HarborOne Bancorp, Inc. (the “Company” or “HarborOne”)
(NASDAQ:HONE), the holding company for HarborOne Bank (the “Bank”),
announced net income of $12.3 million, or $0.24 per diluted share,
for the third quarter of 2021, compared to $14.3 million, or $0.27
per diluted share, for the preceding quarter and $11.9 million, or
$0.22 per diluted share, for the same period last year. For the
nine months ended September 30, 2021, net income was $45.9 million,
or $0.88 per diluted share, compared to $27.2 million, or $0.50 per
diluted share, for the same period last year.
Selected Third Quarter Financial Highlights:
- Commercial loan growth of $52.8 million, or 2.6%, excluding
U.S. Small Business Administration Paycheck Protection Program
(“PPP”) loans.
- Recorded a reversal of provision of $1.6 million, reflecting
continued positive pandemic and economic trends.
- Second share repurchase program completed at an average cost of
$14.09 per share, third share repurchase program approved.
- Cost of funds continue to decline, decreasing 4 basis
points.
“We continue to make steady progress against our plan despite
market challenges including an ultra-competitive rate environment,
tight labor market, and the ongoing impact of COVID-19. I’m
incredibly proud of our team for continuing to deliver in these
tough times,” said Jim Blake, CEO. “We’re very excited with our
recently announced expansion into Brighton, Brookline, and
Cambridge as we continue to make investments in building out our
greater Boston footprint. We look forward to the opportunities this
expansion will provide for our customers and the business,” added
Joe Casey, President and COO.
Net Interest Income The Company’s net interest and
dividend income was $32.8 million for the quarter ended September
30, 2021, up $273,000, or 0.8%, from $32.5 million for the quarter
ended June 30, 2021 and up $1.6 million, or 5.2%, from $31.2
million for the quarter ended September 30, 2020. The tax
equivalent interest rate spread and net interest margin were 2.97%
and 3.08%, respectively, for the quarter ended September 30, 2021,
compared to 2.93% and 3.06%, respectively, for the quarter ended
June 30, 2021, and 2.87% and 3.09%, respectively, for the quarter
ended September 30, 2020. Net interest margin and the tax
equivalent interest rate spread continue to be impacted by low
interest rates, elevated loan prepayments, and the recognition of
deferred fees on PPP loan forgiveness. The continued favorable
repricing of deposits was partially offset by the decrease in the
yield on interest-earning assets. Additionally, effective September
30, 2021, $20.0 million in Federal Home Loan Bank of Boston
(“FHLB”) borrowings with an average cost of 3.5% were prepaid, with
a penalty of $1.1 million included in noninterest expense. Although
interest rates may begin to rise moving into 2022, the positive
impact of the recognition of deferred loan fees on PPP loan
forgiveness will diminish, resulting in continued margin
pressure.
The quarter-over-quarter increase in net interest and dividend
income included a decrease of $79,000, or 0.2%, in total interest
and dividend income and a decrease of $352,000, or 10.5%, in total
interest expense. The decrease in total interest and dividend
income primarily reflected a $31.0 million decrease in average
interest-earning assets and a 2-basis point decrease in the yield
on average interest-earning assets. The yield on loans was 3.91%
for the quarter ended September 30, 2021, down from 4.00% for the
quarter ended June 30, 2021, as new loan originations have lower
interest rates. The yield on loans continues to be impacted by the
recognition of deferred fees due to PPP loan forgiveness, accretion
income and prepayment penalties, although the recent uptick in
rates is expected to lessen the impact from these yield adjustments
in the future. The three months ended September 30, 2021 and June
30, 2021 include the recognition of deferred fees on PPP loans in
the amount of $1.9 million and $1.3 million, respectively. Most of
the remaining $2.1 million in deferred PPP loan fees are expected
to be recognized in the fourth quarter of 2021 as the loans are
forgiven. Interest on loans in the third quarter included $675,000
in accretion income from the fair value discount on loans acquired
in connection with the merger with Coastway Bancorp, Inc. and
$436,000 in prepayment penalties on commercial loans. Accretion
income and prepayment penalties in the preceding quarter were $1.0
million and $244,000, respectively.
The quarter-over-quarter decrease in total interest expense
primarily reflected a decrease in interest rates, resulting in a
4-basis point decrease in the cost of interest-bearing deposits.
The mix of deposits continues to shift as customers move to more
liquid options. The average balance of certificate of deposit
accounts decreased quarter over quarter by $19.4 million, while the
average balance of non-certificate accounts increased $49.0 million
from the preceding quarter. Average FHLB advances decreased $12.4
million, and the cost of those funds decreased 17 basis points,
resulting in a decrease of $100,000 in interest expense on FHLB
borrowings.
The increase in net interest and dividend income from the prior
year quarter reflected a decrease of $2.9 million, or 48.9%, in
total interest expense, partially offset by a $1.2 million, or
3.3%, decrease in total interest and dividend income. The decreases
reflect rate and volume changes in both interest-bearing assets and
liabilities. The cost of interest-bearing liabilities decreased 41
basis points while the average balance increased $110.2 million.
The yield on interest-earning assets decreased 31 basis points
while the average balance increased $212.6 million.
Noninterest Income Total noninterest income increased
$307,000, or 1.4%, to $22.0 million for the quarter ended September
30, 2021, from $21.7 million for the quarter ended June 30, 2021.
Mortgage loan demand remained strong; although refinancing activity
continued to slow, purchase originations increased. Mortgage loan
closings of $604.9 million resulted in a gain on loan sales of
$12.8 million for the quarter ended September 30, 2021, as compared
to $638.8 million in mortgage closings and $14.3 million in gain on
sales for the preceding quarter. The locked residential mortgage
pipeline decreased $125.9 million and negatively impacted the fair
value of the derivative mortgage commitments recorded through the
gain on loan sales. The change in the fair value of derivatives
included in mortgage banking income was a negative $833,000 for the
three months ended September 30, 2021 as compared to a negative
$5.3 million for the three months ended June 30, 2021.
The net impact to mortgage servicing rights values was a
decrease of $992,000 and $2.6 million for the three months ended
September 30, 2021 and June 30, 2021, respectively. The change in
the fair value of mortgage servicing rights positively impacted
mortgage banking income; however, it was offset by the impact of
residential mortgage loan payoffs. The fair value of the mortgage
servicing rights increased $621,000 for the three months ended
September 30, 2021, as compared to a $1.1 million decrease for the
three months ended June 30, 2021. The 10-year Treasury Constant
Maturity rate increased 7 basis points in the third quarter of 2021
and decreased 29 basis points in the second quarter of 2021. The
change in the fair value of the mortgage servicing rights is
generally consistent with the change in the 10-year Treasury
Constant Maturity rate. As interest rates rise and prepayment
speeds slow, mortgage servicing rights values tend to increase;
conversely, as interest rates fall and prepayment speeds quicken
mortgage servicing rights values tend to decrease. The negative
impact on mortgage servicing rights when rates fall in the future
may be muted, as mortgage servicing rights originated during the
second half of 2020 were at historically low rates. Residential
mortgage loan payoffs resulted in a decrease of mortgage servicing
rights values in the amount of $1.6 million and $1.5 million for
the three months ended September 30, 2021 and June 30, 2021,
respectively.
