HarborOne Bancorp, Inc. (the “Company” or “HarborOne”) (NASDAQ:
HONE), the holding company for HarborOne Bank (the “Bank”),
announced net income of $7.5 million, or $0.17 per diluted share,
for the second quarter of 2023, compared to net income of $7.3
million, or $0.16 per diluted share, for the preceding quarter and
net income of $10.0 million, or $0.21 per diluted share, for the
same period last year.
Selected Financial Highlights:
- Loan growth of $75.6 million, or 1.6%, and deposit growth of
$45.8 million, or 1.1%, on a linked-quarter basis.
- The closure of one branch and the relocation of another branch
were completed, providing long-term expense savings.
- Completed share repurchase program and received regulatory
non-objection for sixth share repurchase program.
“During the second quarter, we completed our fifth share
repurchase program and received regulatory approval to commence our
sixth program,” said Joseph F. Casey, President and CEO. “Despite
continued economic headwinds, our book value per share and tangible
book value per share increased for the last three consecutive
quarters. Additionally, the pace of deposit cost increases has
slowed and we had solid customer deposit growth in Q2, with the
average balance increasing at an annualized growth rate of
9.5%.”
Net Interest Income
The Company’s net interest and dividend income was $32.1 million
for the quarter ended June 30, 2023, compared to $34.4 million for
the quarter ended March 31, 2023, and $37.2 million for the quarter
ended June 30, 2022. The tax equivalent interest rate spread and
net interest margin were 1.89% and 2.45%, respectively, for the
quarter ended June 30, 2023, compared to 2.28% and 2.78%,
respectively, for the quarter ended March 31, 2023, and 3.39% and
3.48%, respectively, for the quarter ended June 30, 2022. The
Company continues to evaluate and execute strategies to mitigate
interest rate risk and manage net interest margin, including
designated fair value and cash flow hedges, competitive deposit and
loan pricing and brokered certificates of deposit.
On a linked-quarter basis, the decreases in net interest and
dividend income, tax equivalent interest rate spread, and net
interest margin primarily reflect an increase in interest-bearing
liabilities, with higher cost of funding, partially offset by
increased loan balances and yields with liability repricing
outpacing assets. The cost of funds was 235 basis points for the
quarter ended June 30, 2023, compared to 188 basis points for the
preceding quarter. Income on other interest-earning assets
increased $2.1 million on a linked-quarter basis, primarily
reflecting an increase in the average balance invested in federal
funds.
The $5.1 million decrease in net interest and dividend income
from the prior year quarter reflects an increase of $26.0 million,
or 978.1%, in total interest expense, partially offset by an
increase of $20.9 million, or 52.5%, in total interest and dividend
income. The changes reflect rate and volume changes in both
interest-bearing assets and liabilities. The cost of
interest-bearing liabilities increased 240 basis points, while the
average balance increased $1.08 billion, and the yield on
interest-earning assets increased 90 basis points, while the
average balance increased $1.00 billion.
Noninterest Income
Total noninterest income increased $4.0 million, or 45.7%, to
$12.7 million for the quarter ended June 30, 2023, from $8.7
million for the quarter ended March 31, 2023. Higher gain-on-sale
margins and volume provided gain on loan sales of $3.3 million for
the quarter ended June 30, 2023 compared to $2.2 million in gain on
sales for the preceding quarter, from mortgage loan closings of
$172.2 million and $125.6 million, respectively. Deposit account
fees were $5.0 million for the quarter ended June 30, 2023,
compared to $4.7 million for the quarter ended March 31, 2023.
The increase in the fair value of mortgage servicing rights for
the three months ended June 30, 2023 was $915,000 as compared to a
decrease of $1.3 million in the fair value of mortgage servicing
rights for the three months ended March 31, 2023. The valuation was
positively impacted by key benchmark mortgage rates used in the
valuation. The impact of principal payments on the underlying
mortgages on the mortgage servicing rights was $479,000 and
$371,000 for the quarters ended June 30, 2023 and March 31, 2023,
respectively.
Total noninterest income decreased $1.4 million, or 10.2%,
compared to the quarter ended June 30, 2022, primarily due to a
$2.0 million, or 24.5%, decrease in mortgage banking income, driven
by the decrease in loan demand as a result of interest rate
increases. The prior year quarter also reflected a $1.6 million
increase in the fair value of mortgage servicing rights.
Noninterest Expense
Total noninterest expenses were $31.7 million for the quarter
ended June 30, 2023, an increase of $216,000, or 0.7%, from the
quarter ended March 31, 2023. Deposit insurance expense increased
$666,000 and compensation and benefits increased $421,000,
primarily reflecting increased mortgage origination commission
partially offset by decreased payroll tax expense. There were
additional decreases in occupancy and equipment expense of
$407,000, reflecting recent cost saving measures.
Total noninterest expenses decreased $3.2 million, or 9.2%, from
the quarter ended June 30, 2022. Compensation and benefits
decreased $3.2 million, primarily reflecting decreased mortgage
origination commission and incentive accruals, and professional
fees decreased $566,000, partially offset by a deposit insurance
expense increase of $822,000.
During the second quarter of 2023 the Bank took cost-saving and
organizational efficiency measures with an estimated annual savings
of $2.9 million and recognized severance expense of $452,000.
Additionally, the Bank closed one branch and relocated another
branch, which will both provide additional long-term expense
savings.
Asset Quality and Allowance for Credit Losses
Total nonperforming assets were $20.2 million at June 30, 2023,
compared to $12.3 million at March 31, 2023 and $24.4 million at
June 30, 2022. Nonperforming assets as a percentage of total assets
were 0.36% at June 30, 2023, 0.22% at March 31, 2023, and 0.52% at
June 30, 2022. During the quarter ended June 30, 2023, a $2.9
million charge off was recorded on a metro office space commercial
real estate credit, and it was placed on nonaccrual. As of June 30,
2023, the carrying value of the credit is $7.0 million.
