HarborOne Bancorp, Inc. (the “Company” or “HarborOne”) (NASDAQ:
HONE), the holding company for HarborOne Bank (the “Bank”),
announced net income of $10.0 million, or $0.21 per basic and
diluted share, for the second quarter of 2022, compared to net
income of $12.3 million, or $0.25 per diluted share, for the
preceding quarter and $14.3 million, or $0.27 per diluted share,
for the same period last year.
Selected Second Quarter Financial Highlights:
- Return on average assets was 0.87%, and return on average
equity was 6.22%.
- Loan growth of $174.6 million, or 4.7%.
- Core deposit growth of $96.3 million, or 3.0%.
- Net interest margin increased 27 basis points to 3.48%.
- Continued share repurchase program.
“HarborOne had a solid quarter of growth in loans, deposits, and
margin, with a continued focus on strong credit quality in the
first half of the year,” said Joseph Casey, President and CEO. He
added: “While mortgage banking saw a significant decline in
origination volume and gain on sale margin, our mortgage banking
team has identified over $1.0 million in expense savings to
commence during the third quarter.”
Net Interest Income
The Company’s net interest and dividend income was $37.2 million
for the quarter ended June 30, 2022, up $3.9 million, or 11.8%,
from $33.3 million for the quarter ended March 31, 2022, and up
$4.7 million, or 14.3%, from $32.5 million for the quarter ended
June 30, 2021. The tax equivalent interest rate spread and net
interest margin were 3.38% and 3.48%, respectively, for the quarter
ended June 30, 2022, compared to 3.12% and 3.21%, respectively, for
the quarter ended March 31, 2022, and 2.93% and 3.06%,
respectively, for the quarter ended June 30, 2021. On a
linked-quarter basis, the increase in net interest and dividend
income primarily reflects increased yields on loans and investments
primarily due to rate increases and prepayment penalties on
commercial loan payoffs, partially offset by decreases in fees
recognized in connection with U.S. Small Business Administration
Paycheck Protection Program (“PPP”) loans and higher rates on
deposits. The cost of funds was 27 basis points for the quarter
ended June 30, 2022, compared to 25 basis points in the preceding
quarter.
The $4.3 million increase in total interest and dividend income
on a linked-quarter basis reflected a 30 basis-point increase in
the yield on interest-earning assets. The yield on loans increased
21 basis points, from 3.75% to 3.96%. Interest on loans in the
second quarter included $1.1 million in prepayment penalties on
commercial loans and $353,000 in accretion income from the fair
value discount on loans acquired in connection with the merger with
Coastway Bancorp, Inc. Prepayment penalties and accretion income in
the preceding quarter were $305,000 and $284,000, respectively. The
three months ended June 30, 2022 and March 31, 2022 include the
recognition of deferred fees on PPP loans in the amount of $368,000
and $487,000, respectively. The yield on investments increased 17
basis points, from, 1.75% to 1.92%.
The increase in net interest and dividend income from the prior
year quarter reflects an increase of $4.0 million, or 11.1%, in
total interest and dividend income and a decrease of $695,000, or
20.7%, in total interest expense. The changes reflect rate and
volume changes in both interest-bearing assets and liabilities. The
yield on interest-earning assets increased 35 basis points, while
the average balance increased $29.1 million, and the cost of
interest-bearing liabilities decreased 11 basis points, while the
average balance increased $92.9 million.
Noninterest Income
Total noninterest income decreased $5.0 million, or 26.0%, to
$14.1 million for the quarter ended June 30, 2022, from $19.1
million for the quarter ended March 31, 2022. Mortgage loan
closings for the quarter ended June 30, 2022 were $297.5 million
with a gain on loan sales of $4.5 million, compared to $253.8
million in mortgage closings and $5.3 million in gain on sales for
the preceding quarter. The locked residential mortgage pipeline
continues to be negatively impacted by decreased mortgage volumes
due to rising rates and low for-sale inventory.
The change in the fair value of mortgage servicing rights
positively impacted mortgage banking income, however the increase
in the fair value of mortgage servicing rights for the three months
ended June 30, 2022 was $1.6 million, as compared to an increase of
$6.1 million in the fair value of mortgage servicing rights for the
three months ended March 31, 2022. The 10-year Treasury Constant
Maturity rate increased 66 basis points versus the first quarter of
2022, and prepayments were consistent with the first quarter of
2022. 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.