Deposit account fees increased $112,000, or 2.5%, to $4.7
million for the quarter ended September 30, 2021, from $4.5 million
for the quarter ended June 30, 2021.
Total noninterest income decreased $22.4 million, or 50.5%, as
compared to the quarter ended September 30, 2020, primarily due to
a $22.5 million, or 59.0%, decrease in mortgage banking income,
driven by the decrease in loan closings and narrowing gain-on-sale
margins in 2021. The decrease in mortgage banking income was offset
by a $1.2 million increase in deposit account fees as deposit fees
were reinstated in 2021.
Noninterest Expense Total noninterest expenses were $39.3
million for the quarter ended September 30, 2021, an increase of
$676,000, or 1.8%, from the quarter ended June 30, 2021, primarily
driven by the $1.1 million prepayment penalty on Federal Home Loan
Bank borrowings, partially offset by a $386,000 decrease in
compensation and benefits and a $73,000 decrease in loan expense.
Both decreases reflect the decrease in residential mortgage loan
closings at HarborOne Mortgage, LLC (“HarborOne Mortgage”). During
the third quarter, HarborOne Mortgage closed its New Jersey office,
as management continues to respond to declining mortgage
origination volume with strategic expense reduction.
Total noninterest expenses decreased $6.4 million, or 14.1%,
from the quarter ended September 30, 2020. Compensation and
benefits decreased $5.1 million and loan expenses decreased $1.8
million, consistent with the decrease in residential mortgage loan
closings.
Income Tax Provision The effective tax rate was 28.6% for
the quarter ended September 30, 2021, compared to 28.3% for the
quarter ended June 30, 2021 and 27.7% for the quarter ended
September 30, 2020.
Provision for Loan Losses and Asset Quality The Company
recorded a reversal of provision for loan losses of $1.6 million
for the quarter ended September 30, 2021, compared to a reversal of
provision of $4.3 million for the quarter ended June 30, 2021 and a
provision for loan losses of $13.5 million for the quarter ended
September 30, 2020. The allowance for loan losses was $48.0
million, or 1.39% of total loans at September 30, 2021, compared to
$51.3 million, or 1.50% of total loans at June 30, 2021 and $49.2
million, or 1.40% of total loans at September 30, 2020. Changes in
the provision for loan losses are based on management’s assessment
of loan portfolio growth and composition changes, historical
charge-off trends, and ongoing evaluation of credit quality and
current economic conditions.
The provision for loan losses for the quarter ended September
30, 2021 included adjustments for our quarterly analysis of our
historical and peer loss experience rates, commercial and
residential loan growth, and a $5.0 million specific reserve on one
commercial real estate credit. These items, combined with
adjustments for positive economic and pandemic trends of $4.8
million, resulted in a $1.6 million negative provision. The
provision for loan losses for the quarter ended June 30, 2021
included adjustments based on our quarterly analysis of our
historical and peer loss experience rates, commercial real estate
loan growth, an increase of general reserve allocation on jumbo
residential mortgage loans and a $1.5 million specific reserve on
one commercial credit. Positive economic and pandemic trends also
resulted in a $6.4 million negative provision for COVID-19. The
provision for loan losses for the quarter ended September 30, 2020
included adjustments for our quarterly analysis of our historical
and peer loss experience rates, commercial real estate loan growth,
and a $10.7 million provision directly related to the estimate of
inherent losses resulting from the impact of the COVID-19
pandemic.
In estimating the provision for the COVID-19 pandemic,
management considered economic factors, including unemployment
rates and the interest rate environment, the volume and dollar
amount of requests for payment deferrals, and the loan risk profile
of each loan type. Positive economic trends, vaccination rates, and
COVID-19 cases, low delinquency levels, and status of deferred
loans resulted in management reducing the provision related to the
COVID-19 pandemic in the third quarter of 2021 with a reversal of
provision of $4.8 million. Similar trends resulted in management
reducing provisions related to the COVID-19 pandemic in the second
quarter of 2021 with a reversal of provision of $6.4 million.
Management continues to evaluate our loan portfolio,
particularly the commercial loan portfolio, in light of current
economic conditions, the mitigating effects of government stimulus,
and loan modification efforts designed to limit the long-term
impacts of the COVID-19 pandemic. Our commercial loan portfolio is
diversified across many sectors and is largely secured by
commercial real estate loans, which make up 73.5% of the total
commercial loan portfolio. Management initially identified six
sectors as the most susceptible to increased credit risk as a
result of the COVID-19 pandemic: retail, office space, hotels,
health and social services, restaurants, and recreation. In the
second quarter of 2021, as part of ongoing monitoring of the
at-risk sectors, management determined that the health and social
services sector no longer presents an additional risk from the
impact of the COVID-19 pandemic as borrowers in this sector have
returned to pre-pandemic revenue and profitability levels. Health
and social services operations supported by first-round PPP loans
have a 100% forgiveness rate. Further, over the last eight
quarters, the sector has experienced a positive migration in
obligor risk ratings and no watch or substandard credits, and
delinquency in the sector is currently zero. The total loan
portfolio of the remaining five commercial sectors identified as at
risk totaled $751.0 million at September 30, 2021, which represents
35.1% of the commercial loan portfolio. The five currently
identified at-risk sectors include $630.4 million in commercial
real estate loans, $75.8 million in commercial and industrial
loans, and $44.8 million in commercial construction loans.
Non-performing loans included in the at-risk sectors amounted to
$18.3 million at September 30, 2021, of which $9.1 million was
included in the hotels sector and $8.8 million was included in the
office sector.
As of September 30, 2021, the retail sector was $266.8 million,
or 12.5% of total commercial loans, and included $219.3 million in
commercial real estate loans, $28.9 million in commercial and
industrial loans, and $18.6 million in commercial construction
loans. There are no active deferrals for loans in this sector or
PPP loans. We originated $6.0 million loans during the third
quarter that are within the retail sector.
As of September 30, 2021, the office space sector was $214.2
million, or 10.0% of total commercial loans, and included $199.3
million in commercial real estate loans, $14.0 million in
commercial and industrial loans, and $854,000 in commercial
construction loans. There are no active deferrals for loans and one
expired deferral, in the amount of $515,000 is delinquent and on
nonaccrual. No PPP loans were originated in this sector. We
originated $1.4 million loans during the third quarter that are
within the office space sector and there were $4.5 million in
advances on existing loans. The Bank is the lead bank in a
commercial real estate credit secured by office space that was
downgraded and placed on nonaccrual during the third quarter of
2021. The Bank’s portion of this credit has a recorded net book
value of $8.8 million, and a specific reserve of $5.0 million was
recorded.