The provision for credit losses for the quarter ended June 30,
2023 was $3.3 million and primarily reflects replenishment as a
result of the charge-off and provisioning for loan growth. Net
charge-offs totaled $2.7 million, or 0.23% of average loans
outstanding on an annualized basis, for the quarter ended June 30,
2023. Net recoveries totaled $11,000 for the quarter ended March
31, 2023, and $504,000 for the quarter ended June 30, 2022.
The allowance for credit losses (“ACL”) on loans was $47.8
million, or 1.02% of total loans, at June 30, 2023, compared to
$47.0 million, or 1.02% of total loans, at March 31, 2023 and $43.6
million, or 1.11% of total loans, at June 30, 2022. The ACL on
unfunded commitments, included in other liabilities on the
unaudited Consolidated Balance Sheets, amounted to $4.8 million at
June 30, 2023 as compared to $5.0 million at March 31, 2023 and
$5.1 million at June 30, 2022.
We believe that we are well positioned to withstand a downturn
in the credit cycle should one materialize. We continue to closely
monitor our loan portfolio for signs of deterioration. Management
continues to be focused on commercial real estate in light of
speculation that commercial real estate values may deteriorate as
the market adjusts to higher vacancies and rates. Our commercial
real estate portfolio is centered in New England, with
approximately 75% in Massachusetts and Rhode Island. Approximately
60% of commercial real estate loans are fixed-rate loans with
limited near-term maturity risk.
Management has also identified certain sectors within the
commercial real estate segment that may be particularly susceptible
to increased credit risk as a result of trends that were
precipitated by the COVID-19 pandemic and may be exacerbated by
current economic conditions. This includes business-oriented
hotels, non-anchored retail space and metro office space. As of
June 30, 2023, business-oriented hotels loans included 13 loans
with a total outstanding balance of $114.8 million, non-anchored
retail space loans included 28 loans with a total outstanding
balance of $41.5 million, and metro office space loans included two
loans with a total outstanding balance of $11.9 million. As of June
30, 2023, there was one metro office space loan with a carrying
value of $7.0 million, that was rated doubtful and on nonaccrual
and one business-oriented hotel credit with a carrying value of
$1.8 million that was rated substandard and on nonaccrual. The
other loans in these groups were performing in accordance with
their terms.
Balance Sheet
Total assets increased $86.4 million, or 1.6%, to $5.66 billion
at June 30, 2023, from $5.57 billion at March 31, 2023. The
increase primarily reflects an increase of $75.6 million in
loans.
Available-for-sale securities were $292.0 million and $303.1
million at June 30, 2023 and March 31, 2023, respectively. The
unrealized loss on securities available for sale increased to $66.5
million as of June 30, 2023, as compared to $61.2 million of
unrealized losses as of March 31, 2023. Securities held to maturity
were $19.8 million, or 0.35% of total assets, with a fair value of
$19.0 million.
Loans increased $75.6 million, or 1.6%, to $4.70 billion at June
30, 2023, from $4.62 billion at March 31, 2023. The increase in
loans for the three months ended June 30, 2023 was primarily due to
increases in commercial and industrial loans of $30.4 million,
commercial construction loans of $16.2 million, and residential
real estate loans of $33.8 million, partially offset by a decrease
in consumer loans of $4.8 million. Management continues to seek
prudent commercial lending opportunities to deepen relationships
with existing customers and develop new relationships with strong
borrowers.
Total deposits were $4.29 billion at June 30, 2023 and $4.24
billion at March 31, 2023. Compared to the prior quarter,
non-certificate accounts decreased $35.7 million, brokered deposits
decreased $7.9 million, and term certificate accounts increased
$89.4 million, primarily due to an 11-month term rate special
offered during the quarter. As of June 30, 2023, FDIC-insured
deposits were approximately 69% of total deposits, including Bank
subsidiary deposits. Including Depositors Insurance Fund (“DIF”),
excess insurance coverage that remains available until February 24,
2024, insured deposits are approximately 88% of total deposits,
including Bank subsidiary deposits. The Bank exited the DIF as of
February 24, 2023; however, insurance remains in place for funds on
deposit as of that date for one year or until maturity for term
certificates.
FHLB borrowings increased $13.9 million to $604.6 million at
June 30, 2023 from $590.7 million at March 31, 2023. At June 30,
2023, FHLB short-term borrowings were $414.0 million as the Bank
utilized available credit to enhance liquidity. In the second
quarter of 2023, the Bank established access to the Bank Term
Funding Program (“BTFP”) with the Federal Reserve to enhance its
liquidity position. As of June 30, 2023, there were no outstanding
advances under the BTFP and the Bank had $1.0 billion in available
borrowing capacity across multiple relationships.
Total stockholders’ equity was $595.5 million at June 30, 2023,
compared to $599.8 million at March 31, 2023 and $624.5 million at
June 30, 2022. Stockholders’ equity decreased 0.7% when compared to
the prior quarter, as earnings were offset by share repurchases.
The Company repurchased 472,308 shares at an average price of
$12.30, including $0.13 per share of excise tax, during the three
months ended June 30, 2023. A share repurchase program that
commenced in the first quarter of 2023 was completed in the second
quarter of 2023, and the Company plans to commence a sixth share
repurchase program during the third quarter of 2023. The
tangible-common-equity-to-tangible-assets ratio (1) was 9.38% at
June 30, 2023, 9.60% at March 31, 2023, and 11.92% at June 30,
2022. At June 30, 2023, the Company and the Bank had strong capital
positions, exceeded all regulatory capital requirements, and are
considered well-capitalized.
About HarborOne Bancorp, Inc.
