Directors. In such capacity or capacities, the Executive shall perform such services and duties in connection with the business, affairs and operations of the Bank as may be assigned or delegated to the Executive from time to time by or under the authority of the President and Chief Executive Officer or

Board of Directors, and the Executive shall adhere to all policies established by the Board of Directors or Committees thereof at all times. The Executive’s office shall be located at 455 West Broadway, Boston, Massachusetts.

3. Term .

(b) Commencing on the first anniversary date of the Effective Date (the “Anniversary Date”) and continuing on each Anniversary Date thereafter, the term of this Agreement shall automatically extend for an additional year such that the remaining term shall be two (2) years, unless written notice of non-renewal is provided to Executive by the Board at least thirty (30) days prior to any such Anniversary Date, in which case the term of this Agreement will become fixed and will terminate at the end of the one (1) year period following the Anniversary Date. Prior to each Anniversary Date, the disinterested members of the Board will conduct a comprehensive performance evaluation and review of Executive for purposes of determining whether to allow this Agreement to automatically extend, and the results thereof will be included in the minutes of the Board’s meeting.

4. Compensation and Benefits . The regular compensation and benefits payable to the Executive under this Agreement shall be as follows:

(a) Salary . For all services rendered by the Executive under this Agreement, the Bank shall pay the Executive a salary (the “Salary”) at the annual rate of $314,394, subject to increase from time to time in the discretion of the Board of Directors. The Salary shall be payable in periodic installments in accordance with the Bank’s usual practice for its senior executives.

(c) Regular Benefits . The Executive shall also be entitled to participate in any employee benefit plans, medical insurance plans, life insurance plans, disability income plans, retirement plans, vacation plans, expense reimbursement plans and other benefit plans or credit card privileges which the Bank may from time to time have in effect for its senior executives. Such participation shall be subject to the terms of the applicable plan documents, generally applicable policies of the Bank, applicable law and the discretion of the Board of Directors or any administrative or other committee provided for in or contemplated by any such plan. Nothing contained in this Agreement shall be construed to create any obligation on the part of the Bank to establish any such plan or to maintain the effectiveness of any such plan which may be in effect from time to time.

(e) Exclusivity of Salary and Benefits . The Executive shall not be entitled to any payments or benefits other than those provided under this Agreement.

(f) SERP . The Executive shall be entitled to receive benefits under a supplemental executive retirement plan., .

(g) Joint Beneficiary Designation Agreement . The Executive shall be entitled to the benefits provided under the terms of the Joint Beneficiary Designation Agreement, effective as of September 1, 2004, between the Executive and Mt. Washington Cooperative Bank (“MWCB”), which the Bank has agreed to assume and honor.

(h) [Reserved].

(i) [Reserved].

6. Termination . The Executive’s employment under this Agreement shall terminate under the following circumstances set forth in this Section 6.

(i) the conviction of the Executive for any felony involving deceit, dishonesty or fraud;

(ii) a material act or acts of dishonesty in connection with the performance of the Executive’s duties, including without limitation, material misappropriation of funds or property;

(iii) an act or acts of gross misconduct by the Executive; or

(i) a material diminution or other substantial adverse change, not consented to by Executive, in the nature or scope of the Executive’s responsibilities and authorities as set forth in this Agreement, including a change in the Executive’s line of reporting so that he no longer reports directly to the Bank’s President and Chief Executive Officer;

(ii) the assignment to Executive of any duties materially inconsistent with Executive’s position, including any material change in status or duties, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and that is remedied by the Bank reasonably promptly after receipt of notice thereof given by the Executive;

(iii) a material reduction in the Executive’s base salary except for across-the-board reductions similarly affecting all or substantially all officers;

(iv) involuntary relocation of the Bank’s offices in which the Executive is principally employed by more than 20 miles (10 miles in the event of a Change in Control); or

(v) failure of the Bank to comply with material terms of this Agreement.

(d) Disability . If the Executive shall be disabled so as to be unable to perform the essential functions of the Executive’s then existing position or positions under this Agreement with or without reasonable accommodation, for a total of more than 90 days in any calendar year, the Board of Directors may terminate the Executive’s employment upon written notice to the Executive. If any question shall arise as to whether during any period the Executive is disabled so as to be unable to perform the essential functions of the Executive’s then existing position or positions with or without reasonable accommodation, the Executive may, and at the request of the Bank shall, submit to the Bank a certification in reasonable detail by a physician selected by the Bank to whom the Executive or the Executive’s guardian has no reasonable objection as to whether the Executive is so disabled, and such certification shall for the purposes of this Agreement be conclusive of the issue. The physician shall be board-certified in the area of medicine applicable to the particular disability involved. The Executive shall cooperate with any reasonable request of the physician in connection with such certification. If such question shall arise and the Executive shall fail to submit such certification (unless the failure results from matters beyond the control of the Executive), the Bank’s determination will determine the issue of whether the Executive is disabled. Nothing in this Section 6(d) shall be construed to waive the Executive’s rights, if any, under existing law including, without limitation; the Family and Medical Leave Act of 1993, 29 U.S.C. §2601 et seq. , the Americans with Disabilities Act, 42 U.S.C. §12101 et seq , Massachusetts General Laws Chapter 151B, and Section 10 below.

(e) Death . The Executive’s employment hereunder shall terminate upon his death.

(f) Termination and Board Membership . To the extent Executive is a member of the board of directors or trustees of the Bank or any of its affiliates on the date of termination of employment with the Bank (other than a termination due to normal retirement), Executive will resign from all of the boards of directors and trustees immediately following such termination of employment with the Bank. Executive will be obligated to tender this resignation regardless of the method or manner of termination (other than termination due to normal retirement), and such resignation will not be conditioned upon any event or payment.

7. Certain Compensation Upon Termination .

(a) Compensation Upon Voluntary Termination . If the Executive shall resign (including by retirement) and voluntarily terminate employment without Good Reason, the Bank shall pay to the Executive the Executive’s accrued and unpaid salary, accrued and unpaid vacation pay and all rights and benefits that the Executive is entitled to receive under the terms of the Bank’s benefit plans or arrangements, including the Executive’s rights under any Supplemental Executive Retirement Plan and Joint Beneficiary Designation Agreement (upon death) in effect between the Bank and the Executive (the “Accrued Obligations”).

(e) Compensation Upon Termination of the Bank Without Cause or by the Executive for Good Reason . In the event the Executive’s employment shall be terminated by the Bank without Cause as provided in Section 6(c) above, or by the Executive for Good Reason as provided in Section 6(b) above after the first anniversary of the Effective Date, he shall be entitled to receive the Accrued Obligations. In addition, subject to the Executive’s agreement to a release of any and all legal claims in a form satisfactory to the Bank and the expiration of the applicable revocation period and subject to compliance with the provisions of Section 9 hereof, the Bank shall pay the Executive an amount equivalent to the sum of (i) two (2) times the (a) Executive’s Salary at the rate then in effect pursuant to Section 4(a), and (b) the average of the cash bonuses earned in each of the three (3) calendar years preceding the year of termination; and (ii) the value of 24 months of health insurance premiums for health insurance coverage provided by the Bank, based on the coverage provided to the Executive immediately prior to his termination. The Bank shall make this in a single lump sum cash payment within ten (10) days following the termination of employment. No cash payment shall be made under this Section 7(e) if a payment is required to be made (and is made) under Section 8(b) of this Agreement because of the Executive’s termination of employment.

(f) [Reserved]

(g) If the Executive is a “specified employee” (as defined below) of a publicly traded company, the payments pursuant to this Agreement, including Sections 7(e) and 7(f), may be delayed and paid to the Executive on the first day of the seventh month following termination of employment if required to avoid penalty under Section 409A of the Internal Revenue Code (“Code”). For purposes of this Agreement, the Executive shall not have a “termination of employment” until he has a “separation from service” within the meaning of Code Section 409A and the regulations promulgated thereunder. Also for purposes of this Agreement, Executive is a specified employee if Executive is a “key employee” within the meaning of Code Section 416(i) (without regard to paragraph (i) thereof).

8. Termination in Connection with a Change in Control .

(a) For purposes of this Agreement, a “Change in Control” means a change in control of the Bank or Meridian Bancorp, Inc. (the “Company”) as defined in Section 409A of the Internal Revenue Code of 1986 (the “Code”), as amended, and rules, regulations, and guidance of general application thereunder, including the following:

payment to him equal to 2.99 times his “base amount” (as defined for purposes of Section 280G of the Code) less any other “parachute payments” (as also defined for purposes of Section 280G of the Code) made to the Executive. The cash payment made under this Section 8(b) shall be made in lieu of any payment also required under Section 7 of this Agreement because of the Executive’s termination of employment. For purposes of this Section 8(b), the Executive shall not have a “termination of employment” until he has a “separation from service” within the meaning of Section 409A of the Internal Revenue Code (“Code”) and the regulations promulgated thereunder.