As of September 30, 2021, the hotel sector was $193.7 million,
or 9.1% of total commercial loans, and included $182.6 million in
commercial real estate loans, $2.0 million in commercial and
industrial loans, and $9.0 million in commercial construction
loans. PPP loans included in the sector totaled $31,000. Active
deferrals for loans in this sector had outstanding principal
balances of $7.7 million, and one loan with an outstanding
principal balance of $242,000 had an expired deferral period and is
greater than 30 days delinquent. At September 30, 2021,
nonperforming loans included in the hotel sector amount to $9.1
million. The non-accrual loan amounted to $9.1 million with a
deferral period that expired in the third quarter of 2021, however
it was determined in the fourth quarter of 2020 that weaknesses in
the borrower’s credit warranted a downgrade to substandard and
nonaccrual status. A specific reserve of $1.8 million has been
allocated to this loan. The Bank is receiving payments of interest
only on its pro rata share of the loan in accordance with a
forbearance agreement, in part through a non-revolving line of
credit provided solely by the lead bank. The Bank sold a
nonperforming loan that was included in the hotel sector in the
third quarter of 2021. The loan had a $3.3 million net book value
at the time of sale and total a charge-offs on the credit amounted
to $1.3 million, $157,000 of which was taken in the third quarter
of 2021.
As of September 30, 2021, the restaurant sector amounted to
$57.9 million, or 2.7% of total commercial loans, including
$313,000 in PPP loans. There were no active deferrals in this
sector and expired deferrals are paying as expected. The recreation
sector amounted to $18.5 million, or 0.9% of total commercial
loans, including $3,000 in PPP loans. There are no active deferrals
for loans in this sector and expired deferrals are paying as
expected.
We provided access to the PPP to both our existing customers and
new customers, to ensure small businesses in the communities we
serve have access to this important lifeline for their businesses.
No PPP loans were originated in the third quarter and forgiveness
was processed on $50.9 million loans. We have processed forgiveness
on approximately 98% of PPP loans executed in 2020, with a success
rate above 99%, and we have processed forgiveness on approximately
50% of the PPP loans executed in 2021. As of September 30, 2021,
outstanding PPP loans amounted to $54.3 million and there was $2.1
million in deferred processing fee income. We expect to complete
the forgiveness process on most of the remaining PPP loans by year
end.
We are also working with commercial loan customers that may need
payment deferrals or other accommodations to keep their loans out
of default through the COVID-19 pandemic. As of September 30, 2021,
we have two active payment deferrals on commercial loans with a
total principal balance of $7.7 million, or 0.4% of total
commercial loans, both of which are loans included in an at-risk
sector. As of September 30, 2021, 96.8% of the commercial deferrals
have expired and the borrower is making payments as agreed, 0.3% of
the commercial deferrals have expired and the borrower is
delinquent, and 2.9% are in active deferral period. The active
commercial deferrals are scheduled to expire during 2021. We are no
longer providing deferrals under the Coronavirus Aid Relief and
Economic Security Act but continue to consider accommodations in
the normal course of business.
The residential loan and consumer loan portfolios have not
experienced significant credit quality deterioration as of
September 30, 2021; however, the continuing impact and uncertain
nature of the COVID-19 pandemic may result in increases in
delinquencies, charge-offs and loan modifications in these
portfolios through the remainder of 2021. As of September 30, 2021,
we had one active payment deferrals on residential mortgage loans
with a total principal balance of $177, 000. As of September 30,
2021, 97.8% of the deferrals have expired and are paying as agreed,
1.8% have expired and are delinquent and 0.5% are in active
deferral periods. We have no active payment deferrals on consumer
loans and 98.4% of the consumer loan deferrals have expired and are
paying as agreed. Requests for additional extensions on residential
mortgage loans and consumer loans were not significant as of
September 30, 2021.
Net charges-offs totaled $1.7 million for the quarter ended
September 30, 2021, or 0.19% of average loans outstanding on an
annualized basis. During the third quarter, there was a $1.5
million charge-off on a single credit previously reserved for in
the second quarter of 2021. Net recoveries totaled $175,000, or
0.02% of average loans outstanding on an annualized basis, for the
quarter ended June 30, 2021 and net charge-offs totaled $338,000,
or 0.04% of average loans outstanding on an annualized basis, for
the quarter ended September 30, 2020.
Credit quality performance has remained strong with total
nonperforming assets of $36.5 million at September 30, 2021,
compared to $32.7 million at June 30, 2021 and $41.0 million at
September 30, 2020. Nonperforming assets as a percentage of total
assets were 0.80% at September 30, 2021, 0.71% at June 30, 2021,
and 0.93% at September 30, 2020. During the third quarter of 2021,
a nonperforming commercial real estate loan with a $3.3 million net
book value was sold and a charge-off of $157,000 was recorded. As
noted above, a commercial real estate credit secured by office
space was downgraded and placed on nonaccrual. The Bank’s 56%
portion has a recorded net book value of $8.8 million and a
specific reserve of $5.0 million was recorded in the third
quarter.
Balance Sheet Total assets decreased $49.3 million, or
1.1%, to $4.57 billion at September 30, 2021 from $4.62 billion at
June 30, 2021. The decrease primarily reflects a decrease of $97.3
million in short-term investments and a $26.8 million decrease in
loans held for sale, partially offset by increases of $41.3 million
in net loans and $36.7 million in securities available for sale.
Short-term investments were used to pay down FHLB borrowings and
purchase securities available for sale.
Net loans increased $41.3 million, or 1.2%, to $3.41 billion at
September 30, 2021 from $3.37 billion at June 30, 2021. The net
increase in loans for the three months ended September 30, 2021 was
primarily due to increases in residential mortgage loans of $64.3
million commercial construction loans of $45.1 million and
commercial real estate loans of $11.4 million, partially offset by
decreases in commercial and industrial loans of $52.7 million and
consumer loans of $30.2 million. The decrease in commercial and
industrial loans is primarily due to forgiveness of PPP loans
during the quarter. Excluding the change in PPP loans, total
commercial loans increased $52.8 million, primarily due to an
increase in commercial construction loans. The allowance for loan
losses was $48.0 million at September 30, 2021 and $51.3 million at
June 30, 2021, the change primarily reflecting a negative $1.6
million provision for loan losses and $1.7 million in net loan
charge-offs recorded in the third quarter.
Total deposits was $3.69 billion at September 30, 2021 and June
30, 2021. Compared to the prior quarter, non-certificate accounts
increased $28.8 million and term certificate accounts decreased
$22.7 million. FHLB borrowings decreased $31.8 million, or 36.3%,
to $55.7 million at September 30, 2021 from $87.5 million at June
30, 2021. During the third quarter FHLB borrowings of $20.0 million
were prepaid resulting in a $1.1 million prepayment penalty.
As previously announced, the Bank has agreed to acquire the
leases to four East Boston Savings Bank branches being divested as
part of the acquisition of East Boston Savings Bank by Rockland
Trust Company. The transaction is subject to a number of
contingencies and is expected to close by the end of the year. The
Bank also agreed to acquire the branches’ furniture, fixtures, and
equipment, and expects to add approximately 19 new employees to
staff the branches. The new branches are located in Brighton,
Cambridge, and Brookline, Massachusetts. The average leased space
is approximately 1300 square feet and the leases generally have
initial terms of 10 years with one or more year option terms. The
initial terms expire in 6-10 years. The Bank also transferred a
former branch property into assets held for sale at a carrying
value of $881,000.