HarborOne Bancorp, Inc. is the holding company for HarborOne
Bank, a Massachusetts-chartered trust company. HarborOne Bank
serves the financial needs of consumers, businesses, and
municipalities throughout Eastern Massachusetts and Rhode Island
through a network of 30 full-service banking centers located in
Massachusetts and Rhode Island, and commercial lending offices in
Boston, Massachusetts and Providence, Rhode Island. HarborOne Bank
also provides a range of educational resources through “HarborOne
U,” with free digital content, webinars, and recordings for small
business and personal financial education. HarborOne Mortgage, LLC,
a subsidiary of HarborOne Bank, provides mortgage lending services
throughout New England and other states.
(1) This non-GAAP ratio is total stockholders' equity less
goodwill and intangible assets to total assets less goodwill and
intangible assets.
Forward Looking Statements
Certain statements herein constitute forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Exchange Act and are intended to be
covered by the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. We may also make forward-looking
statements in other documents we file with the Securities and
Exchange Commission (“SEC”), in our annual reports to shareholders,
in press releases and other written materials, and in oral
statements made by our officers, directors or employees. Such
statements may be identified by words such as “believes,” “will,”
“would,” “expects,” “project,” “may,” “could,” “developments,”
“strategic,” “launching,” “opportunities,” “anticipates,”
“estimates,” “intends,” “plans,” “targets” and similar expressions.
These statements are based upon the current beliefs and
expectations of the Company’s management and are subject to
significant risks and uncertainties. Actual results may differ
materially from those set forth in the forward-looking statements
as a result of numerous factors. Factors that could cause such
differences to exist include, but are not limited to, changes in
general business and economic conditions (including inflation and
concerns about inflation) on a national basis and in the local
markets in which the Company operates, including changes that
adversely affect borrowers’ ability to service and repay the
Company’s loans; changes in customer behavior; ongoing turbulence
in the capital and debt markets and the impact of such conditions
on the Company’s business activities; changes in interest rates;
increases in loan default and charge-off rates; decreases in the
value of securities in the Company’s investment portfolio;
fluctuations in real estate values; the possibility that future
credit losses may be higher than currently expected due to changes
in economic assumptions, customer behavior or adverse economic
developments; the adequacy of loan loss reserves; decreases in
deposit levels necessitating increased borrowing to fund loans and
investments; competitive pressures from other financial
institutions; acquisitions may not produce results at levels or
within time frames originally anticipated; cybersecurity incidents,
fraud, natural disasters, war, terrorism, civil unrest, and future
pandemics; changes in regulation; changes in accounting standards
and practices; the risk that goodwill and intangibles recorded in
the Company’s financial statements will become impaired; demand for
loans in the Company’s market area; the Company’s ability to
attract and maintain deposits; risks related to the implementation
of acquisitions, dispositions, and restructurings; the risk that
the Company may not be successful in the implementation of its
business strategy; changes in assumptions used in making such
forward-looking statements and the risk factors described in the
Annual Report on Form 10‑K and Quarterly Reports on Form 10‑Q as
filed with the SEC, which are available at the SEC’s website,
www.sec.gov. Should one or more of these risks materialize or
should underlying beliefs or assumptions prove incorrect,
HarborOne’s actual results could differ materially from those
discussed. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date
of this release. The Company disclaims any obligation to publicly
update or revise any forward-looking statements to reflect changes
in underlying assumptions or factors, new information, future
events or other changes, except as required by law.
Use of Non-GAAP Measures
In addition to results presented in accordance with generally
accepted accounting principles (“GAAP”), this press release
contains certain non-GAAP financial measures. The Company’s
management believes that the supplemental non-GAAP information,
which consists of the efficiency ratio, tangible common equity to
tangible assets ratio and tangible book value per share, is
utilized by regulators and market analysts to evaluate a company’s
financial condition and therefore, such information is useful to
investors. These disclosures should not be viewed as a substitute
for financial results determined in accordance with GAAP, nor are
they necessarily comparable to non-GAAP performance measures which
may be presented by other companies. Because non-GAAP financial
measures are not standardized, it may not be possible to compare
these financial measures with other companies’ non-GAAP financial
measures having the same or similar names.
HarborOne Bancorp,
Inc.