Deposit account fees increased $420,000, or 9.4%, to $4.9
million for the quarter ended June 30, 2022, from $4.5 million for
the quarter ended March 31, 2022, primarily due to an increase in
interchange fees. Other income for the quarter ended June 30, 2022
decreased $241,000. The first quarter of 2022 included a positive
credit valuation adjustment of $239,000 on the termination of an
interest rate swap and a $189,000 corporate capital distribution
from the National Credit Union Association partially offset by a
write-down on the final disposition of a branch real estate asset
held for sale. No similar transactions were recorded in other
income during the second quarter of 2022.
Total noninterest income decreased $7.6 million, or 35.0%, as
compared to the quarter ended June 30, 2021, primarily due to a
$7.8 million, or 49.2%, decrease in mortgage banking income, driven
by the decrease in loan closings and narrowing gain-on-sale
margins. The decrease in mortgage banking income was offset by a
$346,000 increase in deposit account fees.
Noninterest Expense
Total noninterest expenses were $35.0 million for the quarter
ended June 30, 2022, an increase of $119,000, or 0.3%, from the
quarter ended March 31, 2022. Compensation and benefits increased
$732,000, or 3.5%, and other expenses increased $401,000, or 14.0%,
partially offset by an $853,000 decrease in occupancy and equipment
expenses. The increase in compensation expense reflects a $924,000
increase in salary expense due to annual salary increases effective
at the end of the first quarter and $439,000 in expense related to
the benefit accruals and equity award acceleration in connection
with the retirement of the Company’s former CEO James W. Blake,
partially offset by a decrease in payroll tax expenses. The
increase in other expenses reflects increases in cloud computing
and employment agency fees. The decrease in occupancy and equipment
expense reflects decreases in expenses for utilities, seasonal
landscaping, and service maintenance contracts.
Total noninterest expenses decreased $3.6 million, or 9.4%, from
the quarter ended June 30, 2021. Compensation and benefits
decreased $3.7 million and loan expenses decreased $865,000,
consistent with the decrease in residential mortgage loan closings
and corresponding decrease in mortgage origination commissions.
Income Tax Provision
The effective tax rate was 27.6% for the quarter ended June 30,
2022, compared to 28.5% for the quarter ended March 31, 2022 and
28.3% for the quarter ended June 30, 2021.
Asset Quality and Allowance for Credit Losses
Effective January 1, 2022, the Company adopted Accounting
Standards Update No. 2016-13, commonly referred to as CECL, which
requires the measurement of expected lifetime credit losses for
financial assets measured at amortized cost, as well as unfunded
commitments that are considered off-balance sheet credit exposures.
CECL requires that the allowance for credit losses (“ACL”) be
calculated based on current expected credit losses over the full
remaining expected life of the financial assets and also consider
expected future changes in macroeconomic conditions. Upon adoption
of CECL on January 1, 2022, the Company’s ACL on loans decreased by
$1.3 million, and the ACL on unfunded commitments increased by $3.9
million, for a net increase of $2.6 million. The after-tax impact
of $1.9 million was recognized as a one-time, cumulative-effect
adjustment that decreased retained earnings.
Credit quality performance has remained strong with total
nonperforming assets of $24.4 million at June 30, 2022, compared to
$26.1 million at March 31, 2022 and $32.7 million at June 30, 2021.
Nonperforming assets as a percentage of total assets were 0.52% at
June 30, 2022, 0.57% at March 31, 2022, and 0.71% at June 30,
2021.
The funded loan provision for credit losses for the three and
six months ended June 30, 2022 was $1.3 million and $1.7 million,
respectively. Net recoveries totaled $504,000, or 0.05% of average
loans outstanding on an annualized basis, for the quarter ended
June 30, 2022. Net charge-offs totaled $2.7 million, or 0.30% of
average loans outstanding on an annualized basis, for the quarter
ended March 31, 2022, and net recoveries totaled $175,000, or 0.02%
of average loans outstanding on an annualized basis, for the
quarter ended June 30, 2021.
The ACL was $43.6 million, or 1.11% of total loans, at June 30,
2022, compared to $41.8 million, or 1.12% of total loans, at March
31, 2022 and an allowance for loss under the incurred loss model of
$51.3 million, or 1.50% of total loans, at June 30, 2021. The ACL
on unfunded commitments, included in other liabilities on the
unaudited Consolidated Balance Sheets, amounted to $5.1 million at
June 30, 2022 as compared to $3.8 million at March 31, 2022 and the
associated provision was $1.3 million and $1.2 million for the
three and six months ended June 30, 2022. There was no ACL on
unfunded commitments at December 31, 2021 or June 30, 2021. The
increase from the prior quarter reflects $125.2 million in new
construction originations in the second quarter, with $98.1 million
in unfunded balances as of June 30, 2022.