(c) The provisions of Section 9, including the defined terms used in such sections, shall continue in effect until the later of the expiration of this Agreement or one year following a Change in Control, except the non-compete provisions in Section 9(d) shall not be applicable in the event of a Change in Control.

(d) Limitation of Benefits Under Certain Circumstances . If the payments and benefits pursuant to this Section 8 of this Agreement, either alone or together with other payments and benefits the Executive has the right to receive from the Bank, would constitute a “parachute payment” under Section 280G of the Code, the payments and benefits shall be reduced or revised, by the amount, if any, which is the minimum necessary to result in no portion of the payments and benefits under this Agreement or otherwise being non-deductible to the Bank pursuant to Section 280G of the Code and subject to the excise tax imposed under Section 4999 of the Code. The reduction will be made in the manner determined by the Executive, unless it is determined that permitting the Executive to make the determination would violate Code Section 409A. In such case, the reduction will be made first from the cash severance payment payable under this Section 8. The Bank’s independent public accountants will determine any reduction in the payments and benefits to be made pursuant to this Agreement or otherwise; the Bank will pay for the accountant’s opinion. If the Bank and/or the Executive do not agree with the accountant’s opinion, the Bank will pay to the Executive the maximum amount of payments and benefits pursuant to this Section 8, as selected by the Executive, that the opinion indicates have a high probability of not causing any of the payments and benefits to be non-deductible to the Bank and subject to the excise tax imposed under Section 4999 of the Code. The Bank may also request, and the Executive has the right to demand that the Bank request, a ruling from the Internal Revenue Service (“IRS”) as to whether the disputed payments and benefits pursuant to this Section 8 have such tax consequences. The Bank will promptly prepare and file the request for a ruling from the IRS, but in no event will the Bank make this filing later than thirty (30) days from the date of the accountant’s opinion referred to above. The request will be subject to the Executive’s approval prior to filing; the Executive shall not unreasonably withhold his approval. The Bank and the Executive agree to be bound by any ruling received from the IRS and to make appropriate payments to each other to reflect any IRS rulings, together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code. Nothing contained in this Agreement shall result in a reduction of any payments or benefits to which the Executive may be entitled upon termination of employment other than pursuant to this Section 8, or a reduction in the payments and benefits specified in this Section 8, below zero.

9. Confidential Information, Noncompetition and Cooperation .

(c) Documents, Records, etc . All documents, records, data, apparatus, equipment and other physical property, whether or not pertaining to Confidential Information, which are furnished to the Executive by the Bank or are produced by the Executive in connection with the Executive’s employment will be and remain the sole property of the Bank. The Executive will return to the Bank all such materials and property as and when requested by the Bank. In any event, the Executive will return all such materials and property immediately upon termination of the Executive’s employment for any reason. The Executive will not retain with the Executive any such material or property or any copies thereof after such termination.

restrictions are reasonable and appropriate for this purpose. For purposes of this Agreement, the term “Competing Business” shall mean a business conducted anywhere in the cities of Boston or Quincy, Massachusetts, which is competitive with any business which the Bank or any of its affiliates conducts or has taken affirmative action to begin conducting at any time during the employment of the Executive. Notwithstanding the foregoing, the Executive may own up to one percent (1%) of the outstanding stock of a publicly held corporation which constitutes or is affiliated with a Competing Business.

(f) Injunction . The Executive agrees that it would be difficult to measure any damages caused to the Bank which might result from any breach by the Executive of the promises set forth in this Section 9, and that in any event money damages would be an inadequate remedy for any such breach. Accordingly, subject to Section 10 of this Agreement, the Executive agrees that if the Executive breaches, or proposes to breach, any portion of this Agreement, the Bank shall be entitled, in addition to all other remedies that it may have, to an injunction or other appropriate equitable relief to restrain any such breach without showing or proving any actual damage to the Bank.

10. Arbitration of Disputes. Any controversy or claim arising out of or relating to this Agreement or the breach thereof or otherwise arising out of the Executive’s employment or the termination of that employment (including, without limitation, any claims of unlawful employment discrimination whether based on age or otherwise) shall, to the fullest extent permitted by law, be settled by arbitration in any forum and form agreed upon by the parties or, in the absence of such an agreement, under the auspices of the American Arbitration Association (“AAA”) in Boston, Massachusetts in accordance with the Employment Dispute Resolution Rules of the AAA, including, but not limited to, the rules and procedures applicable to the selection of arbitrators. In the event that any person or entity other than the Executive or the Bank may be a party with regard to any such controversy or claim, such controversy or claim shall be submitted to arbitration subject to such other person or entity’s agreement. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. This Section 10 shall be specifically enforceable. Notwithstanding the foregoing, this Section 10 shall not preclude either party from pursuing a court action for the sole purpose of obtaining a temporary restraining order or a preliminary injunction in circumstances in which

such relief is appropriate; provided that any other relief shall be pursued through an arbitration proceeding pursuant to this Section 10. The cost of all arbitration proceedings (other than the Executive’s legal fees, which are subject to section 15 of this Agreement) shall be paid by the Bank.

13. Assignment; Successors and Assigns, etc . Neither the Bank nor the Executive may make any assignment of this Agreement or any interest herein, by operation of law or otherwise, without the prior written consent of the other party; provided that the Bank may assign its rights under this Agreement without the consent of the Executive in the event that the Bank shall effect a reorganization, consolidate with or merge into any other corporation, partnership, organization or other entity, or transfer all or substantially all of its properties or assets to any other corporation, partnership, organization or other entity. This Agreement shall inure to the benefit of and be binding upon the Bank and the Executive, their respective successors, executors, administrators, heirs and permitted assigns.

15. Payment of Legal Fees . All reasonable legal fees paid or incurred by the Executive pursuant to any dispute or question of interpretation relating to this Agreement shall be paid or reimbursed by the Bank, only if the Executive is successful pursuant to a legal judgment, arbitration or settlement. Such payment or reimbursement shall be made no later than two and one-half months after the successful conclusion in Executive’s favor of the dispute by judgment, arbitration or settlement.

18. Amendment . This Agreement may be amended or modified only by a written instrument signed by the Executive and by a duly authorized representative of the Bank.

IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by the Bank, by its duly authorized officer, and by the Executive, as of the date first above written.


EAST BOSTON SAVINGS BANK

By:		/s/ Richard J. Gavegnano
Name:		Richard J. Gavegnano
Title: Chairman of the Board, President and Chief Executive Officer

EXECUTIVE

/s/ Edward J. Merritt
Edward J. Merritt

Exhibit 10.10

AMENDED AND RESTATED

SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT

FOR EDWARD J. MERRITT

THIS AMENDED AND RESTATED SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT (the “Agreement”) is dated July 28, 2014 by and between East Boston Savings Bank, a corporation organized and existing under the laws of the Commonwealth of Massachusetts (the “Bank” or “Employer”) and Edward J. Merritt (the “Executive”). This Agreement is effective as of January 5, 2010.

WITNESSETH

WHEREAS , the Executive originally entered into a supplemental executive retirement agreement with Meridian Interstate Bancorp, Inc., a Massachusetts corporation, effective as of January 5, 2010, which was the date Mt. Washington Cooperative Bank (“MWCB”) merged into the Bank (the “Merger Effective Time”); and

WHEREAS , in connection with the conversion of Meridian Financial Services, Incorporated (the “MHC”) from the mutual holding company to the stock holding company form of organization, the Bank desires to amend and restate the Prior Agreement in order to remove any reference to the MHC structure and to make certain other changes; and

WHEREAS , the Executive has agreed to such amendment and restatement of the Prior Agreement; and

NOW, THEREFORE , in consideration of the premises and the mutual promises of the parties hereto, the parties agree as follows:

PURPOSE

The purpose of this Agreement is to provide the Executive with supplemental retirement benefits in order to provide him with a reasonable level of retirement income which will assist him in maintaining an appropriate standard of living in retirement. An integral part of the Agreement is to encourage and induce the Executive to remain as a full-time executive officer of the Bank until he attains the retirement age of sixty-five (65) and to recognize his service to the Bank. The parties intend that this Agreement shall at all times be characterized as a “top hat” plan of deferred compensation maintained for the Executive who is a highly compensated employee, as described under Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974 (the “ERISA”), and the Agreement shall at all times satisfy Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and as enacted under the American Jobs Creation Act of 2004. The provisions of the Agreement shall be construed to effectuate such intentions. The Agreement shall be unfunded for tax purposes and for purposes of Title I of ERISA.