Consolidated Balance Sheet
Trend
(Unaudited)
June 30,
March 31,
December 31,
September 30,
June 30,
(in thousands)
2023
2023
2022
2022
2022
Assets
Cash and due from banks
$
43,525
$
38,989
$
39,712
$
39,910
$
35,843
Short-term investments
209,326
210,765
58,305
46,044
48,495
Total cash and cash equivalents
252,851
249,754
98,017
85,954
84,338
Securities available for sale, at fair
value
292,012
303,059
301,149
304,852
334,398
Securities held to maturity, at amortized
cost
19,839
19,838
19,949
15,000
10,000
Federal Home Loan Bank stock, at cost
27,123
23,589
20,071
15,973
5,625
Asset held for sale
966
—
—
—
—
Loans held for sale, at fair value
20,949
13,956
18,544
18,805
31,679
Loans:
Commercial real estate
2,286,688
2,286,727
2,250,344
2,041,905
1,847,619
Commercial construction
228,902
212,689
199,311
185,062
158,762
Commercial and industrial
453,422
423,036
424,275
397,112
407,182
Total commercial loans
2,969,012
2,922,452
2,873,930
2,624,079
2,413,563
Residential real estate
1,701,766
1,667,934
1,634,319
1,520,809
1,423,074
Consumer
27,425
32,246
41,421
52,466
75,312
Loans
4,698,203
4,622,632
4,549,670
4,197,354
3,911,949
Less: Allowance for credit losses on
loans
(47,821
)
(46,994
)
(45,236
)
(44,621
)
(43,560
)
Net loans
4,650,382
4,575,638
4,504,434
4,152,733
3,868,389
Mortgage servicing rights, at fair
value
48,176
47,080
48,138
49,861
47,130
Goodwill
69,802
69,802
69,802
69,802
69,802
Other intangible assets
1,893
2,082
2,272
2,461
2,695
Other assets
275,261
268,060
277,169
272,202
249,988
Total assets
$
5,659,254
$
5,572,858
$
5,359,545
$
4,987,643
$
4,704,044
Liabilities and Stockholders'
Equity
Deposits:
Demand deposit accounts
$
717,572
$
726,548
$
762,576
$
795,945
$
775,154
NOW accounts
286,956
287,376
297,692
308,191
316,839
Regular savings and club accounts
1,390,906
1,455,318
1,468,172
1,289,825
1,282,913
Money market deposit accounts
834,120
796,008
861,704
889,517
885,673
Term certificate accounts
742,931
653,553
497,975
484,936
487,354
Brokered deposits
315,003
322,927
301,380
114,696
100,000
Total deposits
4,287,488
4,241,730
4,189,499
3,883,110
3,847,933
FHLB borrowings
604,568
590,665
400,675
345,684
105,693
Subordinated debt
34,348
34,317
34,285
34,254
34,222
Other liabilities and accrued expenses
137,318
106,352
118,110
113,225
91,718
Total liabilities
5,063,722
4,973,064
4,742,569
4,376,273
4,079,566
Common stock
597
597
596
593
593
Additional paid-in capital
484,544
483,831
483,031
480,617
479,519
Unearned compensation - ESOP
(26,704
)
(27,164
)
(27,623
)
(28,083
)
(28,542
)
Retained earnings
364,709
360,454
356,438
350,049
339,471
Treasury stock
(181,324
)
(175,514
)
(148,384
)
(143,125
)
(132,296
)
Accumulated other comprehensive loss
(46,290
)
(42,410
)
(47,082
)
(48,681
)
(34,267
)
Total stockholders' equity
595,532
599,794
616,976
611,370
624,478
Total liabilities and stockholders'
equity
$
5,659,254
$
5,572,858
$
5,359,545
$
4,987,643
$
4,704,044
HarborOne Bancorp,
Inc.
Consolidated Statements of Net
Income - Trend
(Unaudited)
Quarters Ended
June 30,
March 31,
December 31,
September 30,
June 30,
(in thousands, except share data)
2023
2023
2022
2022
2022
Interest and dividend income:
Interest and fees on loans
$
55,504
$
52,771
$
49,177
$
42,065
$
37,522
Interest on loans held for sale
326
286
334
377
331
Interest on securities
2,035
2,079
2,045
1,971
1,873
Other interest and dividend income
2,935
803
359
143
131
Total interest and dividend income
60,800
55,939
51,915
44,556
39,857
Interest expense:
Interest on deposits
20,062
15,913
8,499
3,491
2,019
Interest on FHLB and FRB borrowings
8,114
5,105
3,703
1,209
119
Interest on subordinated debentures
524
523
524
524
524
Total interest expense
28,700
21,541
12,726
5,224
2,662
Net interest and dividend income
32,100
34,398
39,189
39,332
37,195
Provision for credit losses
3,283
1,866
2,108
668
2,546
Net interest and dividend income, after
provision for credit losses
28,817
32,532
37,081
38,664
34,649
Noninterest income:
Mortgage banking income:
Gain on sale of mortgage loans
3,300
2,224
2,301
3,809
4,538
Changes in mortgage servicing rights fair
value
436
(1,692
)
(2,631
)
1,816
862
Other
2,312
2,216
2,325
2,453
2,612
Total mortgage banking income
6,048
2,748
1,995
8,078
8,012
Deposit account fees
5,012
4,733
5,031
4,870
4,892
Income on retirement plan annuities
128
119
118
119
112
Bank-owned life insurance income
511
500
501
503
494
Other income
963
590
2,255
675
593
Total noninterest income
12,662
8,690
9,900
14,245
14,103
Noninterest expenses:
Compensation and benefits
18,220
17,799
20,104
20,991
21,455
Occupancy and equipment
4,633
5,040
4,935
4,829
4,575
Data processing
2,403
2,346
2,359
2,311
2,259
Loan expense
417
313
169
355
385
Marketing
925
1,181
862
850
986
Professional fees
1,114
1,501
1,446
1,457
1,680
Deposit insurance
1,176
510
385
357
354
Other expenses
2,837
2,819
4,384
3,323
3,260
Total noninterest expenses
31,725
31,509
34,644
34,473
34,954
Income before income taxes
9,754
9,713
12,337
18,436
13,798
Income tax provision
2,275
2,416
2,760
4,678
3,811
Net income
$
7,479
$
7,297
$
9,577
$
13,758
$
9,987
Earnings per common share:
Basic
$
0.17
$
0.16
$
0.21
$
0.30
$
0.21
Diluted
$
0.17
$
0.16
$
0.21
$
0.30
$
0.21
Weighted average shares outstanding:
Basic
43,063,507
44,857,224
45,321,491
45,830,737
46,980,830
Diluted
43,133,455
45,284,240
45,861,658
46,420,527
47,536,033
HarborOne Bancorp,
Inc.