Total stockholders’ equity was $680.0 million at September 30,
2021, compared to $705.5 million at June 30, 2021 and $694.1
million at September 30, 2020. During the third quarter, the
Company announced and completed a share repurchase program adopted
April 16, 2021, repurchasing 2,790,903 shares of the Company’s
common stock at an average cost of $14.09 per share. The Company
adopted a third share repurchase program on September 17, 2021 to
repurchase up to 2,668,159 shares of the Company’s common stock, or
approximately 5% of the Company’s outstanding shares. The Company
has not repurchased any shares under the third share repurchase
program as of September 30, 2021. The tangible common equity to
tangible assets ratio was 13.50% at September 30, 2021, 13.91% at
June 30, 2021, and 14.23% at September 30, 2020. At September 30,
2021, the Company and the Bank had strong capital positions and
exceeded all regulatory capital requirements.
About HarborOne Bancorp, Inc. HarborOne Bancorp, Inc. is
the holding company for HarborOne Bank, a Massachusetts-chartered
savings bank. HarborOne Bank serves the financial needs of
consumers, businesses, and municipalities throughout Eastern
Massachusetts and Rhode Island through a network of 27 full-service
branches located in Massachusetts and Rhode Island, and a
commercial lending office in each of Boston, Massachusetts and
Providence, Rhode Island. The Bank also provides a range of
educational services through “HarborOne U,” with classes on small
business, financial literacy and personal enrichment at two
campuses located adjacent to our Brockton and Mansfield locations.
HarborOne Mortgage, LLC, a subsidiary of HarborOne Bank, is a
full-service mortgage lender with more than 30 offices in
Massachusetts, Rhode Island, New Hampshire, and Maine, and is
licensed to lend in six additional states.
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,
the negative impacts and disruptions of the COVID-19 pandemic and
the measures taken to contain its spread on our employees,
customers, business operations, credit quality, financial position,
liquidity and results of operations; changes in general business
and economic conditions 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; 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; operational risks including, but not
limited to, cybersecurity incidents, fraud, natural disasters, and
future pandemics; changes in regulation; reputational risk relating
to the Company’s participation in the Paycheck Protection Program
and other pandemic-related legislative and regulatory initiatives
and programs; 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 tax equivalent basis
for yields, 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)
September 30,
June 30,
March 31,
December 31,
September 30,
(in thousands)
2021
2021
2021
2020
2020
Assets
Cash and due from banks
$
42,589
$
41,328
$
37,074
$
31,777
$
29,180
Short-term investments
277,050
374,319
281,451
174,093
108,338
Total cash and cash equivalents
319,639
415,647
318,525
205,870
137,518
Securities available for sale, at fair
value
390,552
353,848
304,168
276,498
280,308
Federal Home Loan Bank stock, at cost
6,828
7,241
7,572
8,738
11,631
Asset held for sale
881
—
—
—
—
Loans held for sale, at fair value
77,052
103,886
210,494
208,612
190,373
Loans:
Commercial real estate
1,573,284
1,561,873
1,559,056
1,551,265
1,380,071
Commercial construction
152,685
107,585
112,187
99,331
211,953
Commercial and industrial
414,814
467,479
499,728
464,393
480,129
Total commercial loans
2,140,783
2,136,937
2,170,971
2,114,989
2,072,153
Residential real estate
1,160,689
1,096,370
1,062,229
1,105,823
1,130,935
Consumer
156,272
186,430
228,279
273,830
312,743
Loans
3,457,744
3,419,737
3,461,479
3,494,642
3,515,831
Less: Allowance for loan losses
(47,988
)
(51,273
)
(55,384
)
(55,395
)
(49,223
)
Net loans
3,409,756
3,368,464
3,406,095
3,439,247
3,466,608
Mortgage servicing rights, at fair
value
36,540
35,955
33,939
24,833
20,159
Goodwill
69,802
69,802
69,802
69,802
69,802
Other intangible assets
3,399
3,723
4,047
4,370
4,694
Other assets
252,645
257,856
251,316
245,645
247,226
Total assets
$
4,567,094
$
4,616,422
$
4,605,958
$
4,483,615
$
4,428,319
Liabilities and Stockholders'
Equity
Deposits:
Demand deposit accounts
$
756,917
$
800,118
$
777,959
$
689,672
$
650,336
NOW accounts
300,577
250,099
224,869
218,584
202,020
Regular savings and club accounts
1,144,595
1,123,123
1,113,450
998,994
912,017
Money market deposit accounts
832,441
832,006
861,867
866,661
815,644
Term certificate accounts
659,850
682,594
696,438
732,298
785,871
Total deposits
3,694,380
3,687,940
3,674,583
3,506,209
3,365,888
Short-term borrowed funds
—
—
—
35,000
95,000
Long-term borrowed funds
55,720
87,479
97,488
114,097
141,106
Subordinated debt
34,128
34,096
34,064
34,033
34,002
Other liabilities and accrued expenses
102,834
101,436
101,750
97,962
98,220
Total liabilities
3,887,062
3,910,951
3,907,885
3,787,301
3,734,216
Common stock
585
585
585
584
584
Additional paid-in capital
468,526
467,194
465,832
464,176
463,531
Unearned compensation - ESOP
(29,921
)
(30,380
)
(30,840
)
(31,299
)
(31,759
)
Retained earnings
315,683
305,831
294,116
277,312
261,304
Treasury stock
(73,723
)
(38,588
)
(31,460
)
(16,644
)
(1,333
)
Accumulated other comprehensive income
(loss)
(1,118
)
829
(160
)
2,185
1,776
Total stockholders' equity
680,032
705,471
698,073
696,314
694,103
Total liabilities and stockholders'
equity
$
4,567,094
$
4,616,422
$
4,605,958
$
4,483,615
$
4,428,319
HarborOne Bancorp,
Inc.