1. Establishment of Accumulation Account . An Accumulation Account shall be maintained on the books of the Employer for the Executive with respect to this Agreement. The Accumulation Account shall be utilized solely as a device for the measurement and determination of the benefits, if any, payable to the Executive pursuant to this Agreement. The Executive will be one-hundred percent (100%) vested in the Accumulation Account at all times. The amount of the Accumulation Account as of the Merger Effective Time shall equal the amount accrued under the MWCB SERP for GAAP purposes as of the Merger Effective Time (the “GAAP Accrual”).

2. Annual Credits to Accumulation Account . Commencing as of the Merger Effective Time and ending on the date of termination of the Executive’s employment, the Board of Directors of the Bank shall credit the Executive’s Accumulation Account with an amount equal to $50,000 (which is the amount equal to the product of (i) 1/15, times (ii) $750,000) for each full calendar year of Executive’s employment, and for each partial calendar year of Executive’s employment, a pro rated amount determined by dividing the number of days during such year prior to termination of Executive’s employment by 365, and multiplying such quotient by $50,000. The Accumulation Account shall be credited as of each December 31 ^st , and in the event the Executive terminates employment prior to December 31 ^st , his pro rated amount for the year of termination of service will be credited to his Accumulation Account within thirty days after termination of his employment. The Executive may not make any contributions under this Agreement.

Maximum Amount Credited to Accumulation Account . All amounts credited to the Accumulation Account shall not exceed the GAAP Accrual plus $750,000. No further additions to the Accumulation Account will be made when, and if, a total of $750,000 has been credited to the Accumulation Account after the Merger Effective Time, excluding the GAAP Accrual.

Payment upon Separation from Service .

(a) Upon a Separation from Service prior to the attainment of age sixty (60), the Accumulation Account shall be paid to the Executive in one hundred and twenty (120) equal monthly installments with interest equal to the one-year Treasury bill as of the date of the Separation of Service, with the first payment commencing on the first day of the month following the lapse of six months after such Separation from Service. In the event of the Executive’s death after such Separation from Service but prior to the completion of the one hundred and twenty (120) installment payments described above, an amount equal to the aggregate remaining unpaid installments shall be paid to the Executive’s beneficiary (or estate, if there is no beneficiary) in a single lump sum payment on the first day of the month following the occurrence of his death.

(b) Upon a Separation from Service on or after the attainment of age sixty (60), the Accumulation Account shall be paid in the form of a single-life annuity (subject to Section 18),

with such payments to be made in equal monthly installments (1/12 ^th of the annual annuity benefit) until the death of the Executive, with the first payment commencing on the first day of the month following the lapse of six months after such Separation from Service. The value of such single-life annuity shall be the actuarial equivalent of the Accumulation Account calculated in a manner that is no less favorable to the Executive (or his beneficiary) than would be determined using the interest rates, mortality tables and other assumptions expressed in Section 417(e) of the Code.

(c) For purposes hereof, Separation from Service shall mean a termination of the Executive’s services (whether as an employee or as an independent contractor) to the Company and the Bank for any reason other than Disability or death. Whether a Separation from Service has occurred shall be determined in accordance with the requirements of Section 409A of the Code based on whether the facts and circumstances indicate that the Company, the Bank and the Executive reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the Executive would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to no more than twenty percent (20%) of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding thirty-six (36) month period.

5. Payment upon Disability; Death .

(a) Upon the Disability of the Executive, which causes a Separation from Service, the Accumulation Account shall be paid in the form of a single-life annuity (calculated pursuant to Section 4(b) above, and subject to Section 18), with such payments to be made in equal monthly installments (1/12 ^th of the annual annuity benefit) until the death of the Executive, with the first payment commencing on the first day of the month following the Disability.

(b) Upon the death of the Executive (i) while actively employed by the Bank, or (ii) after a Separation from Service to which Section 4(b) applies, but prior to the Insured’s receipt of the first installment payment under such Section 4(b), the Accumulation Account shall be paid to the Executive’s beneficiary in a single lump sum payment on the first day of the month following the occurrence of death.

(c) For purposes hereof, Disability shall mean an Executive (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve months; or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Bank (or would have received such benefits if the Executive was eligible to participate in such plan). If any question shall arise as to whether during any period the Executive is Disabled, the Executive may, and at the request of the Bank shall, submit to the Bank a certification in reasonable detail by a physician selected by the Bank to whom the Executive or the Executive’s guardian has no reasonable objection as to whether the Executive is so Disabled, and such certification shall for the purposes of this Agreement be conclusive of the issue. The physician

shall be board-certified in the area of medicine applicable to the particular disability involved. The Executive shall cooperate with any reasonable request of the physician in connection with such certification. If such question shall arise and the Executive shall fail to submit such certification (unless the failure results from matters beyond the control of the Executive), the Bank’s determination will determine the issue of whether the Executive is Disabled.

Payment upon Termination of the Executive Without Cause or by the Executive for Good Reason in connection with a Change in Control .

(a) Notwithstanding anything in the Agreement to the contrary, in the event the Executive’s employment shall be terminated by the Bank (which termination shall constitute a Separation from Service), or its successor, without Cause, as provided in Section 6(b), or by the Executive for Good Reason, as provided in Section 6(c), concurrently with or within one (1) year of a Change in Control, as defined in Section 6(d), and ending one year after consummation of such Change in Control, the Executive’s Accumulation Account shall equal the GAAP Accrual plus $750,000 and shall be paid in a single lump sum payment to the Executive on the first day of the month following the lapse of six months after such Separation from Service.

(b) Termination by the Bank without Cause. The Executive’s employment may be terminated by the Bank, or its successor, without Cause (which, for purposes of clarification, shall not include a termination of Executive’s employment under this Agreement due to Executive’s death or Disability) upon written notice to the Executive. A determination of whether the Executive’s employment shall be terminated without Cause will be made solely by the Executive Committee of the Board of Directors.

(c) Termination by the Executive for Good Reason. The Executive’s employment may be terminated by the Executive by written notice to the Board of Directors within sixty (60) days following an event constituting “Good Reason.” The Executive’s termination of employment shall become effective on the thirty-first (31 ^st ) day following such notice, provided the Bank, or its successor, has not remedied the condition giving rise to the event of “Good Reason.” For purposes of this Agreement, “Good Reason” shall mean:

(i) a material diminution or other substantial adverse change, not consented to by Executive, in the nature or scope of the Executive’s responsibilities or authorities as set forth in the employment agreement between the Executive and the Bank, including a change in the Executive’s line of reporting so that he no longer reports directly to the Bank’s Chief Executive Officer;

(iii) a material reduction in the Executive’s base salary except for across-the-board reductions similarly affecting all or substantially all officers;

(iv) involuntary relocation of the Bank’s offices in which the Executive is principally employed by more than 10 miles; or

(v) failure of the Bank to comply with material terms of this Agreement.

(d) For purposes hereof, “Change in Control” shall mean a change in the ownership of Meridian Bancorp, Inc., a Maryland corporation (the “Company”), or the Bank, a change in the effective control of the Company or the Bank or a change in the ownership of a substantial portion of the assets of the Company or the Bank, in each case as provided under Section 409A of the Code and the regulations thereunder.

7. Designation of Beneficiary . The Executive may from time to time, by providing a written notification to the Employer, designate any person or persons (who may be designated concurrently, contingently or successively), his estate or any trust or trusts created by him to receive benefits which are payable under this Agreement. Each beneficiary designation shall revoke all prior designations and will be effective only when filed in writing with the Employer’s Compensation Committee, or any successor thereto (the “Committee”). If the Executive fails to designate a beneficiary or if a beneficiary dies before the date of the Executive’s death and no contingent beneficiary has been designated, then the benefits which are payable as aforesaid shall be paid to his estate. If benefits to be paid to a beneficiary commence and such beneficiary dies before all benefits to which such beneficiary is entitled have been paid, the remaining benefits shall be paid to the successive beneficiary or beneficiaries designated by the Executive, if any, and if none to the estate of such beneficiary.

8. Claims Procedure . The Executive or his designated beneficiary or beneficiaries may make a claim for benefits under this Agreement by filing a written request with the Committee. If a claim is wholly or partially denied, the Committee shall furnish the claimant with written notice setting forth in a manner calculated to be understood by the claimant;

(a) the specific reason or reasons for the denial;

(b) specific reference to the pertinent provisions of this Agreement on which the denial is based;

(c) a description of any additional material or information necessary for the claimant to perfect his claim and an explanation why such material or information is necessary; and

(d) appropriate information as to the steps to be taken if the claimant wishes to submit his claim for review.

Such notice shall be furnished to the claimant within ninety (90) days after the receipt of his claim, unless special circumstances require an extension of time for processing his claim. If an extension of time for processing is required, the Committee shall, prior to the termination of the initial ninety (90) day period, furnish the claimant with written notice indicating the special circumstances requiring an extension and the date by which the Committee expects to render its decision. In no event shall an extension exceed a period of ninety (90) days from the end of the initial ninety (90) day period.