Consolidated Statements of Net
Income - Trend
(Unaudited)
For the Six Months Ended June
30,
(dollars in thousands, except share
data)
2023
2022
$ Change
% Change
Interest and dividend income:
Interest and fees on loans
$
108,275
$
71,098
$
37,177
52.3
%
Interest on loans held for sale
612
595
17
2.9
Interest on securities
4,114
3,574
540
15.1
Other interest and dividend income
3,738
192
3,546
1846.9
Total interest and dividend income
116,739
75,459
41,280
54.7
Interest expense:
Interest on deposits
35,975
3,640
32,335
888.3
Interest on FHLB and FRB borrowings
13,219
307
12,912
4205.9
Interest on subordinated debentures
1,047
1,047
—
0.0
Total interest expense
50,241
4,994
45,247
906.0
Net interest and dividend income
66,498
70,465
(3,967
)
(5.6
)
Provision for credit losses
5,149
2,884
2,265
78.5
Net interest and dividend income, after
provision for credit losses
61,349
67,581
(6,232
)
(9.2
)
Noninterest income:
Mortgage banking income:
Gain on sale of mortgage loans
5,524
9,860
(4,336
)
(44.0
)
Changes in mortgage servicing rights fair
value
(1,256
)
6,147
(7,403
)
(120.4
)
Other
4,528
5,170
(642
)
(12.4
)
Total mortgage banking income
8,796
21,177
(12,381
)
(58.5
)
Deposit account fees
9,745
9,364
381
4.1
Income on retirement plan annuities
247
219
28
12.8
Bank-owned life insurance income
1,011
977
34
3.5
Other income
1,553
1,427
126
8.8
Total noninterest income
21,352
33,164
(11,812
)
(35.6
)
Noninterest expenses:
Compensation and benefits
36,019
42,178
(6,159
)
(14.6
)
Occupancy and equipment
9,673
10,003
(330
)
(3.3
)
Data processing
4,749
4,500
249
5.5
Loan expense
730
863
(133
)
(15.4
)
Marketing
2,106
2,204
(98
)
(4.4
)
Professional fees
2,615
3,219
(604
)
(18.8
)
Deposit insurance
1,686
703
983
139.8
Other expenses
5,656
6,119
(463
)
(7.6
)
Total noninterest expenses
63,234
69,789
(6,555
)
(9.4
)
Income before income taxes
19,467
30,956
(11,489
)
(37.1
)
Income tax provision
4,691
8,702
(4,011
)
(46.1
)
Net income
$
14,776
$
22,254
$
(7,478
)
(33.6
)
%
Earnings per common share:
Basic
$
0.34
$
0.47
Diluted
$
0.33
$
0.46
Weighted average shares outstanding:
Basic
43,955,411
47,406,257
Diluted
44,203,893
48,110,863
HarborOne Bancorp,
Inc.
Average Balances /
Yields
(Unaudited)
Quarters Ended
June 30, 2023
March 31, 2023
June 30, 2022
Average
Average
Average
Outstanding
Yield/
Outstanding
Yield/
Outstanding
Yield/
Balance
Interest
Cost (8)
Balance
Interest
Cost (7)
Balance
Interest
Cost (7)
(dollars in thousands)
Interest-earning assets:
Investment securities (1)
$
381,762
$
2,035
2.14
%
$
387,303
$
2,079
2.18
%
$
391,448
$
1,873
1.92
%
Other interest-earning assets
238,891
2,935
4.93
63,426
803
5.13
64,678
131
0.81
Loans held for sale
19,614
326
6.67
18,108
286
6.41
29,474
331
4.51
Loans
Commercial loans (2)(3)
2,938,292
38,842
5.30
2,901,464
36,837
5.15
2,384,630
25,295
4.25
Residential real estate loans (3)(4)
1,682,860
16,456
3.92
1,647,109
15,616
3.85
1,330,772
11,182
3.37
Consumer loans (3)
29,025
419
5.79
36,310
519
5.80
88,943
1,045
4.71
Total loans
4,650,177
55,717
4.81
4,584,883
52,972
4.69
3,804,345
37,522
3.96
Total interest-earning assets
5,290,444
61,013
4.63
5,053,720
56,140
4.51
4,289,945
39,857
3.73
Noninterest-earning assets
305,132
313,309
311,998
Total assets
$
5,595,576
$
5,367,029
$
4,601,943
Interest-bearing liabilities:
Savings accounts
$
1,421,622
6,165
1.74
$
1,459,392
5,445
1.51
$
1,266,912
626
0.20
NOW accounts
280,501
59
0.08
275,801
36
0.05
311,241
38
0.05
Money market accounts
802,373
6,256
3.13
824,694
5,238
2.58
885,305
635
0.30
Certificates of deposit
708,087
5,273
2.99
552,636
2,685
1.97
484,484
670
0.55
Brokered deposits
281,614
2,309
3.29
330,426
2,509
3.08
100,000
50
0.20
Total interest-bearing deposits
3,494,197
20,062
2.30
3,442,949
15,913
1.87
3,047,942
2,019
0.27
FHLB and FRB borrowings
666,345
8,114
4.88
448,096
5,105
4.62
34,763
119
1.36
Subordinated debentures
34,331
524
6.12
34,298
523
6.18
34,207
524
6.14
Total borrowings
700,676
8,638
4.94
482,394
5,628
4.73
68,970
643
3.74
Total interest-bearing liabilities
4,194,873
28,700
2.74
3,925,343
21,541
2.23
3,116,912
2,662
0.34
Noninterest-bearing
liabilities:
Noninterest-bearing deposits
712,081
721,536
768,088
Other noninterest-bearing liabilities
88,363
101,820
75,186
Total liabilities
4,995,317
4,748,699
3,960,186
Total stockholders' equity
600,259
618,330
641,757
Total liabilities and stockholders'
equity
$
5,595,576
$
5,367,029
$
4,601,943
Tax equivalent net interest income
32,313
34,599
37,195
Tax equivalent interest rate spread
(5)
1.89
%
2.28
%
3.39
%
Less: tax equivalent adjustment
213
201
—
Net interest income as reported
$
32,100
$
34,398
$
37,195
Net interest-earning assets (6)
$
1,095,571
$
1,128,377
$
1,173,033
Net interest margin (7)
2.43
%
2.76
%
3.48
%
Tax equivalent effect
0.02
0.02
—
Net interest margin on a fully tax
equivalent basis
2.45
%
2.78
%
3.48
%
Ratio of interest-earning assets to
interest-bearing liabilities
126.12
%
128.75
%
137.63
%
Supplemental information:
Total deposits, including demand
deposits
$
4,206,278
$
20,062
$
4,164,485
$
15,913
$
3,816,030
$
2,019
Cost of total deposits
1.91
%
1.55
%
0.21
%
Total funding liabilities, including
demand deposits
$
4,906,954
$
28,700
$
4,646,879
$
21,541
$
3,885,000
$
2,662
Cost of total funding liabilities
2.35
%
1.88
%
0.27
%
(1) Includes securities available
for sale and securities held to maturity.