Consolidated Statements of Net
Income - Trend
(Unaudited)
Quarters Ended
September 30,
June 30,
March 31,
December 31,
September 30,
(in thousands, except share data)
2021
2021
2021
2020
2020
Interest and dividend income:
Interest and fees on loans
$
33,680
$
34,106
$
33,860
$
35,274
$
34,496
Interest on loans held for sale
665
852
1,324
1,267
1,060
Interest on securities
1,293
793
585
1,064
1,317
Other interest and dividend income
170
136
78
115
175
Total interest and dividend income
35,808
35,887
35,847
37,720
37,048
Interest expense:
Interest on deposits
2,050
2,302
2,720
3,775
4,520
Interest on FHLB borrowings
431
531
552
671
835
Interest on subordinated debentures
524
524
523
524
524
Total interest expense
3,005
3,357
3,795
4,970
5,879
Net interest and dividend income
32,803
32,530
32,052
32,750
31,169
Provision (credit) for loan losses
(1,627
)
(4,286
)
91
7,608
13,454
Net interest and dividend income, after
provision for loan losses
34,430
36,816
31,961
25,142
17,715
Noninterest income:
Mortgage banking income:
Gain on sale of mortgage loans
12,756
14,262
24,802
28,274
34,055
Changes in mortgage servicing rights fair
value
(992
)
(2,552
)
3,409
(1,041
)
(193
)
Other
3,882
4,075
4,515
4,522
4,259
Total mortgage banking income
15,646
15,785
32,726
31,755
38,121
Deposit account fees
4,658
4,546
3,852
3,667
3,451
Income on retirement plan annuities
108
106
104
106
104
Gain on sale and call of securities,
net
241
—
—
—
—
Bank-owned life insurance income
515
508
493
550
560
Other income
842
758
634
949
2,203
Total noninterest income
22,010
21,703
37,809
37,027
44,439
Noninterest expenses:
Compensation and benefits
24,760
25,146
27,454
27,122
29,839
Occupancy and equipment
4,765
4,702
5,256
4,545
4,581
Data processing
2,205
2,362
2,343
2,235
2,119
Loan expense
1,323
1,250
2,435
2,689
3,167
Marketing
880
831
813
640
817
Professional fees
1,362
1,487
1,583
1,252
1,458
Deposit insurance
341
332
320
320
310
Prepayment penalties on Federal Home Loan
Bank advances
1,095
—
—
—
—
Other expenses
2,543
2,488
2,598
2,483
3,409
Total noninterest expenses
39,274
38,598
42,802
41,286
45,700
Income before income taxes
17,166
19,921
26,968
20,883
16,454
Income tax provision
4,907
5,645
7,576
3,283
4,561
Net income
$
12,259
$
14,276
$
19,392
$
17,600
$
11,893
Earnings per common share:
Basic
$
0.25
$
0.28
$
0.37
$
0.33
$
0.22
Diluted
$
0.24
$
0.27
$
0.37
$
0.33
$
0.22
Weighted average shares outstanding:
Basic
49,801,123
51,778,293
52,537,409
53,947,868
54,465,339
Diluted
50,663,415
52,650,071
53,000,830
53,973,737
54,465,339
HarborOne Bancorp,
Inc.
Consolidated Statements of Net
Income
(Unaudited)
For the Nine Months Ended
September 30,
(dollars in thousands, except share
data)
2021
2020
$ Change
% Change
Interest and dividend income:
Interest and fees on loans
$
101,646
$
102,491
$
(845
)
(0.8
)%
Interest on loans held for sale
2,841
2,625
216
8.2
Interest on securities
2,671
4,549
(1,878
)
(41.3
)
Other interest and dividend income
384
1,173
(789
)
(67.3
)
Total interest and dividend income
107,542
110,838
(3,296
)
(3.0
)
Interest expense:
Interest on deposits
7,072
19,018
(11,946
)
(62.8
)
Interest on FHLB borrowings
1,514
2,933
(1,419
)
(48.4
)
Interest on subordinated debentures
1,571
1,571
—
0.0
Total interest expense
10,157
23,522
(13,365
)
(56.8
)
Net interest and dividend income
97,385
87,316
10,069
11.5
Provision (credit) for loan losses
(5,822
)
27,207
(33,029
)
(121.4
)
Net interest and dividend income, after
provision for loan losses
103,207
60,109
43,098
71.7
Noninterest income:
Mortgage banking income:
Gain on sale of mortgage loans
51,820
77,195
(25,375
)
(32.9
)
Changes in mortgage servicing rights fair
value
(135
)
(5,691
)
5,556
97.6
Other
12,472
10,962
1,510
13.8
Total mortgage banking income
64,157
82,466
(18,309
)
(22.2
)
Deposit account fees
13,056
10,351
2,705
26.1
Income on retirement plan annuities
318
308
10
3.2
Gain on sale and call of securities,
net
241
2,533
(2,292
)
(90.5
)
Bank-owned life insurance income
1,516
1,665
(149
)
(8.9
)
Other income
2,234
4,642
(2,408
)
(51.9
)
Total noninterest income
81,522
101,965
(20,443
)
(20.0
)
Noninterest expenses:
Compensation and benefits
77,360
78,493
(1,133
)
(1.4
)
Occupancy and equipment
14,723
13,296
1,427
10.7
Data processing
6,910
6,576
334
5.1
Loan expense
5,008
7,433
(2,425
)
(32.6
)
Marketing
2,524
2,750
(226
)
(8.2
)
Professional fees
4,432
4,204
228
5.4
Deposit insurance
993
860
133
15.5
Prepayment penalties on Federal Home Loan
Bank advances
1,095
—
1,095
100.0
Other expenses
7,629
11,336
(3,707
)
(32.7
)
Total noninterest expenses
120,674
124,948
(4,274
)
(3.4
)
Income before income taxes
64,055
37,126
26,929
72.5
Income tax provision
18,128
9,934
8,194
82.5
Net income
$
45,927
$
27,192
$
18,735
68.9
%
Earnings per common share:
Basic
$
0.89
$
0.50
Diluted
$
0.88
$
0.50
Weighted average shares outstanding:
Basic
51,362,252
54,436,090
Diluted
52,094,749
54,436,090
HarborOne Bancorp,
Inc.