A claimant may request the Committee to review a denied claim. Such request shall be in writing and must be delivered to the Committee within sixty (60) days after receipt by the claimant of written notification of denial of claim. A claimant or his duly authorized representative may:

(a) review pertinent documents, and

(b) submit issues and comments in writing.

The Committee shall notify the claimant of its decision on review not later than sixty (60) days after receipt of a request for review, unless special circumstances require an extension of time for processing, in which case a decision shall be rendered as soon as possible, but not later than one hundred twenty (120) days after receipt of a request for review. If an extension of time for review is required because of special circumstances, written notice of the extension must be furnished to the claimant prior to the commencement of the extension. The Committee’s decision on the review shall be in writing and shall include specific reasons for the decision, as well as specific references to the pertinent provisions of this Agreement on which the decision is based.

9. Statement of Accumulation Account . Within 90 days after the close of each calendar year, the Committee shall submit to the Executive a statement in such form as the Committee deems desirable setting forth the balance as of the last day of the calendar year in the Accumulation Account maintained for the Executive.

10. Withholding . To the extent required by the law in effect at the time payment of the Accumulation Account is made, the Bank shall withhold from such payment any taxes or other amounts required by law to be withheld.

11. Unsecured Promise . Nothing contained in this Agreement shall create or require the Employer to create a trust of any kind to fund the benefits payable hereunder. To the extent that the Executive or any other person acquires a right to receive payments from the Employer, such individual shall at all times remain an unsecured general creditor of the Employer.

12. Assignment . The right of the Executive or any other person to the payment of benefits under this Agreement shall not be subject to alienation, assignment, garnishment, attachment, execution or levy of any kind, and any attempt to cause such benefits to be so subjected shall not be recognized by the Employer.

13. Employment . Nothing contained herein shall be construed to grant the Executive the right to be retained in the employ of the Employer or any other rights or interests other than those specifically set forth.

14. Amendment, Suspension or Termination . This Agreement shall be binding upon and inure to the benefit of the Employer and the Executive. The Employer shall have the right to suspend, terminate or amend this Agreement only with the mutual consent of the Executive; provided, however, no such suspension, termination or amendment shall adversely affect the rights of the Executive or any beneficiary to the funds and benefits which have accrued as of the date of such action.

15. Successors . This Agreement shall be binding upon and inure to the benefit of the Employer, its successors and assigns and the Executive and his heirs, executors, administrators, and legal representatives.

16. Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts.

17. Entire Agreement . This Agreement contains the entire agreement of the parties relating to the subject matter hereof, and supersedes in its entirety any and all understandings or representations relating to the subject matter hereof, including the MWCB SERP and the Prior Agreement.

18. Alternate Form of Annuity . For purposes of Sections 4(b) or 5(a), the Executive may, upon request made prior to commencement of payment of the benefit, elect to have the Accumulation Account paid in the form of a joint and 50% survivor annuity or a joint and 100% survivor annuity rather than a single-life annuity, provided that such alternate form of annuity is the actuarial equivalent of the annuity described in Section 4(b), for purposes of Section 409A of the Code and Reg. 1.409A-2(b)(2)(ii).

The remainder of this page has been intentionally left blank

IN WITNESS WHEREOF, this Agreement has been executed as of the date first above written.


EAST BOSTON SAVINGS BANK

By:		/s/ Richard J. Gavegnano
		Richard J. Gavegnano
		President and Chief Executive Officer

EXECUTIVE

By:		/s/ Edward J. Merritt
		Edward J. Merritt

This SERP is joined in by Meridian Bancorp, Inc. for purposes of fulfilling the obligations of the Bank under the SERP.


MERIDIAN BANCORP, INC.

By:		/s/ Richard J. Gavegnano
Richard J. Gavegnano
President and Chief Executive Officer

Exhibit 10.13

AMENDED AND RESTATED

TWO-YEAR CHANGE IN CONTROL AGREEMENT

This Change in Control Agreement (the “Agreement”) is made and entered into as of July 28, 2014, by and between East Boston Savings Bank (the “Bank”), a bank organized under the laws of the Commonwealth of Massachusetts with its headquarters located in East Boston, Massachusetts (the “Bank”) and Mark Abbate (the “Executive”). This Agreement is effective January 4, 2010 (the “Effective Date”).

WITNESSETH

WHEREAS , the Executive originally entered into a two-year change in control agreement with the Bank on January 4, 2010 (the “Original Agreement”); and

WHEREAS , the Original Agreement may be amended in accordance with Section 8(b) of the Original Agreement; and

WHEREAS , the Executive has agreed to such amendment and restatement of the Original Agreement; and

NOW THEREFORE , in consideration of the mutual agreements herein contained, and upon the other terms and conditions hereinafter provided, the parties hereby agree as follows:

1.	TERM OF AGREEMENT

(a) The term of this Agreement shall be (i) the initial term, consisting of the period commencing on the Effective Date and ending on the second anniversary date of the Effective Date, plus (ii) any and all extensions of the initial term made pursuant to this Section 1.

(b) The term of this Agreement shall be extended for one day each day so that a constant twenty-four (24) calendar month term shall remain in effect, until such time as the board of directors of the Bank (the “Board”) or Executive elects not to extend the term of the Agreement by giving written notice to the other party in accordance with the terms of this Agreement, in which case the term of this Agreement shall be fixed and shall end on the second anniversary of the date of such written notice.

2.	DEFINITIONS

(a) “Change in Control” shall mean a change in control of the Bank or Meridian Bancorp, Inc., a Maryland corporation (the “Company”), as defined in Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations promulgated thereunder, including the following:

(1)

Change in ownership : A change in ownership of the Bank or the Company occurs on the date any one person or group of persons accumulates ownership of more than 50% of the total fair market value or total voting power of the Bank or the Company; or

(2)

Change in effective control : A change in effective control occurs when either (i) any one person or more than one person acting as a group acquires within a twelve (12)-month period ownership of stock of the Bank or Company possessing 35% or more of the total voting power of the Bank or Company; or (ii) a majority of the Bank’s or Company’s Board of Directors is replaced during any 12-month period by Directors whose appointment or election is not endorsed in advance by a majority of the Bank’s or Company’s Board of Directors (as applicable), or

(3)

Change in ownership of a substantial portion of assets : A change in the ownership of a substantial portion of the Bank’s or Company’s assets occurs if, in a twelve (12)-month period, any one person or more than one person acting as a group acquires assets from the Bank or Company having a total gross fair market value equal to or exceeding 40% of the total gross fair market value of the Bank’s or Company’s entire assets immediately before the acquisition or acquisitions. For this purpose, “gross fair market value” means the value of the Bank’s or Company’s assets, or the value of the assets being disposed of, determined without regard to any liabilities associated with the assets.

(b) “Good Reason” shall mean a termination by the Executive following a Change in Control based on the following:

(1) a material diminution in the Executive’s base compensation as in effect immediately prior to the date of the Change in Control or as the same may be increased from time to time thereafter, (2) a material diminution in the Executive’s authority, duties or responsibilities as in effect immediately prior to the Change in Control, or (3) a material diminution in the authority, duties or responsibilities of the officer (as in effect immediately prior to the date of the Change in Control) to whom the Executive is required to report,

(2) any material breach of this Agreement by the Bank, or

(3) an involuntary relocation of the Bank’s offices in which Executive is principally employed by more than 10 miles;

provided, however, that prior to any termination of employment for Good Reason, the Executive must first provide written notice to the Bank (or its successor) within sixty (60) days of the initial existence of the condition, describing the existence of such condition, and the Bank shall thereafter have the right to remedy the condition within thirty (30) days of the date the Bank received the written notice from the Executive. If the Bank remedies the condition within such thirty (30) day cure period, then no Good Reason shall be deemed to exist with respect to such condition. If the Bank does not remedy the condition within such thirty (30) day cure period, then the Executive may deliver a Notice of Termination for Good Reason at any time within sixty (60) days following the expiration of such cure period.

(1)

the commission by, or indictment of, Executive for any felony involving moral turpitude, deceit, dishonesty, or fraud;

(2)

a material act or acts of dishonesty in connection with the performance of Executive’s duties, including without limitation, material misappropriation of funds or property;

(3)

an act or acts of gross misconduct by Executive; or

(4)

continued, willful, and deliberate non-performance by Executive of duties (other than by reason of illness or disability) which has continued for more than thirty (30) days following written notice of non-performance from the Board.

A determination of whether Executive’s employment shall be terminated for Cause shall be made at a meeting of the Board called and held for such purpose, at which the Board makes a finding that in good faith opinion of the Board an event set forth in clauses (1), (2), (3), or (4) above has occurred and specifying the particulars thereof in detail.