(2) Includes industrial revenue
bonds for the six months ended June 30, 2023. Interest income from
tax exempt loans is computed on a taxable equivalent basis using a
rate of 21%. The yield on commercial loans before tax equivalent
adjustment at June 30, 2023 was 5.20%.
(3) Includes nonaccruing loan
balances and interest received on such loans.
(4) Includes the basis
adjustments of certain loans included in fair value hedging
relationships.
(5) Net interest rate spread
represents the difference between the yield on average
interest-earning assets and the cost of average interest-bearing
liabilities.
(6) Net interest-earning assets
represents total interest-earning assets less total
interest-bearing liabilities.
(7) Net interest margin
represents net interest income divided by average total
interest-earning assets.
(8) Annualized.
HarborOne Bancorp,
Inc.
Average Balances /
Yields
(Unaudited)
For the Six Months
Ended
June 30, 2023
June 30, 2022
Average
Average
Outstanding
Yield/
Outstanding
Yield/
Balance
Interest
Cost (8)
Balance
Interest
Cost (8)
(dollars in thousands)
Interest-earning assets:
Investment securities (1)
$
384,517
$
4,114
2.16
%
$
392,401
$
3,574
1.84
%
Other interest-earning assets
151,644
3,738
4.97
107,386
192
0.36
Loans held for sale
18,865
612
6.54
29,657
595
4.05
Loans
Commercial loans (2)(3)
2,919,980
75,679
5.23
2,338,245
47,390
4.09
Residential real estate loans (3)(4)
1,665,083
32,072
3.88
1,276,041
21,324
3.37
Consumer loans (3)
32,647
938
5.79
103,512
2,384
4.64
Total loans
4,617,710
108,689
4.75
3,717,798
71,098
3.86
Total interest-earning assets
5,172,736
117,153
4.57
4,247,242
75,459
3.58
Noninterest-earning assets
309,198
319,362
Total assets
$
5,481,934
$
4,566,604
Interest-bearing liabilities:
Savings accounts
$
1,440,403
11,610
1.63
$
1,216,578
992
0.16
NOW accounts
278,164
95
0.07
306,287
74
0.05
Money market accounts
813,472
11,494
2.85
872,122
938
0.22
Certificates of deposit
630,791
7,958
2.54
503,243
1,399
0.56
Brokered deposits
305,885
4,818
3.18
100,000
237
0.48
Total interest-bearing deposits
3,468,715
35,975
2.09
2,998,230
3,640
0.24
FHLB and FRB borrowings
557,823
13,219
4.78
45,176
307
1.37
Subordinated debentures
34,315
1,047
6.15
34,190
1,047
6.18
Total borrowings
592,138
14,266
4.86
79,366
1,354
3.44
Total interest-bearing liabilities
4,060,853
50,241
2.49
3,077,596
4,994
0.33
Noninterest-bearing
liabilities:
Noninterest-bearing deposits
716,782
753,414
Other noninterest-bearing liabilities
95,054
80,943
Total liabilities
4,872,689
3,911,953
Total stockholders' equity
609,245
654,651
Total liabilities and stockholders'
equity
$
5,481,934
$
4,566,604
Tax equivalent net interest income
66,912
70,465
Tax equivalent interest rate spread
(5)
2.08
%
3.25
%
Less: tax equivalent adjustment
414
—
Net interest income as reported
$
66,498
$
70,465
Net interest-earning assets (6)
$
1,111,883
$
1,169,646
Net interest margin (7)
2.59
%
3.35
%
Tax equivalent effect
0.02
—
Net interest margin on a fully tax
equivalent basis
2.61
%
3.35
%
Ratio of interest-earning assets to
interest-bearing liabilities
127.38
%
138.01
%
Supplemental information:
Total deposits, including demand
deposits
$
4,185,497
$
35,975
$
3,751,644
$
3,640
Cost of total deposits
1.73
%
0.20
%
Total funding liabilities, including
demand deposits
$
4,777,635
$
50,241
$
3,831,010
$
4,994
Cost of total funding liabilities
2.12
%
0.26
%
(1) Includes securities available
for sale and securities held to maturity.
(2) Includes industrial revenue
bonds for the six months ended June 30, 2023. Interest income from
tax exempt loans is computed on a taxable equivalent basis using a
rate of 21%. The yield on commercial loans before tax equivalent
adjustment at June 30, 2023 was 5.20%.
(3) Includes nonaccruing loan
balances and interest received on such loans.
(4) Includes the basis
adjustments of certain loans included in fair value hedging
relationships.
(5) Net interest rate spread
represents the difference between the yield on average
interest-earning assets and the cost of average interest-bearing
liabilities.
(6) Net interest-earning assets
represents total interest-earning assets less total
interest-bearing liabilities.
(7) Net interest margin
represents net interest income divided by average total
interest-earning assets.
(8) Annualized.
HarborOne Bancorp, Inc.