Average Balances /
Yields
(Unaudited)
Quarters Ended
September 30, 2021
June 30, 2021
September 30, 2020
Average
Average
Average
Outstanding
Yield/
Outstanding
Yield/
Outstanding
Yield/
Balance
Interest
Cost (6)
Balance
Interest
Cost (6)
Balance
Interest
Cost (6)
(dollars in thousands)
Interest-earning assets:
Investment securities (1)
$
358,927
$
1,293
1.43
%
$
325,205
$
793
0.98
%
$
269,477
$
1,319
1.95
%
Other interest-earning assets
372,892
170
0.18
397,979
136
0.14
121,384
175
0.57
Loans held for sale
84,399
665
3.13
115,240
852
2.97
139,418
1,060
3.02
Loans
Commercial loans (2)
2,121,432
22,394
4.19
2,152,105
22,079
4.11
2,017,492
19,066
3.76
Residential real estate loans (2)
1,121,898
9,352
3.31
1,064,481
9,747
3.67
1,135,947
11,833
4.14
Consumer loans (2)
170,366
1,934
4.50
205,856
2,280
4.44
333,623
3,597
4.29
Total loans
3,413,696
33,680
3.91
3,422,442
34,106
4.00
3,487,062
34,496
3.94
Total interest-earning assets
4,229,914
35,808
3.36
4,260,866
35,887
3.38
4,017,341
37,050
3.67
Noninterest-earning assets
347,060
339,438
333,444
Total assets
$
4,576,974
$
4,600,304
$
4,350,785
Interest-bearing liabilities:
Savings accounts
$
1,136,131
365
0.13
$
1,118,494
461
0.17
$
897,751
589
0.26
NOW accounts
283,725
45
0.06
231,075
41
0.07
199,982
39
0.08
Money market accounts
832,340
392
0.19
853,586
417
0.20
825,732
745
0.36
Certificates of deposit
570,570
1,087
0.76
589,964
1,229
0.84
684,002
2,895
1.68
Brokered deposits
100,000
161
0.64
100,000
154
0.62
139,887
252
0.72
Total interest-bearing deposits
2,922,766
2,050
0.28
2,893,119
2,302
0.32
2,747,354
4,520
0.65
FHLB advances
84,438
431
2.03
96,823
531
2.20
149,750
835
2.22
Subordinated debentures
34,111
524
6.09
34,080
524
6.17
33,983
524
6.13
Total borrowings
118,549
955
3.20
130,903
1,055
3.23
183,733
1,359
2.94
Total interest-bearing liabilities
3,041,315
3,005
0.39
3,024,022
3,357
0.45
2,931,087
5,879
0.80
Noninterest-bearing
liabilities:
Noninterest-bearing deposits
756,927
784,521
641,353
Other noninterest-bearing liabilities
90,366
88,577
89,319
Total liabilities
3,888,608
3,897,120
3,661,759
Total stockholders' equity
688,366
703,184
689,026
Total liabilities and stockholders'
equity
$
4,576,974
$
4,600,304
$
4,350,785
Tax equivalent net interest income
32,803
32,530
31,171
Tax equivalent interest rate spread
(3)
2.97
%
2.93
%
2.87
%
Less: tax equivalent adjustment
—
—
2
Net interest income as reported
$
32,803
$
32,530
$
31,169
Net interest-earning assets (4)
$
1,188,599
$
1,236,844
$
1,086,254
Net interest margin (5)
3.08
%
3.06
%
3.09
%
Tax equivalent effect
—
—
—
Net interest margin on a fully tax
equivalent basis
3.08
%
3.06
%
3.09
%
Average interest-earning assets to average
interest-bearing liabilities
139.08
%
140.90
%
137.06
%
Supplemental information:
Total deposits, including demand
deposits
$
3,679,693
$
2,050
$
3,677,640
$
2,302
$
3,388,707
$
4,520
Cost of total deposits
0.22
%
0.25
%
0.53
%
Total funding liabilities, including
demand deposits
$
3,798,242
$
3,005
$
3,808,543
$
3,357
$
3,572,440
$
5,879
Cost of total funding liabilities
0.31
%
0.35
%
0.65
%
(1) Includes securities available for
sale. Interest income from tax exempt securities is computed
on a taxable equivalent basis using a tax rate of 21% for the
quarters presented. The yield on investments before tax
equivalent adjustments for the quarter ended September 30, 2020 was
1.95%.
(2) Includes nonaccruing loan balances and
interest received on such loans.
(3) Tax equivalent interest rate spread
represents the difference between the yield on average
interest-earning assets and the cost of average interest-bearing
liabilities.
(4) Net interest-earning assets represents
total interest-earning assets less total interest-bearing
liabilities.
(5) Net interest margin represents net
interest income divided by average total interest-earning
assets.
(6) Annualized.
HarborOne Bancorp,
Inc.
Average Balances /
Yields
(Unaudited)
Nine Months Ended
September 30, 2021
September 30, 2020
Average
Average
Outstanding
Yield/
Outstanding
Yield/
Balance
Interest
Cost
Balance
Interest
Cost
(dollars in thousands)
Interest-earning assets:
Investment securities (1)
$
318,817
$
2,671
1.12
%
$
261,740
$
4,571
2.33
%
Other interest-earning assets
317,837
384
0.16
176,745
1,173
0.89
Loans held for sale
130,622
2,841
2.91
106,790
2,625
3.28
Loans
Commercial loans (2)
2,144,726
65,253
4.07
1,846,462
55,385
4.01
Residential real estate loans (2)
1,090,361
29,439
3.61
1,120,065
35,188
4.20
Consumer loans (2)
209,443
6,954
4.44
373,809
11,918
4.26
Total loans
3,444,530
101,646
3.95
3,340,336
102,491
4.10
Total interest-earning assets
4,211,806
107,542
3.41
3,885,611
110,860
3.81
Noninterest-earning assets
338,980
327,385
Total assets
$
4,550,786
$
4,212,996
Interest-bearing liabilities:
Savings accounts
$
1,104,765
1,363
0.16
$
809,106
2,721
0.45
NOW accounts
242,623
123
0.07
182,146
103
0.08
Money market accounts
849,041
1,369
0.22
829,263
4,535
0.73
Certificates of deposit
589,404
3,760
0.85
736,355
10,724
1.95
Brokered deposits
100,000
457
0.61
99,739
935
1.25
Total interest-bearing deposits
2,885,833
7,072
0.33
2,656,609
19,018
0.96
FHLB advances
94,482
1,514
2.14
216,333
2,933
1.81
Subordinated debentures
34,080
1,571
6.16
33,951
1,571
6.18
Total borrowings
128,562
3,085
3.21
250,284
4,504
2.40
Total interest-bearing liabilities
3,014,395
10,157
0.45
2,906,893
23,522
1.08
Noninterest-bearing
liabilities:
Noninterest-bearing deposits
749,426
549,233
Other noninterest-bearing liabilities
90,763
76,660
Total liabilities
3,854,584
3,532,786
Total stockholders' equity
696,202
680,210
Total liabilities and stockholders'
equity
$
4,550,786
$
4,212,996
Tax equivalent net interest income
97,385
87,338
Tax equivalent interest rate spread
(3)
2.96
%
2.73
%
Less: tax equivalent adjustment
—
22
Net interest income as reported
$
97,385
$
87,316
Net interest-earning assets (4)
$
1,197,411
$
978,718
Net interest margin (5)
3.09
%
3.00
%
Tax equivalent effect
—
—
Net interest margin on a fully tax
equivalent basis
3.09
%
3.00
%
Average interest-earning assets to average
interest-bearing liabilities
139.72
%
133.67
%
Supplemental information:
Total deposits, including demand
deposits
$
3,635,259
$
7,072
$
3,205,842
$
19,018
Cost of total deposits
0.26
%
0.79
%
Total funding liabilities, including
demand deposits
$
3,763,821
$
10,157
$
3,456,126
$
23,522
Cost of total funding liabilities
0.36
%
0.91
%
(1) Interest income from tax exempt
securities is computed on a tax equivalent basis using a tax rate
of 21%. The yield on investments before tax equivalent
adjustments was 2.32% for the six months ended September 30,
2020.
(2) Includes nonaccruing loan balances and
interest received on such loans.
(3) Tax equivalent interest rate spread
represents the difference between the yield on average
interest-earning assets and the cost of average interest-bearing
liabilities.
(4) Net interest-earning assets represents
total interest-earning assets less total interest-bearing
liabilities.
(5) Net interest margin represents net
interest income divided by average total interest-earning
assets.
HarborOne Bancorp,
Inc.