(d) For purposes of this Agreement, any termination of Executive’s employment shall be construed to require a “Separation from Service” in accordance with Code Section 409A and the regulations promulgated thereunder, such that the Bank and Executive reasonably anticipate that the level of bona fide services Executive would perform after termination of employment would permanently decrease to a level that is less than 20% of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding thirty-six (36)-month period.

3.	BENEFITS UPON TERMINATION

(a) If the Executive’s employment by the Bank shall be terminated subsequent to a Change in Control and during the term of this Agreement by (i) the Bank for other than Cause, or (ii) the Executive for Good Reason, then the Bank shall:

(1) pay Executive, or in the event of Executive’s subsequent death, Executive’s beneficiary or beneficiaries or estate, as applicable, a cash severance amount equal to:

(i) two (2) times the Executive’s base salary in effect as of the Date of Termination,

(ii) the highest level of cash incentive compensation earned by the Executive from the Bank in any one of the three calendar years immediately preceding the year in which the termination occurs, and

(iii) payable by lump sum within ten (10) business days of the Date of Termination.

(b) In no event shall the payments or benefits to be made or provided to Executive under Section 3 hereof (the “Termination Benefits”) constitute an “excess parachute payment” under Section 280G of the Code or any successor thereto, and in order to avoid such a result, Termination Benefits will be reduced, if necessary, to an amount the value of which is one dollar ($1.00) less than an amount equal to three (3) times Executive’s “base amount,” as determined in accordance with Section 280G of the Code. The reduction required among the Termination Benefits provided by this Section 3 shall be applied to the cash severance benefits otherwise payable under Section 3(a) hereof.

4.	NOTICE OF TERMINATION

facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated. “Date of Termination” shall mean the date specified in the Notice of Termination (which, in the case of a termination for Cause, shall be immediate). In no event shall the Date of Termination exceed thirty (30) days from the date the Notice of Termination is given.

5.	SOURCE OF PAYMENTS

All payments provided in this Agreement shall be timely paid in cash or check from the general funds of the Bank.

6.	REQUIRED REGULATORY PROVISIONS

Notwithstanding anything herein contained to the contrary, any payments to Executive by the Bank, whether pursuant to this Agreement or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and the regulations promulgated thereunder in 12 C.F.R. Part 359.

7.	NO ATTACHMENT

Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation, or to execution, attachment, levy, or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void, and of no effect.

8.	ENTIRE AGREEMENT; MODIFICATION AND WAIVER

(a) This Agreement contains the entire understanding between the parties hereto and supersedes the Original Agreement, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring to Executive of a kind elsewhere provided. No provision of this Agreement shall be interpreted to mean that Executive is subject to receiving fewer benefits than those available to him without reference to this Agreement.

(b) This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto.

party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.

9.	SEVERABILITY

If, for any reason, any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provision of this Agreement or any part of such provision not held so invalid, and each such other provision and part thereof shall to the full extent consistent with law continue in full force and effect.

10.

HEADINGS FOR REFERENCE ONLY

The headings of sections and paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement.

11.

GOVERNING LAW

This Agreement shall be governed by the laws of the Commonwealth of Massachusetts but only to the extent not superseded by federal law.

12.

ARBITRATION

Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by binding arbitration, as an alternative to civil litigation and without any trial by jury to resolve such claims, conducted by a single arbitrator, mutually acceptable to the Bank and Executive, sitting in a location selected by the Bank within twenty-five (25) miles from the main office of the Bank, in accordance with the rules of the American Arbitration Association’s National Rules for the Resolution of Employment Disputes then in effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction.

13.

PAYMENT OF LEGAL FEES

To the extent that such payment(s) may be made without triggering penalty under Code Section 409A, all reasonable legal fees paid or incurred by Executive pursuant to any dispute or question of interpretation relating to this Agreement shall be paid or reimbursed by the Bank, provided that the dispute or interpretation has been resolved in Executive’s favor, and such reimbursement shall occur no later than sixty (60) days after the end of the year in which the dispute is settled or resolved in Executive’s favor.

14.

OBLIGATIONS OF BANK

The termination of Executive’s employment, other than following a Change in Control, shall not result in any obligation of the Bank under this Agreement.

15.

SUCCESSORS AND ASSIGNS

The Bank shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all the business or assets of the Bank, expressly and unconditionally to assume and agree to perform the Bank’s obligations under this Agreement, in the same manner and to the same extent that the Bank would be required to perform if no such succession or assignment had taken place.

[Signature Page Follows]

SIGNATURES

IN WITNESS WHEREOF , the Bank has caused this Agreement to be executed by its duly authorized officer, and Executive has signed this Agreement, as of the date first above written.


		EAST BOSTON SAVINGS BANK

By:		/s/ Richard J. Gavegnano
		Richard J. Gavegnano

		EXECUTIVE

By:		/s/ Mark Abbate
		Mark Abbate

Exhibit 10.15

AMENDED AND RESTATED

TWO-YEAR CHANGE IN CONTROL AGREEMENT

This Change in Control Agreement (the “Agreement”) is made and entered into as of July 28, 2014, by and between East Boston Savings Bank (the “Bank”), a bank organized under the laws of the Commonwealth of Massachusetts with its headquarters located in East Boston, Massachusetts (the “Bank”) and John Migliozzi (the “Executive”). This Agreement is effective December 17, 2013 (the “Effective Date”).

WITNESSETH

WHEREAS , the Executive originally entered into a two-year change in control agreement with the Bank on December 17, 2013 (the “Original Agreement”); and

WHEREAS , the Original Agreement may be amended in accordance with Section 8(b) of the Original Agreement; and

WHEREAS , the Executive has agreed to such amendment and restatement of the Original Agreement; and

NOW THEREFORE , in consideration of the mutual agreements herein contained, and upon the other terms and conditions hereinafter provided, the parties hereby agree as follows:

1.	TERM OF AGREEMENT

2.	DEFINITIONS

(1)

(2)

(3)

(b) “Good Reason” shall mean a termination by the Executive following a Change in Control based on the following:

(2) any material breach of this Agreement by the Bank, or

(3) an involuntary relocation of the Bank’s offices in which Executive is principally employed by more than 10 miles;

(1)

the commission by, or indictment of, Executive for any felony involving moral turpitude, deceit, dishonesty, or fraud;

(2)

a material act or acts of dishonesty in connection with the performance of Executive’s duties, including without limitation, material misappropriation of funds or property;

(3)

an act or acts of gross misconduct by Executive; or

(4)

3.	BENEFITS UPON TERMINATION

(1) pay Executive, or in the event of Executive’s subsequent death, Executive’s beneficiary or beneficiaries or estate, as applicable, a cash severance amount equal to:

(i) two (2) times the Executive’s base salary in effect as of the Date of Termination,

(ii) the highest level of cash incentive compensation earned by the Executive from the Bank in any one of the three calendar years immediately preceding the year in which the termination occurs, and

(iii) payable by lump sum within ten (10) business days of the Date of Termination.

(2) cause to be continued non-taxable medical and dental coverage substantially identical to the coverage maintained by the Bank for Executive prior to Executive’s termination, with the Executive responsible for his share of employee premiums, for twenty-four (24) months. Notwithstanding the foregoing, if applicable law (including, but not limited to, laws prohibiting discriminating in favor of highly compensated employees), or, if participation by the Executive is not permitted under the terms of the applicable health plans, or if providing such benefits would subject the Bank to penalties, then the Bank shall pay the Executive a cash lump sum payment reasonably estimated to be equal to the value of such non-taxable medical and dental benefits, with such payment to be made by lump sum within ten (10) business days of the Date of Termination, or if later, the date on which the Bank determines that such insurance coverage (or the remainder of such insurance coverage) cannot be provided for the foregoing reasons.

(b) In no event shall the payments or benefits to be made or provided to Executive under Section 3 hereof (the “Termination Benefits”) constitute an “excess parachute payment”

under Section 280G of the Code or any successor thereto, and in order to avoid such a result, Termination Benefits will be reduced, if necessary, to an amount the value of which is one dollar ($1.00) less than an amount equal to three (3) times Executive’s “base amount,” as determined in accordance with Section 280G of the Code. The reduction required among the Termination Benefits provided by this Section 3 shall be applied to the cash severance benefits otherwise payable under Section 3(a) hereof.

4.	NOTICE OF TERMINATION

Any purported termination by the Bank or by Executive in connection with or following a Change in Control shall be communicated by Notice of Termination to the other party hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a written notice which shall indicate the Date of Termination and, in the event of termination by Executive, the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated. “Date of Termination” shall mean the date specified in the Notice of Termination (which, in the case of a termination for Cause, shall be immediate). In no event shall the Date of Termination exceed thirty (30) days from the date the Notice of Termination is given.