Average Balances and Yield
Trend
(Unaudited)
Average Balances - Trend -
Quarters Ended
June 30, 2023
March 31, 2023
December 31, 2022
September 30, 2022
June 30, 2022
(in thousands)
Interest-earning assets:
Investment securities (1)
$
381,762
$
387,303
$
388,247
$
390,577
$
391,448
Other interest-earning assets
238,891
63,426
42,640
27,723
64,678
Loans held for sale
19,614
18,108
22,350
28,046
29,474
Loans
Commercial loans (2)(3)
2,938,292
2,901,464
2,770,667
2,522,359
2,384,630
Residential real estate loans (3)(4)
1,682,860
1,647,109
1,566,389
1,470,305
1,330,772
Consumer loans (3)
29,025
36,310
45,629
63,220
88,943
Total loans
4,650,177
4,584,883
4,382,685
4,055,884
3,804,345
Total interest-earning assets
5,290,444
5,053,720
4,835,922
4,502,230
4,289,945
Noninterest-earning assets
305,132
313,309
311,372
308,734
311,998
Total assets
$
5,595,576
$
5,367,029
$
5,147,294
$
4,810,964
$
4,601,943
Interest-bearing liabilities:
Savings accounts
$
1,421,622
$
1,459,392
$
1,408,493
$
1,293,598
$
1,266,912
NOW accounts
280,501
275,801
291,890
305,777
311,241
Money market accounts
802,373
824,694
878,609
893,452
885,305
Certificates of deposit
708,087
552,636
487,121
486,923
484,484
Brokered deposits
281,614
330,426
148,460
102,875
100,000
Total interest-bearing deposits
3,494,197
3,442,949
3,214,573
3,082,625
3,047,942
FHLB and FRB borrowings
666,345
448,096
392,508
196,036
34,763
Subordinated debentures
34,331
34,298
34,268
34,237
34,207
Total borrowings
700,676
482,394
426,776
230,273
68,970
Total interest-bearing liabilities
4,194,873
3,925,343
3,641,349
3,312,898
3,116,912
Noninterest-bearing
liabilities:
Noninterest-bearing deposits
712,081
721,536
788,572
789,214
768,088
Other noninterest-bearing liabilities
88,363
101,820
101,621
80,304
75,186
Total liabilities
4,995,317
4,748,699
4,531,542
4,182,416
3,960,186
Total stockholders' equity
600,259
618,330
615,752
628,548
641,757
Total liabilities and stockholders'
equity
$
5,595,576
$
5,367,029
$
5,147,294
$
4,810,964
$
4,601,943
Annualized Yield Trend -
Quarters Ended
June 30, 2023
March 31, 2023
December 31, 2022
September 30, 2022
June 30, 2022
Interest-earning assets:
Investment securities (1)
2.14
%
2.18
%
2.09
%
2.00
%
1.92
%
Other interest-earning assets
4.93
%
5.13
%
3.34
%
2.05
%
0.81
%
Loans held for sale
6.67
%
6.41
%
5.93
%
5.33
%
4.51
%
Commercial loans (2)(3)
5.30
%
5.15
%
4.92
%
4.45
%
4.25
%
Residential real estate loans (3)(4)
3.92
%
3.85
%
3.64
%
3.50
%
3.37
%
Consumer loans (3)
5.79
%
5.80
%
5.50
%
4.99
%
4.71
%
Total loans
4.81
%
4.69
%
4.47
%
4.11
%
3.96
%
Total interest-earning assets
4.63
%
4.51
%
4.27
%
3.93
%
3.73
%
Interest-bearing liabilities:
Savings accounts
1.74
%
1.51
%
1.01
%
0.37
%
0.20
%
NOW accounts
0.08
%
0.05
%
0.05
%
0.05
%
0.05
%
Money market accounts
3.13
%
2.58
%
1.50
%
0.61
%
0.30
%
Certificates of deposit
2.99
%
1.97
%
0.86
%
0.64
%
0.55
%
Brokered deposits
3.29
%
3.08
%
1.32
%
0.27
%
0.20
%
Total interest-bearing deposits
2.30
%
1.87
%
1.05
%
0.45
%
0.27
%
FHLB and FRB borrowings
4.88
%
4.62
%
3.74
%
2.45
%
1.36
%
Subordinated debentures
6.12
%
6.18
%
6.07
%
6.07
%
6.14
%
Total borrowings
4.94
%
4.73
%
3.93
%
2.99
%
3.74
%
Total interest-bearing liabilities
2.74
%
2.23
%
1.39
%
0.63
%
0.34
%
(1) Includes securities available
for sale and securities held to maturity.
(2) Includes industrial revenue
bonds for the quarters ended March 31, 2023 and December 31, 2022.
Interest income from tax exempt loans is computed on a taxable
equivalent basis using a rate of 21% for the quarters presented.
The yield on commercial loans before tax equivalent adjustment at
March 31, 2023 and December 31, 2022 was 5.12% and 4.90%,
respectively.
(3) Includes nonaccruing loan
balances and interest received on such loans.
(4) Includes the basis
adjustments of certain loans included in fair value hedging
relationships.
HarborOne Bancorp,
Inc.