Average Balances and Yield
Trend
(Unaudited)
Average Balances - Trend -
Quarters Ended
September 30, 2021
June 30, 2021
March 31, 2021
December 31, 2020
September 30, 2020
(in thousands)
Interest-earning assets:
Investment securities (1)
$
358,927
$
325,205
$
271,357
$
271,511
$
269,477
Other interest-earning assets
372,892
397,979
180,526
84,969
121,384
Loans held for sale
84,399
115,240
193,426
178,980
139,418
Loans
Commercial loans (2)
2,121,432
2,152,105
2,161,076
2,112,377
2,017,492
Residential real estate loans (2)
1,121,898
1,064,481
1,084,292
1,106,286
1,135,947
Consumer loans (2)
170,366
205,856
253,014
292,665
333,623
Total loans
3,413,696
3,422,442
3,498,382
3,511,328
3,487,062
Total interest-earning assets
4,229,914
4,260,866
4,143,691
4,046,788
4,017,341
Noninterest-earning assets
347,060
339,438
330,257
317,663
333,444
Total assets
$
4,576,974
$
4,600,304
$
4,473,948
$
4,364,451
$
4,350,785
Interest-bearing liabilities:
Savings accounts
$
1,136,131
$
1,118,494
$
1,058,820
$
968,766
$
897,751
NOW accounts
283,725
231,075
212,282
205,845
199,982
Money market accounts
832,340
853,586
861,518
840,674
825,732
Certificates of deposit
570,570
589,964
608,089
649,919
684,002
Brokered deposits
100,000
100,000
100,000
109,788
139,887
Total interest-bearing deposits
2,922,766
2,893,119
2,840,709
2,774,992
2,747,354
FHLB advances
84,438
96,823
102,383
119,763
149,750
Subordinated debentures
34,111
34,080
34,048
34,015
33,983
Total borrowings
118,549
130,903
136,431
153,778
183,733
Total interest-bearing liabilities
3,041,315
3,024,022
2,977,140
2,928,770
2,931,087
Noninterest-bearing
liabilities:
Noninterest-bearing deposits
756,927
784,521
706,274
656,227
641,353
Other noninterest-bearing liabilities
90,366
88,577
93,380
84,387
89,319
Total liabilities
3,888,608
3,897,120
3,776,794
3,669,384
3,661,759
Total stockholders' equity
688,366
703,184
697,154
695,067
689,026
Total liabilities and stockholders'
equity
$
4,576,974
$
4,600,304
$
4,473,948
$
4,364,451
$
4,350,785
Annualized Yield Trend -
Quarters Ended
September 30, 2021
June 30, 2021
March 31, 2021
December 31, 2020
September 30, 2020
Interest-earning assets:
Investment securities (1)
1.43
%
0.98
%
0.87
%
1.56
%
1.95
%
Other interest-earning assets
0.18
%
0.14
%
0.18
%
0.54
%
0.57
%
Loans held for sale
3.13
%
2.97
%
2.78
%
2.82
%
3.02
%
Commercial loans (2)
4.19
%
4.11
%
3.90
%
3.92
%
3.76
%
Residential real estate loans (2)
3.31
%
3.67
%
3.87
%
4.04
%
4.14
%
Consumer loans (2)
4.50
%
4.44
%
4.39
%
4.36
%
4.29
%
Total loans
3.91
%
4.00
%
3.93
%
4.00
%
3.94
%
Total interest-earning assets
3.36
%
3.38
%
3.51
%
3.71
%
3.67
%
Interest-bearing liabilities:
Savings accounts
0.13
%
0.17
%
0.21
%
0.26
%
0.26
%
NOW accounts
0.06
%
0.07
%
0.07
%
0.08
%
0.08
%
Money market accounts
0.19
%
0.20
%
0.26
%
0.34
%
0.36
%
Certificates of deposit
0.76
%
0.84
%
0.96
%
1.35
%
1.68
%
Brokered deposits
0.64
%
0.62
%
0.58
%
0.72
%
0.72
%
Total interest-bearing deposits
0.28
%
0.32
%
0.39
%
0.54
%
0.65
%
FHLB advances
2.03
%
2.20
%
2.19
%
2.23
%
2.22
%
Subordinated debentures
6.09
%
6.17
%
6.23
%
6.13
%
6.13
%
Total borrowings
3.20
%
3.23
%
3.20
%
3.09
%
2.94
%
Total interest-bearing liabilities
0.39
%
0.45
%
0.52
%
0.68
%
0.80
%
(1) Includes securities available for sale
and securities held to maturity.
(2) Includes nonaccruing loan balances and
interest received on such loans.
HarborOne Bancorp,
Inc.
Selected Financial
Highlights
(Unaudited)
Quarters Ended
September 30,
June 30,
March 31,
December 31,
September 30,
Performance Ratios
(annualized):
2021
2021
2021
2020
2020
(dollars in thousands)
Return on average assets (ROAA)
1.07
%
1.24
%
1.73
%
1.61
%
1.09
%
Return on average equity (ROAE)
7.12
%
8.12
%
11.13
%
10.13
%
6.90
%
Total noninterest expense
$
39,274
$
38,598
$
42,802
$
41,286
$
45,700
Less: Amortization of other intangible
assets
324
324
324
324
447
Total adjusted noninterest expense
$
38,950
$
38,274
$
42,478
$
40,962
$
45,253
Net interest and dividend income
$
32,803
$
32,530
$
32,052
$
32,750
$
31,169
Total noninterest income
22,010
21,703
37,809
37,027
44,439
Total revenue
$
54,813
$
54,233
$
69,861
$
69,777
$
75,608
Efficiency ratio (1)
71.06
%
70.57
%
60.80
%
58.70
%
59.85
%
(1) This non-GAAP measure represents
adjusted noninterest expense divided by total revenue
At or for the Quarters
Ended
September 30,
June 30,
March 31,
December 31,
September 30,
Asset Quality
2021
2021
2021
2020
2020
(dollars in thousands)
Total nonperforming assets
$
36,514
$
32,732
$
32,886
$
34,696
$
40,925
Nonperforming assets to total assets
0.80
%
0.71
%
0.71
%
0.77
%
0.93
%
Allowance for loan losses to total
loans
1.39
%
1.50
%
1.60
%
1.59
%
1.40
%
Net charge-offs
$
1,658
$
(175
)
$
102
$
1,436
$
338
Annualized net charge-offs/average
loans
0.19
%
(0.02
)%
0.01
%
0.16
%
0.04
%
Allowance for loan losses to nonperforming
loans
131.50
%
158.10
%
171.20
%
162.40
%
122.86
%
HarborOne Bancorp,
Inc.