We have not experienced any significant negative trends in the
at-risk sectors identified in response to conditions that developed
during the COVID-19 pandemic; however management continues to
monitor certain credit types within those sectors that may be
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. Management is focused on
business-oriented hotels, non-anchored retail space and metro
office space. As of June 30, 2022, business-oriented hotels
included 14 loans with a total outstanding balance of $123.3
million, non-anchored retail space included 35 loans with a total
outstanding balance of $58.8 million and metro office space
included 2 loans with a total outstanding balance of $14.9 million.
As of June 30, 2022 there were two business-oriented hotel credits
with a carrying value of $10.6 million that were on nonaccrual. The
other loans in these groups were performing in accordance with
their terms.
Balance Sheet
Total assets increased $112.7 million, or 2.5%, to $4.70 billion
at June 30, 2022, from $4.59 billion at March 31, 2022. The
increase primarily reflects an increase of $174.6 million in loans,
partially offset by decreases of $55.4 million in cash and cash
equivalents and $27.1 million in securities available for sale.
Securities available for sale were negatively impacted by
unrealized losses of $49.9 million as of June 30, 2022 and $30.0
million as March 31, 2022, as compared to $3.6 million of
unrealized losses as of December 31, 2021.
Loans increased $174.6 million, or 4.7%, to $3.91 billion at
June 30, 2022, from $3.74 billion at March 31, 2022. The increase
in loans for the three months ended June 30, 2022 was primarily due
to an increase in residential real estate loans of $170.2 million
and an increase in commercial real estate loans of $31.1 million,
partially offset by a decrease in consumer loans of $27.8 million.
As of June 30, 2022, outstanding PPP loans amounted to $2.5
million, and there was $93,000 in deferred processing fee income.
We expect to complete the forgiveness process for the remaining PPP
loans by the end of the third quarter of 2022.
Total deposits were $3.85 billion at June 30, 2022 and $3.76
billion at March 31, 2022. Compared to the prior quarter,
non-certificate accounts increased $96.3 million, and term
certificate accounts decreased $10.4 million. FHLB borrowings
increased $50.0 million to $105.7 million at June 30, 2022 from
$55.7 million at March 31, 2022. At June 30, 2022, FHLB borrowings
are were primarily short-term borrowings.
Total stockholders’ equity was $624.5 million at June 30, 2022,
compared to $649.1 million at March 31, 2022 and $705.5 million at
June 30, 2021. Stockholders’ equity decreased 3.8% when compared to
the prior quarter, as earnings were offset by share repurchases and
elevated levels of unrealized losses on available-for-sale
investment securities included in other comprehensive income. The
Company announced a fourth share repurchase program on April 12,
2022, and repurchased 1,337,602 shares at an average price of
$13.83 during the three months ended June 30, 2022. The
tangible-common-equity-to-tangible-assets ratio was 11.92% at June
30, 2022, 12.75% at March 31, 2022, and 13.91% at June 30, 2021. At
June 30, 2022, 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 30 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 27 offices in Massachusetts,
Rhode Island, and New Hampshire, and is licensed to lend in seven
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, ongoing
disruptions due to 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 (including 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; changes related to
the discontinuation and replacement of LIBOR; 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, 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 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)