Selected Financial
Highlights
(Unaudited)
Quarters Ended
June 30,
March 31,
December 31,
September 30,
June 30,
Performance Ratios
(annualized):
2023
2023
2022
2022
2022
(dollars in thousands)
Return on average assets (ROAA)
0.54
%
0.54
%
0.74
%
1.14
%
0.87
%
Return on average equity (ROAE)
4.98
%
4.72
%
6.22
%
8.76
%
6.22
%
Total noninterest expense
$
31,725
$
31,509
$
34,644
$
34,473
$
34,954
Less: Amortization of other intangible
assets
189
189
189
235
235
Total adjusted noninterest expense
$
31,536
$
31,320
$
34,455
$
34,238
$
34,719
Net interest and dividend income
$
32,100
$
34,398
$
39,189
$
39,332
$
37,195
Total noninterest income
12,662
8,690
9,900
14,245
14,103
Total revenue
$
44,762
$
43,088
$
49,089
$
53,577
$
51,298
Efficiency ratio (1)
70.45
%
72.69
%
70.19
%
63.90
%
67.68
%
(1) This non-GAAP measure
represents adjusted noninterest expense divided by total
revenue
At or for the Quarters
Ended
June 30,
March 31,
December 31,
September 30,
June 30,
Asset Quality
2023
2023
2022
2022
2022
(dollars in thousands)
Total nonperforming assets
$
20,210
$
12,300
$
14,840
$
23,367
$
24,441
Nonperforming assets to total assets
0.36
%
0.22
%
0.28
%
0.47
%
0.52
%
Allowance for credit losses on loans to
total loans
1.02
%
1.02
%
0.99
%
1.06
%
1.11
%
Net charge-offs (recoveries)
$
2,671
$
(11
)
$
2,067
$
(799
)
$
(504
)
Annualized net charge-offs
(recoveries)/average loans
0.23
%
—
%
0.19
%
(0.08
)
%
(0.05
)
%
Allowance for credit losses on loans to
nonperforming loans
236.62
%
383.50
%
305.93
%
191.60
%
178.41
%
HarborOne Bancorp,
Inc.
Selected Financial
Highlights
(Unaudited)
Quarters Ended
June 30,
March 31,
December 31,
September 30,
June 30,
Capital and Share Related
2023
2023
2022
2022
2022
(dollars in thousands, except share
data)
Common stock outstanding
46,575,478
47,063,087
48,961,452
49,202,660
49,989,007
Book value per share
$
12.79
$
12.74
$
12.60
$
12.43
$
12.49
Tangible common equity:
Total stockholders' equity
$
595,532
$
599,794
$
616,976
$
611,370
$
624,478
Less: Goodwill
69,802
69,802
69,802
69,802
69,802
Less: Other intangible assets (1)
1,893
2,082
2,272
2,461
2,695
Tangible common equity
$
523,837
$
527,910
$
544,902
$
539,107
$
551,981
Tangible book value per share (2)
$
11.25
$
11.22
$
11.13
$
10.96
$
11.04
Tangible assets:
Total assets
$
5,659,254
$
5,572,858
$
5,359,545
$
4,987,643
$
4,704,044
Less: Goodwill
69,802
69,802
69,802
69,802
69,802
Less: Other intangible assets
1,893
2,082
2,272
2,461
2,695
Tangible assets
$
5,587,559
$
5,500,974
$
5,287,471
$
4,915,380
$
4,631,547
Tangible common equity / tangible assets
(3)
9.38
%
9.60
%
10.31
%
10.97
%
11.92
%
(1) Other intangible assets are
core deposit intangibles.
(2) This non-GAAP ratio is total
stockholders' equity less goodwill and intangible assets divided by
common stock outstanding.
(3) This non-GAAP ratio is total
stockholders' equity less goodwill and intangible assets to total
assets less goodwill and intangible assets.
HarborOne Bancorp,
Inc.
Segments Statements of Net
Income
(Unaudited)
HarborOne Mortgage
HarborOne Bank
For the Quarter Ended
For the Quarter Ended
June 30,
March 31,
June 30,
June 30,
March 31,
June 30,
2023
2023
2022
2023
2023
2022
(in thousands)
Net interest and dividend income
$
120
$
327
$
411
$
32,490
$
34,562
$
37,246
Provision for credit losses
—
—
—
3,283
1,866
2,546
Net interest and dividend income, after
provision for credit losses
120
327
411
29,207
32,696
34,700
Mortgage banking income:
Gain on sale of mortgage loans
3,300
2,224
4,538
—
—
—
Intersegment gain (loss)
90
454
1,097
(358
)
(348
)
(1,095
)
Changes in mortgage servicing rights fair
value
407
(1,556
)
735
29
(136
)
127
Other
2,117
2,015
2,393
195
201
219
Total mortgage banking income (loss)
5,914
3,137
8,763
(134
)
(283
)
(749
)
Other noninterest income
—
—
7
6,614
5,942
6,084
Total noninterest income
5,914
3,137
8,770
6,480
5,659
5,335
Noninterest expense
5,493
5,322
7,242
26,193
26,190
27,131
Income (loss) before income taxes
541
(1,858
)
1,939
9,494
12,165
12,904
Provision (benefit) for income taxes
232
(565
)
549
2,193
3,115
3,550
Net income (loss)
$
309
$
(1,293
)
$
1,390
$
7,301
$
9,050
$
9,354
HarborOne Mortgage
HarborOne Bank
For the Six Months
Ended
For the Six Months
Ended
June 30,
June 30,
June 30,
June 30,
2023
2022
2023
2022
(in thousands)
Net interest and dividend income
$
447
$
761
$
67,052
$
70,670
Provision for credit losses
—
—
5,149
2,884
Net interest and dividend income, after
provision for credit losses
447
761
61,903
67,786
Mortgage banking income:
Gain on sale of mortgage loans
5,524
9,860
—
—
Intersegment gain (loss)
544
1,934
(706
)
(1,703
)
Changes in mortgage servicing rights fair
value
(1,149
)
5,430
(107
)
717
Other
4,132
4,718
396
452
Total mortgage banking income (loss)
9,051
21,942
(417
)
(534
)
Other noninterest income
—
16
12,556
11,971
Total noninterest income
9,051
21,958
12,139
11,437
Noninterest expense
10,815
15,003
52,383
53,956
(Loss) income before income taxes
(1,317
)
7,716
21,659
25,267
(Benefit) provision for income taxes
(333
)
2,090
5,308
7,107
Net (loss) income
$
(984
)
$
5,626
$
16,351
$
18,160
Category: Earnings Release
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230724349614/en/
Linda Simmons, EVP, CFO 508-895-1000
lsimmons@harborone.com
HarborOne Bancorp (NASDAQ:HONE)
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HarborOne Bancorp (NASDAQ:HONE)
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