5.	SOURCE OF PAYMENTS

All payments provided in this Agreement shall be timely paid in cash or check from the general funds of the Bank.

6.	REQUIRED REGULATORY PROVISIONS

7.	NO ATTACHMENT

8.	ENTIRE AGREEMENT; MODIFICATION AND WAIVER

(b) This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto.

(c) No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.

9.	SEVERABILITY

10.

HEADINGS FOR REFERENCE ONLY

The headings of sections and paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement.

11.

GOVERNING LAW

This Agreement shall be governed by the laws of the Commonwealth of Massachusetts but only to the extent not superseded by federal law.

12.

ARBITRATION

13.

PAYMENT OF LEGAL FEES

14.

OBLIGATIONS OF BANK

The termination of Executive’s employment, other than following a Change in Control, shall not result in any obligation of the Bank under this Agreement.

15.

SUCCESSORS AND ASSIGNS

[Signature Page Follows]

SIGNATURES

IN WITNESS WHEREOF , the Bank has caused this Agreement to be executed by its duly authorized officer, and Executive has signed this Agreement, as of the date first above written.


		EAST BOSTON SAVINGS BANK

By:		/s/ Richard J. Gavegnano
		Richard J. Gavegnano

		EXECUTIVE

By:		/s/ John Migliozzi
		John Migliozzi

Exhibit 10.16

EAST BOSTON SAVINGS BANK

NON-QUALIFIED SUPPLEMENTAL

EMPLOYEE STOCK OWNERSHIP PLAN

October 1, 2014

EAST BOSTON SAVINGS BANK

NON-QUALIFIED SUPPLEMENTAL

EMPLOYEE STOCK OWNERSHIP PLAN

1. Purpose

This Non-Qualified Supplemental Employee Stock Ownership Plan (“Plan”) is intended to provide Participants (as defined herein) or their Beneficiaries with the economic value of the annual allocations credited to such Participant’s account under the East Boston Savings Bank Employee Stock Ownership Plan (“ESOP”) which may not be accrued under the ESOP due to the limitations imposed by Section 415 of the Internal Revenue Code (the “Code”) and the limitation on includible compensation imposed by Section 401(a)(17) of the Code.

The benefits provided under this Plan are intended to constitute deferred compensation for “a select group of management or highly compensated employees” for purposes of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). This Plan is intended to comply with Section 409A of the Code and the regulatory guidance and other guidance issued thereunder.

2. Definitions

Where the following words and phrases appear in the Plan, they shall have the respective meaning as set forth below unless the context clearly indicates the contrary. Except to the extent otherwise indicated herein, and to the extent inconsistent with the definitions provided below, the definitions contained in the ESOP are applicable under the Plan.

2.1 “ Annual ESOP Credit ” means the amount credited to the Participant’s account in the Plan, determined as set forth in Section 5.1 hereof.

2.2 “ Applicable Limitations ” means one or more of the following, as applicable: (i) the maximum limitations on annual additions to a tax-qualified defined contribution plan under Section 415(c) of the Code; or (ii) the maximum limitation on the annual amount of compensation that may, under Section 401(a)(17) of the Code, be taken into account in determining contributions to and benefits under tax-qualified plans.

2.3 “ Bank ” means East Boston Savings Bank.

2.4 “ Beneficiary ” means the person designated by the Participant under the ESOP to receive the Supplemental ESOP Benefit in the event of the Participant’s death.

2.5 “ Board of Directors ” means the Board of Directors of the Bank.

2.6 “ Change in Control ” shall mean (1) a change in ownership of the Bank or the Company under paragraph (a) below, or (2) a change in effective control of the Bank or the Company under paragraph (b) below, or (3) a change in the ownership of a substantial portion of the assets of the Bank or the Company under paragraph (c) below:

(a)

Change in the ownership of the Bank or the Company. A change in the ownership of the Bank or the Company shall occur on the date that any one person, or more than one person acting as a group (as defined in Treasury

Regulation Section 1.409A-3(i)(5)(v)(B)), acquires ownership of stock of the corporation that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of such corporation; or

(b)

Change in the effective control of the Bank or the Company. A change in the effective control of the Bank or the Company shall occur on the date that either (i) any one person, or more than one person acting as a group (as defined in Treasury Regulation Section 1.409A-3(i)(5)(vi)(D)), acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Bank or the Company possessing 30% or more of the total voting power of the stock of the Bank or the Company; or (ii) a majority of members of the Bank’s or the Company’s board of Directors is replaced during any 12-month period by Directors whose appointment or election is not endorsed by a majority of the members of the corporation’s board of Directors prior to the date of the appointment or election, provided that this sub-section (ii) is inapplicable where a majority shareholder of the Bank or the Company is another corporation; or

(c)

Change in the ownership of a substantial portion of the Bank’s or the Company’s assets. A change in the ownership of a substantial portion of the Bank’s or the Company’s assets shall occur on the date that any one person, or more than one person acting as a group (as defined in Treasury Regulation Section 1.409A-3(i)(5)(vii)(C)), acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Bank or the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the corporation immediately prior to such acquisition or acquisitions. For this purpose, gross fair market value means the value of the assets of the corporation, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets. There is no Change in Control event under this paragraph (c) when there is a transfer to an entity that is controlled by the shareholders of the transferring corporation immediately after the transfer; or

(d)

For all purposes hereunder, the definition of Change in Control shall be construed to be consistent with the requirements of Treasury Regulation Section 1.409A-3(i)(5), except to the extent modified herein.

2.7 “ Code ” means the Internal Revenue Code of 1986, as amended from time to time. Reference to a specific provision of the Code shall include such provision, any valid regulation or ruling promulgated thereunder and any comparable provision of future law that amends, supplements or supersedes such provision.

2.8 “ Committee ” means the Compensation Committee of the Board of Directors of the Bank.

2.9 “ Company ” means Meridian Bancorp, Inc.

2.10 “ Effective Date ” means October 1, 2014

2.11 “ Employee ” means an employee of the Employer on whose behalf benefits are payable under the ESOP.

2.12 “ Employer ” means the Bank or the Company, as applicable, and any successors by merger, purchase, reorganization or otherwise. If a subsidiary or affiliate of the Employer adopts the Plan, it shall be deemed the Employer with respect to its employees.

2.13 “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time. Reference to a specific provision of ERISA shall include such provision, any valid regulation or ruling promulgated thereunder and any comparable provision of future law that amends, supplements or supersedes such provision.

2.14 “ ESOP ” means the tax-qualified East Boston Savings Bank Employee Stock Ownership Plan, and any successor thereto.

2.15 “ Fair Market Value ” means, with respect to a share of Stock on the Valuation Date:

(a)

the final reported sales price on the date in question (or if there is no reported sale on such date, on the last preceding date on which any reported sale occurred) as reported in the principal consolidated reporting system with respect to securities listed or admitted to trading on the principal United States securities exchange on which the shares of Stock are listed or admitted to trading, as of the close of the market in New York City and without regard to after-hours trading activity; or

(b)

if the shares of Stock are not listed or admitted to trading on any such exchange, the closing bid quotation with respect to a share of Stock on such date, as of the close of the market in New York City and without regard to after-hours trading activity, or, if no such quotation is provided, on another similar system, selected by the Committee, then in use; or

(c)

if (a) and (b) are not applicable, the Fair Market Value of a share of Stock as the Committee may determine in good faith and in accordance with Code Section 422 and the applicable requirements of Code Section 409A and the regulations promulgated thereunder.

2.16 “ Participant ” means an Employee who has been designated for participation in this Plan pursuant to Section 3.1.

2.17 “ Phantom Shares ” means the unit of measurement of a Participant’s Account hereunder denominated in hypothetical shares of Company Stock. On any Valuation Date, one Phantom Share shall have a value equal to the Fair Market Value of one share of Company Stock on such date.

2.18 “ Plan ” means East Boston Savings Bank Non-Qualified Supplemental Employee Stock Ownership Plan, as set forth herein and as may be amended from time to time.

2.19 “ Plan Year ” means the period from January 1 to December 31.

2.20 “ Separation from Service ” means the Employee’s death, Retirement or other termination of employment with the Bank within the meaning of Code Section 409A. A Separation from Service shall not be deemed to occur due to military leave, sick leave or other bona fide leave of absence if the period of such leave does not exceed six months or, if longer, so long as the Employee’s right to reemployment is provided by law or contract. If the leave exceeds six months and the Employee’s right to reemployment is not provided by law or by contract, then the Employee shall have a Separation from Service on the first date immediately following such six-month period.

Whether a termination of employment has occurred is determined based on whether the facts and circumstances indicate that the Employer and Employee reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the employee would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to no more than 50% of the average level of bona fide services performed over the immediately preceding 36 months (or such lesser period of time in which the Participant performed services for the Bank). The determination of whether a Participant has had a Separation from Service shall be made by applying the presumptions set forth in the Treasury Regulations under Code Section 409A.