June 30,
March 31,
December 31,
September 30,
June 30,
(in thousands)
2022
2022
2021
2021
2021
Assets
Cash and due from banks
$
35,843
$
41,862
$
35,549
$
42,589
$
41,328
Short-term investments
48,495
97,870
159,170
277,050
374,319
Total cash and cash equivalents
84,338
139,732
194,719
319,639
415,647
Securities available for sale, at fair
value
334,398
361,529
394,036
390,552
353,848
Securities held to maturity, at amortized
cost
10,000
—
—
—
—
Federal Home Loan Bank stock, at cost
5,625
5,931
5,931
6,828
7,241
Asset held for sale
—
678
881
881
—
Loans held for sale, at fair value
31,679
25,690
45,642
77,052
103,886
Loans:
Commercial real estate
1,847,619
1,816,484
1,699,877
1,573,284
1,561,873
Commercial construction
158,762
154,059
136,563
152,685
107,585
Commercial and industrial
407,182
410,787
421,608
414,814
467,479
Total commercial loans
2,413,563
2,381,330
2,258,048
2,140,783
2,136,937
Residential real estate
1,423,074
1,252,920
1,217,980
1,160,689
1,096,370
Consumer
75,312
103,100
131,705
156,272
186,430
Loans
3,911,949
3,737,350
3,607,733
3,457,744
3,419,737
Less: Allowance for credit losses on
loans
(43,560
)
(41,765
)
(45,377
)
(47,988
)
(51,273
)
Net loans
3,868,389
3,695,585
3,562,356
3,409,756
3,368,464
Mortgage servicing rights, at fair
value
47,130
45,043
38,268
36,540
35,955
Goodwill
69,802
69,802
69,802
69,802
69,802
Other intangible assets
2,695
2,930
3,164
3,399
3,723
Other assets
249,988
244,405
238,606
252,645
257,856
Total assets
$
4,704,044
$
4,591,325
$
4,553,405
$
4,567,094
$
4,616,422
Liabilities and Stockholders'
Equity
Deposits:
Demand deposit accounts
$
775,154
$
771,172
$
743,051
$
756,917
$
800,118
NOW accounts
316,839
310,090
313,733
300,577
250,099
Regular savings and club accounts
1,282,913
1,218,656
1,138,979
1,144,595
1,123,123
Money market deposit accounts
885,673
864,316
858,970
832,441
832,006
Term certificate accounts
587,354
597,746
627,916
659,850
682,594
Total deposits
3,847,933
3,761,980
3,682,649
3,694,380
3,687,940
Short-term borrowed funds
90,000
—
—
—
—
Long-term borrowed funds
15,693
55,702
55,711
55,720
87,479
Subordinated debt
34,222
34,191
34,159
34,128
34,096
Other liabilities and accrued expenses
91,718
90,387
101,625
102,834
101,436
Total liabilities
4,079,566
3,942,260
3,874,144
3,887,062
3,910,951
Common stock
593
591
585
585
585
Additional paid-in capital
479,519
477,302
469,934
468,526
467,194
Unearned compensation - ESOP
(28,542
)
(29,002
)
(29,461
)
(29,921
)
(30,380
)
Retained earnings
339,471
332,734
325,699
315,683
305,831
Treasury stock
(132,296
)
(113,513
)
(85,859
)
(73,723
)
(38,588
)
Accumulated other comprehensive income
(loss)
(34,267
)
(19,047
)
(1,637
)
(1,118
)
829
Total stockholders' equity
624,478
649,065
679,261
680,032
705,471
Total liabilities and stockholders'
equity
$
4,704,044
$
4,591,325
$
4,553,405
$
4,567,094
$
4,616,422
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)
2022
2022
2021
2021
2021
Interest and dividend income:
Interest and fees on loans
$
37,522
$
33,576
$
34,177
$
33,680
$
34,106
Interest on loans held for sale
331
264
501
665
852
Interest on securities
1,873
1,701
1,541
1,293
793
Other interest and dividend income
131
61
134
170
136
Total interest and dividend income
39,857
35,602
36,353
35,808
35,887
Interest expense:
Interest on deposits
2,019
1,621
1,651
2,050
2,302
Interest on FHLB borrowings
119
188
193
431
531
Interest on subordinated debentures
524
523
524
524
524
Total interest expense
2,662
2,332
2,368
3,005
3,357
Net interest and dividend income
37,195
33,270
33,985
32,803
32,530
Provision for credit losses
2,546
338
(1,436
)
(1,627
)
(4,286
)
Net interest and dividend income, after
provision for credit losses