Selected Financial
Highlights
(Unaudited)
September 30,
June 30,
March 31,
December 31,
September 30,
Capital and Share Related
2021
2021
2021
2020
2020
(dollars in thousands, except share
data)
Common stock outstanding
53,232,110
55,735,623
56,228,762
57,205,458
58,342,464
Book value per share
$
12.77
$
12.66
$
12.41
$
12.17
$
11.90
Tangible common equity:
Total stockholders' equity
$
680,032
$
705,471
$
698,073
$
696,314
$
694,103
Less: Goodwill
69,802
69,802
69,802
69,802
69,802
Less: Other intangible assets (1)
3,399
3,723
4,047
4,370
4,694
Tangible common equity
$
606,831
$
631,946
$
624,224
$
622,142
$
619,607
Tangible book value per share (2)
$
11.40
$
11.34
$
11.10
$
10.88
$
10.62
Tangible assets:
Total assets
$
4,567,094
$
4,616,422
$
4,605,958
$
4,483,615
$
4,428,319
Less: Goodwill
69,802
69,802
69,802
69,802
69,802
Less: Other intangible assets
3,399
3,723
4,047
4,370
4,694
Tangible assets
$
4,493,893
$
4,542,897
$
4,532,109
$
4,409,443
$
4,353,823
Tangible common equity / tangible assets
(3)
13.50
%
13.91
%
13.77
%
14.11
%
14.23
%
(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
September 30,
June 30,
September 30,
September 30,
June 30,
September 30,
2021
2021
2020
2021
2021
2020
(in thousands)
Net interest and dividend income
$
792
$
855
$
1,000
$
32,494
$
32,134
$
30,599
Provision for loan losses
—
—
—
(1,627
)
(4,286
)
13,454
Net interest and dividend income, after
provision for loan losses
792
855
1,000
34,121
36,420
17,145
Mortgage banking income:
Gain on sale of mortgage loans
12,756
14,262
34,055
—
—
—
Intersegment gain (loss)
2,366
910
645
(1,373
)
(910
)
(645
)
Changes in mortgage servicing rights fair
value
(918
)
(2,133
)
161
(74
)
(419
)
(354
)
Other
3,619
3,799
3,924
263
276
334
Total mortgage banking income (loss)
17,823
16,838
38,785
(1,184
)
(1,053
)
(665
)
Other noninterest income (loss)
25
20
(8
)
6,339
5,898
6,326
Total noninterest income
17,848
16,858
38,777
5,155
4,845
5,661
Noninterest expense
12,387
14,101
19,133
26,570
24,128
26,300
Income before income taxes
6,253
3,612
20,644
12,706
17,137
(3,494
)
Provision for income taxes
1,559
1,013
4,550
3,575
4,863
571
Net income
$
4,694
$
2,599
$
16,094
$
9,131
$
12,274
$
(4,065
)
HarborOne Mortgage
HarborOne Bank
For the Nine Months
Ended
For the Nine Months
Ended
September 30,
September 30,
September 30,
September 30,
2021
2020
2021
2020
(in thousands)
Net interest and dividend income
$
2,897
$
2,020
$
95,876
$
86,248
Provision for loan losses
—
—
(5,822
)
27,207
Net interest and dividend income, after
provision for loan losses
2,897
2,020
101,698
59,041
Mortgage banking income:
Gain on sale of mortgage loans
51,820
77,195
—
—
Intersegment gain (loss)
3,938
2,444
(2,945
)
(2,444
)
Changes in mortgage servicing rights fair
value
72
(3,677
)
(207
)
(2,014
)
Other
11,633
9,619
839
1,031
Total mortgage banking income (loss)
67,463
85,581
(2,313
)
(3,427
)
Other noninterest income (loss)
37
(141
)
17,328
19,640
Total noninterest income
67,500
85,440
15,015
16,213
Noninterest expense
44,545
47,923
75,161
75,806
Income before income taxes
25,852
39,537
41,552
(552
)
Provision (benefit) for income taxes
6,905
8,667
11,873
2,199
Net income
$
18,947
$
30,870
$
29,679
$
(2,751
)
HarborOne Bancorp,
Inc.
COVID Loans at Risk as of
September 30, 2021
(Unaudited)
At Risk Sectors
Percent
Total
at risk
at risk
Total
sector
Retail
Office Space
Hotels
Restaurants
Recreation
sectors
loans
to total
(dollars in thousands)
Commercial real estate
$
219,299
$
199,329
$
182,622
$
14,498
$
14,630
$
630,378
$
1,573,284
40.1
%
Commercial and industrial
28,858
14,009
2,022
27,073
3,835
75,797
414,814
18.3
Commercial construction
18,605
854
9,040
16,284
—
44,783
152,685
29.3
Total
$
266,762
$
214,192
$
193,684
$
57,855
$
18,465
$
750,958
$
2,140,783
35.1
%
Outstanding principal, active commercial
deferrals
$
—
$
—
$
7,740
$
—
$
—
$
7,740
$
2,140,783
0.4
%
Outstanding principal, expired and
delinquent commercial deferrals
$
—
$
515
$
242
$
—
$
—
$
757
$
2,140,783
0.0
%
PPP loans, net of fees
$
—
$
—
$
31
$
313
$
3
$
347
$
52,143
0.7
%
Nonaccrual loans
$
387
$
8,843
$
9,061
$
30
$
—
$
18,321
$
36,486
50.2
%
% Active
deferrals to
Deferrals
Deferrals
Total
total
expired &
expired &
Active
Total
outstanding
outstanding
(dollars in thousands)
paying
delinquent
deferrals
deferrals
loans
loans
#
$
#
$
#
$
#
$
Commercial real estate
61
$
222,393
1
$
515
2
$
7,740
64
$
230,648
$
1,573,284
0.5
%
Commercial and industrial
83
37,944
2
261
—
—
85
38,205
414,814
—
Commercial construction
—
—
—
—
—
—
—
—
152,685
—
Total commercial loans
144
$
260,337
3
$
776
2
$
7,740
149
$
268,853
$
2,140,783
0.4
%
1-4 Family
125
$
34,721
3
$
452
1
$
177
129
$
35,350
$
993,726
0.0
%
Home Equity
12
772
4
184
—
—
16
956
135,146
—
Residential construction
—
—
—
—
—
—
—
—
31,817
—
Total residential real estate
137
$
35,493
7
$
636
1
$
177
145
$
36,306
$
1,160,689
0.0
%
Consumer
311
$
7,068
6
$
112
—
$
—
317
$
7,180
$
156,272
—
Total loans
592
$
302,898
16
$
1,524
3
$
7,917
611
$
312,339
$
3,457,744
0.2
%
HarborOne Bancorp,
Inc.
COVID Loans at Risk as of
September 30, 2021
(Unaudited)
Active deferrals expiring by
quarter
(dollars in thousands)
12/31/2021
3/31/2022
6/30/2022
9/30/2022
Total
Commercial real estate
$
7,740
$
—
$
—
$
—
$
7,740
Commercial and industrial
—
—
—
—
—
Commercial construction
—
—
—
—
—
Total commercial loans
$
7,740
$
—
$
—
$
—
$
7,740
1-4 Family
$
177
$
—
$
—
$
—
$
177
Home equity
—
—
—
—
—
Residential construction
—
—
—
—
—
Total residential real estate
$
177
$
—
$
—
$
—
$
177
Consumer
$
—
$
—
$
—
$
—
$
—
Total loans
$
7,917
$
—
$
—
$
—
$
7,917
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211026005765/en/
Linda Simmons, EVP, CFO 508 895-1379
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