2.21 “ Specified Employee ” means any Participant who also satisfies the definition of “key employee” as such term is defined in Code Section 416(i) (without regard to paragraph 5 thereof). In the event a Participant is a Specified Employee, no distribution shall be made to such Participant upon Separation from Service (other than due to death or Disability) prior to the first day of the seventh month following Separation from Service.

2.22 “ Stock ” means the common stock of the Company, par value $.01 per share.

2.23 “ Supplemental ESOP Account ” means the bookkeeping account to which a Participant’s Annual ESOP Credits and earnings thereon are credited.

2.24 “ Supplemental ESOP Benefit ” means the value of the Participant’s Account as of the most recent Valuation Date.

2.25 “ Valuation Date ” means for so long as there is a generally recognized market for the Stock each business day. If at any time there shall be no generally recognized market for the Stock, then “Valuation Date” means the last day of each Plan and such other year as determined from time to time by the Committee.

3. Participation and Vesting

3.1 Designation to Participate . Richard J. Gavegnano, President and Chief Executive Officer of the Company and Bank, shall be a Participant in the Plan effective as of the Effective Date. Upon the designation of the Committee, and subject to the approval of the Board of Directors, other Employees may become Participants at any time during the Plan Year. Each Employee, other than Mr. Gavegnano, that is selected by the Committee to participate in the Plan shall be set forth on Exhibit A attached hereto and made a part hereof.

3.2 Continuation of Participation . An Employee who has become a Participant shall remain a Participant so long as benefits are payable to or with respect to such Participant under the Plan.

3.3 Vesting . Each Participant’s Supplemental ESOP Benefit shall be 100% vested at all times.

4. Account

4.1 Supplemental ESOP Account . The Bank shall maintain for each Participant a Supplemental ESOP Account to which it shall credit all amounts credited thereto in accordance with Section 5.1 and 5.2 of the Plan.

4.2 Unsecured Creditor . The Participant’s interest in his or her Supplemental ESOP Account is limited to the right to receive payments under the Plan, and the Participant’s position is that of a general unsecured creditor of the Bank.

5. Contributions and Investment

5.1 Annual ESOP Credit . On the date on which shares of Stock are allocated to the Participant’s ESOP account for the relevant ESOP Plan Year, the Bank shall credit the Participant’s Supplemental ESOP Account with the Annual ESOP Credit. The Annual ESOP Credit is equal to the sum of the difference (denominated in Phantom Shares) between “(a)” and “(b),” where:

(a)

is the number of shares of Stock that would have been allocated to the ESOP account of the Participant for a Plan Year under the ESOP but for the Applicable Limitations; and

(b)

is the number of shares of Stock actually allocated to the account of the Participant for the relevant ESOP Plan Year.

5.2 Investment of Annual ESOP Credits . All Annual ESOP Credits allocated to the Participant’s Supplemental ESOP Account shall be deemed invested in Phantom Shares and all dividends deemed paid on Phantom Shares credited to each Participant’s Supplemental ESOP Account shall be immediately deemed to be reinvested in Phantom Shares. The Employer may establish a rabbi trust and set aside assets to informally fund the benefit obligations under this Plan, but the Bank is not obligated to do so.

5.3 Statement of Deferred Compensation Account . The Bank shall provide each Participant, within ninety (90) days following the end of the Plan Year, a statement setting forth the balance of the Participant’s Supplemental ESOP Account as of the last day of the previous Plan Year.

6. Distribution of the Supplemental ESOP Benefit

6.1 Time of Payment of the Supplemental ESOP Benefit . The Supplemental ESOP Benefit shall be payable to the Participant (or the Participant’s Beneficiary) in a lump sum within thirty (30) days of the first to occur of:

(a)

the Participant’s “Separation from Service,” other than due to death or Disability;

(b)

the Participant’s Disability;

(c)

the Participant’s death; or

(d)

a Change in Control of the Bank or the Company.

Notwithstanding anything herein to the contrary, if the Participant is a Specified Employee and the distribution under this Section is due to the Participants Separation from Service (other than due to death or Disability), then solely to the extent necessary to avoid penalties under Code Section 409A, the distribution (or any part thereof) shall be delayed and paid on the first day of the seventh month following Separation from Service.

6.2 Form of Supplemental ESOP Payments . A Participant’s Supplemental ESOP Benefit under Section 4.1 of this Plan shall be a benefit paid in cash equal to the Fair Market Value of the Participant’s Supplemental ESOP Account as of the most recent Valuation Date.

7. Administration of the Plan

7.1 Committee; Duties . This Plan shall be administered by the Committee. The Committee shall have the authority to make, amend, interpret and enforce all appropriate rules and regulations for the administration of the Plan and decide or resolve any and all questions, including interpretations of this Plan, that may arise in connection with the administration of the Plan; provided, however, that any such interpretations, rules and/or regulations shall be consistent with the requirements of Code Section 409A and any Treasury Regulations or other guidance issued thereunder.

7.2 Agents . The Committee may, from time to time, employ other agents and delegate to them such administrative duties as it sees fit, and may from time to time consult with counsel who may be counsel to the Employer.

7.3 Binding Effect of Decisions . The decision or action of the Committee regarding of any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in the Plan.

7.4 Indemnity of Committee . The Employer shall indemnify and hold harmless the members of the Committee against any and all claims, loss, damage, expense or liability arising from any action or failure to act with respect to this Plan, except in the case of gross negligence or willful misconduct.

8. Claims Procedure

8.1 Claim . Any person claiming a benefit, requesting an interpretation or ruling under the Plan, or requesting information under the Plan shall present the request in writing to the Committee which shall respond in writing within thirty (30) days.

8.2 Denial of Claim . If the claim or request is denied, the written notice of denial shall state:

(a)

the reason for denial, with specific reference to the Plan provisions on which the denial is based.

(b)

a description of any additional material or information required and an explanation of why it is necessary.

(c)

an explanation of the Plan‘s claim review procedure.

8.3 Review of Claim . Any person whose claim or request is denied or who has not received a response within thirty (30) days may request review by notice given in writing to the Committee. The claim or request shall be reviewed by the Committee who may, but shall not be required to, grant the claimant a hearing. On review, the claimant may have representation, examine pertinent documents, and submit issues and comments in writing.

8.4 Final Decision . The decision on review shall normally be made within sixty (60) days. If an extension of time is required for a hearing or other special circumstances, the claimant shall be notified and the time limit shall be one hundred twenty (120) days. The decision shall be in writing and shall state the reason and the relevant plan provisions. All decisions on review shall be final and bind all parties concerned.

8.5 Arbitration . If a claimant continues to dispute the benefit denial based upon completed performance of this Plan or the meaning and effect of the terms and conditions thereof, then the claimant may submit the dispute to mediation, administered by the American Arbitration Association (“AAA”) (or a mediator selected by the parties) in accordance with the AAA’s Commercial Mediation Rules. If mediation is not successful

in resolving the dispute, it shall be settled by arbitration administered by the AAA under its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.

9. Amendment or Termination

9.1 Amendment of Plan . The Board shall have the right to amend or terminate the Plan, in whole or in part, provided, however, that no amendment shall reduce any Participant’s vested and accrued benefits.

9.2 Plan Termination . Subject to the requirements of Code Section 409A and the Treasury Regulations, in the event of the termination of this Plan, the Plan shall cease to operate and all benefits shall be immediately payable to the Participant by the Bank as if the Participant had terminated employment as of the effective date of the complete termination. Such complete termination of the Plan shall occur only under the following circumstances and conditions:

(a)

The Board may terminate the Plan within twelve (12) months of a corporate dissolution taxed under Code Section 331, or with approval of a bankruptcy court pursuant to 11 U.S.C. §503(b)(1)(A), provided that the amounts deferred under the Plan are included in the Participant’s gross income in the latest of (i) the calendar year in which the Plan terminates; (ii) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the payment is administratively practicable.

(b)

The Board may terminate the Plan by irrevocable action within the thirty (30) days preceding, or twelve (12) months following, a Change in Control, provided that the Plan shall only be treated as terminated if all substantially similar arrangements sponsored by the Employer are terminated so that the Participant and all participants under substantially similar arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within twelve (12) months of the date of the termination of the arrangements.