34,649
32,932
35,421
34,430
36,816
Noninterest income:
Mortgage banking income:
Gain on sale of mortgage loans
4,538
5,322
10,063
12,756
14,262
Changes in mortgage servicing rights fair
value
862
5,285
(245
)
(992
)
(2,552
)
Other
2,612
2,558
3,359
3,882
4,075
Total mortgage banking income
8,012
13,165
13,177
15,646
15,785
Deposit account fees
4,892
4,472
4,783
4,658
4,546
Income on retirement plan annuities
112
107
109
108
106
Gain on sale and call of securities,
net
—
—
—
241
—
Bank-owned life insurance income
494
483
506
515
508
Other income
593
834
589
842
758
Total noninterest income
14,103
19,061
19,164
22,010
21,703
Noninterest expenses:
Compensation and benefits
21,455
20,723
24,564
24,760
25,146
Occupancy and equipment
4,575
5,428
4,923
4,765
4,702
Data processing
2,259
2,241
2,244
2,205
2,362
Loan expense
385
478
732
1,323
1,250
Marketing
986
1,218
1,120
880
831
Professional fees
1,680
1,539
1,443
1,362
1,487
Deposit insurance
354
349
345
341
332
Prepayment penalties on Federal Home Loan
Bank advances
—
—
—
1,095
—
Other expenses
3,260
2,859
2,817
2,543
2,488
Total noninterest expenses
34,954
34,835
38,188
39,274
38,598
Income before income taxes
13,798
17,158
16,397
17,166
19,921
Income tax provision
3,811
4,891
3,807
4,907
5,645
Net income
$
9,987
$
12,267
$
12,590
$
12,259
$
14,276
Earnings per common share:
Basic
$
0.21
$
0.26
$
0.26
$
0.25
$
0.28
Diluted
$
0.21
$
0.25
$
0.25
$
0.24
$
0.27
Weighted average shares outstanding:
Basic
46,980,830
47,836,410
48,918,539
49,801,123
51,778,293
Diluted
47,536,033
48,690,420
49,828,379
50,663,415
52,650,071
HarborOne Bancorp,
Inc.
Consolidated Statements of Net
Income
(Unaudited)
For the Six Months Ended June
30,
(dollars in thousands, except share
data)
2022
2021
$ Change
% Change
Interest and dividend income:
Interest and fees on loans
$
71,098
$
67,966
$
3,132
4.6
%
Interest on loans held for sale
595
2,176
(1,581
)
(72.7
)
Interest on securities
3,574
1,378
2,196
159.4
Other interest and dividend income
192
214
(22
)
(10.3
)
Total interest and dividend income
75,459
71,734
3,725
5.2
Interest expense:
Interest on deposits
3,640
5,022
(1,382
)
(27.5
)
Interest on FHLB borrowings
307
1,083
(776
)
(71.7
)
Interest on subordinated debentures
1,047
1,047
—
0.0
Total interest expense
4,994
7,152
(2,158
)
(30.2
)
Net interest and dividend income
70,465
64,582
5,883
9.1
Provision for credit losses
2,884
(4,195
)
7,079
168.7
Net interest and dividend income, after
provision for credit losses
67,581
68,777
(1,196
)
(1.7
)
Noninterest income:
Mortgage banking income:
Gain on sale of mortgage loans
9,860
39,064
(29,204
)
(74.8
)
Changes in mortgage servicing rights fair
value
6,147
857
5,290
617.3
Other
5,170
8,590
(3,420
)
(39.8
)
Total mortgage banking income
21,177
48,511
(27,334
)
(56.3
)
Deposit account fees
9,364
8,398
966
11.5
Income on retirement plan annuities
219
210
9
4.3
Bank-owned life insurance income
977
1,001
(24
)
(2.4
)
Other income
1,427
1,392
35
2.5
Total noninterest income
33,164
59,512
(26,348
)
(44.3
)
Noninterest expenses:
Compensation and benefits
42,178
52,600
(10,422
)
(19.8
)
Occupancy and equipment
10,003
9,958
45
0.5
Data processing
4,500
4,705
(205
)
(4.4
)
Loan expense
863
3,685
(2,822
)
(76.6
)
Marketing
2,204
1,644
560
34.1
Professional fees
3,219
3,070
149
4.9
Deposit insurance
703
652
51
7.8
Other expenses
6,119
5,086
1,033
20.3
Total noninterest expenses
69,789
81,400
(11,611
)
(14.3
)
Income before income taxes
30,956
46,889
(15,933
)
(34.0
)
Income tax provision
8,702
13,221
(4,519
)
(34.2
)
Net income
$
22,254
$
33,668
$
(11,414
)
(33.9
)
%
Earnings per common share:
Basic
$
0.47
$
0.65
Diluted
$
0.46
$
0.64
Weighted average shares outstanding:
Basic
47,406,257
52,155,754
Diluted
48,110,863
52,823,354
HarborOne Bancorp,
Inc.