(c)

The Board may terminate the Plan provided that (i) the termination and liquidation does not occur proximate to a downturn in the financial health of the Bank or Company; (ii) all arrangements sponsored by the Bank that would be aggregated with this Plan under Treasury Regulations Section 1.409A-1(c) if the Participant covered by this Plan was also covered by any of those other arrangements are also terminated; (iii) no payments other than payments that would be payable under the terms of the arrangement if the termination had not occurred are made within twelve (12) months of the termination of the arrangement; (iv) all payments are made within twenty-four (24) months of the termination of the arrangements; and (v) the Bank does not adopt a new arrangement that would be aggregated with any terminated arrangement under Treasury Regulations Section 1.409A-1(c) if the Participant participated in both arrangements, at any time within three years following the date of termination of the arrangement.

10. Miscellaneous

10.1 Unfunded Plan . This Plan is intended to be an unfunded plan maintained primarily to provide deferred compensation benefits for a select group of management or highly compensated employees. However, the Employer may elect to fund for the benefits of Participants as described in Section 10.3 below. This Plan will continue to be unfunded for tax purposes and Title I of ERISA even if benefits are funded by the Employer under Section 10.3 below.

10.2 Unsecured General Creditor . The Participant and his Beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, interest or claims in any property or assets of the Employer, nor shall they be beneficiaries of, or have any rights, claims or interests in any life insurance policies, annuity contracts or the proceeds therefrom owned or which may be acquired by the Employer. Such policies or other assets of the Employer shall not be held under any trust for the benefit of Participants, their Beneficiaries, heirs, successors or assigns, or held in any way as collateral security for the fulfilling of the obligations of Employer under this Plan. Any and all of the Employer‘s assets shall be, and remain, the general, unpledged, unrestricted assets of the Employer. The Employer‘s obligation under the Plan shall be that of an unfunded and unsecured promise of the Employer to pay money in the future.

10.3 Trust Fund . The Employer shall be responsible for the payment of all benefits provided under the Plan. At its discretion, the Employer may establish one (1) or more rabbi trusts, with such trustees as the Board may approve, for the purpose of providing for payment of such benefits. Such trust or trusts may be irrevocable, but the assets thereof shall be subject to the claims of the Employer‘s creditors. To the extent any benefits provided under the Plan are actually paid from any such rabbi trust, the Employer shall have no further obligation with respect thereto, but to the extent not so paid, such benefits shall remain the obligation of, and shall be paid by, the Employer.

10.4 Nonassignability . Neither the Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are, expressly declared to be unassignable and nontransferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of a Participant‘s or any other person‘s bankruptcy or insolvency.

10.5 Expenses of Plan . All expenses of the Plan will be paid by the Employer.

10.6 Payment of Employment and Code Section 409A Taxes . Any distribution under this Plan shall be reduced by the amount of any taxes required to be withheld from such distribution. This Plan shall permit the acceleration of the time or schedule of a payment to pay employment related taxes as permitted under Treasury regulation Section 1.409A-3(j) or to pay any taxes that may become due at any time that the arrangement fails to meet the requirements of Code Section 409A and the regulations and other guidance promulgated thereunder. In the latter case, such payments shall not exceed the amount required to be included in income as the result of the failure to comply with the requirements of Code Section 409A.

10.7 Acceleration of Payments . Except as specifically permitted herein or in other sections of this Plan, no acceleration of the time or schedule of any payment may be made hereunder. Notwithstanding the foregoing, payments may be accelerated hereunder by the Bank, in accordance with the provisions of Treasury Regulation Section 1.409A-3(j)(4) and any subsequent guidance issued by the United States Treasury Department. Accordingly, payments may be accelerated, in accordance with requirements and conditions of the Treasury Regulations (or subsequent guidance) in the following circumstances: (i) as a result of certain domestic relations orders; (ii) in compliance with ethics agreements with the Federal government; (iii) in compliance with ethics laws or conflicts of interest laws; (iv) in limited cash-outs (but not in excess of the limit under Code Section 402(g)(1)(B)); (v) in the case of certain distributions to avoid a non-allocation year under Code Section 409(p); (vi)

to apply certain offsets in satisfaction of a debt of the Participant to the Bank; (vii) in satisfaction of certain bona fide disputes between the Participant and the Bank; or (viii) for any other purpose set forth in the Treasury Regulations and subsequent guidance.

10.8 Participation by Subsidiaries and Affiliates . If any employer is now or hereafter becomes a subsidiary or affiliated company of the Employer and its employees participate in the ESOP, the Board of Directors may authorize such subsidiary or affiliated company to participate in this Plan upon appropriate action by such employer necessary to adopt the Plan.

10.9 Delivery of Elections to Committee . All elections, designation, requests, notices, instructions and other communications required or permitted under the Plan from the Employer, a Participant, Beneficiary or other person to the Committee shall be on the appropriate form, shall be mailed by first-class mail or delivered to such address as shall be specified by such Committee, and shall be deemed to have been given or delivered only upon actual receipt thereof by such Committee at such location.

10.10 Delivery of Notice to Participants . All notices, statements, reports and other communications required or permitted under the Plan from the Employer or the Committee to any Participant, Beneficiary or other person, shall be deemed to have been duly given when delivered to, or when mailed by first-class mail, postage prepaid, and addressed to such person at this address last appearing on the records of the Committee.

10.11 Successors . The provisions of this Plan shall bind and inure to the benefit of the Employer and its successors and assigns. The term “successors” as used herein shall include any corporate or other business entity which shall, whether by merger, consolidation, purchase or otherwise acquire all or substantially all of the business and assets of the Employer, and successors of any such corporation or other business entity.

11. Construction of the Plan

11.1 Construction of the Plan . The provisions of this Plan shall be construed, regulated, and administered according to the laws of the State of Massachusetts, to the extent not superseded by Federal law.

11.2 Counterparts . This Plan has been established by the Employer in accordance with the resolutions adopted by the Board of Directors and may be executed in any number of counterparts, each of which shall be deemed to be an original. All the counterparts shall constitute one instrument, which may be sufficiently evidenced by any one counterpart.

11.3 Validity . In case any provision of this Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal or invalid provision had never been inserted herein.

[signature page follows]

IN WITNESS WHEREOF , the Bank, acting through its authorized officer, has adopted this Plan.


	EAST BOSTON SAVINGS BANK

September 29, 2014	By:	/s/ Domenic A. Gambardella
Date		Chairperson, Compensation Committee

EAST BOSTON SAVINGS BANK

Exhibit A


Participant		Date of Participation

A-1

EAST BOSTON SAVINGS BANK

NONQUALIFIED SUPPLEMENTAL

EMPLOYEE STOCK OWNERSHIP PLAN

BENEFICIARY DESIGNATION FORM

Name:

I hereby designate the following Beneficiary(ies) to receive any guaranteed payments or death benefits under the Plan following my death:

PRIMARY BENEFICIARY:


Name:				% of Benefit:

Name:				% of Benefit:

Name:				% of Benefit:

SECONDARY BENEFICIARY (if all Primary Beneficiaries pre-decease me):

Name:				% of Benefit:

Name:				% of Benefit:

Name:				% of Benefit:

This Beneficiary Designation hereby revokes any prior Beneficiary Designation which may have been in effect and this Beneficiary Designation is revocable.



Date				Participant

				RECEIPT ACKNOWLEDGED:

				By:
Date

A-2

Exhibit 21

Subsidiaries of the Registrant


Name		State of Incorporation

East Boston Savings Bank		Massachusetts (direct)

Prospect, Inc.		Massachusetts (indirect)

EBOSCO, LLC		Massachusetts (indirect)

Berkley River Bend Estates, LLC		Massachusetts (indirect)

East Boston Investment Services, Inc.		Massachusetts (indirect)

Investment in Affordable Home Ownership, LLC		Massachusetts (indirect)

EXHIBIT 31.1

RULE 13a-14(a)/15d-14(a)

CHIEF EXECUTIVE OFFICER CERTIFICATION

I, Richard J. Gavegnano, certify that:

I have reviewed this Quarterly Report on Form 10-Q of Meridian Bancorp, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13(a)-15(f) and 15(d)-15(f)) for the registrant and have:

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

designed such internal controls over financial reporting, or caused such internal controls over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

EXHIBIT 31.2

RULE 13a-14(a)/15d-14(a)

CHIEF FINANCIAL OFFICER CERTIFICATION

I, Mark L. Abbate, certify that:

I have reviewed this Quarterly Report on Form 10-Q of Meridian Bancorp, Inc.;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

EXHIBIT 32.0

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Meridian Bancorp, Inc. on Form 10-Q for the period ended September 30, 2014 as filed with the Securities and Exchange Commission (the “Report”), the undersigned hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Meridian Bancorp as of and for the period covered by the Report.


Dated: November 10, 2014				/s/ Richard J. Gavegnano
				Richard J. Gavegnano
				Chairman, President and Chief Executive Officer (Principal Executive Officer)

Dated: November 10, 2014				/s/ Mark L. Abbate
				Mark L. Abbate
				Senior Vice President, Treasurer and Chief Financial Officer (Principal Financial and Accounting Officer)