Average Balances /
Yields
(Unaudited)
Quarters Ended
June 30, 2022
March 31, 2022
June 30, 2021
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)
$
391,448
$
1,873
1.92
%
$
393,364
$
1,701
1.75
%
$
325,205
$
793
0.98
%
Other interest-earning assets
64,678
131
0.81
150,569
61
0.16
397,979
136
0.14
Loans held for sale
29,474
331
4.51
29,842
264
3.59
115,240
852
2.97
Loans
Commercial loans (2)
2,384,630
25,295
4.25
2,291,343
22,095
3.91
2,152,105
22,079
4.11
Residential real estate loans (2)
1,330,772
11,182
3.37
1,220,703
10,142
3.37
1,064,481
9,747
3.67
Consumer loans (2)
88,943
1,045
4.71
118,242
1,339
4.59
205,856
2,280
4.44
Total loans
3,804,345
37,522
3.96
3,630,288
33,576
3.75
3,422,442
34,106
4.00
Total interest-earning assets
4,289,945
39,857
3.73
4,204,063
35,602
3.43
4,260,866
35,887
3.38
Noninterest-earning assets
311,998
326,811
339,438
Total assets
$
4,601,943
$
4,530,874
$
4,600,304
Interest-bearing liabilities:
Savings accounts
$
1,266,912
626
0.20
$
1,165,683
366
0.13
$
1,118,494
461
0.17
NOW accounts
311,241
38
0.05
301,279
36
0.05
231,075
41
0.07
Money market accounts
885,305
635
0.30
858,792
303
0.14
853,586
417
0.20
Certificates of deposit
484,484
670
0.55
522,211
729
0.57
589,964
1,229
0.84
Brokered deposits
100,000
50
0.20
100,000
187
0.76
100,000
154
0.62
Total interest-bearing deposits
3,047,942
2,019
0.27
2,947,965
1,621
0.22
2,893,119
2,302
0.32
FHLB advances
34,763
119
1.36
55,706
188
1.37
96,823
531
2.20
Subordinated debentures
34,207
524
6.14
34,173
523
6.21
34,080
524
6.17
Total borrowings
68,970
643
3.74
89,879
711
3.21
130,903
1,055
3.23
Total interest-bearing liabilities
3,116,912
2,662
0.34
3,037,844
2,332
0.31
3,024,022
3,357
0.45
Noninterest-bearing
liabilities:
Noninterest-bearing deposits
768,088
738,578
784,521
Other noninterest-bearing liabilities
75,186
86,763
88,577
Total liabilities
3,960,186
3,863,185
3,897,120
Total stockholders' equity
641,757
667,689
703,184
Total liabilities and stockholders'
equity
$
4,601,943
$
4,530,874
$
4,600,304
Tax equivalent net interest income
37,195
33,270
32,530
Tax equivalent interest rate spread
(3)
3.38
%
3.12
%
2.93
%
Less: tax equivalent adjustment
—
—
—
Net interest income as reported
$
37,195
$
33,270
$
32,530
Net interest-earning assets (4)
$
1,173,033
$
1,166,219
$
1,236,844
Net interest margin (5)
3.48
%
3.21
%
3.06
%
Tax equivalent effect
—
—
—
Net interest margin on a fully tax
equivalent basis
3.48
%
3.21
%
3.06
%
Average interest-earning assets to average
interest-bearing liabilities
137.63
%
138.39
%
140.90
%
Supplemental information:
Total deposits, including demand
deposits
$
3,816,030
$
2,019
$
3,686,543
$
1,621
$
3,677,640
$
2,302
Cost of total deposits
0.21
%
0.18
%
0.25
%
Total funding liabilities, including
demand deposits
$
3,885,000
$
2,662
$
3,776,422
$
2,332
$
3,808,543
$
3,357
Cost of total funding liabilities
0.27
%
0.25
%
0.35
%
(1) Includes securities available
for sale and securities held to maturity.
(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)
For the Six Months
Ended
June 30, 2022
June 30, 2021
Average
Average
Outstanding
Yield/
Outstanding
Yield/
Balance
Interest
Cost
Balance
Interest
Cost
(dollars in thousands)
Interest-earning assets:
Investment securities (1)
$
392,401
$
3,574
1.84
%
$
298,430
$
1,378
0.93
%
Other interest-earning assets
107,386
192
0.36
289,853
214
0.15
Loans held for sale
29,657
595
4.05
154,117
2,176
2.85
Loans
Commercial loans (2)
2,338,245
47,390
4.09
2,156,566
42,859
4.01
Residential real estate loans (2)
1,276,041
21,324
3.37
1,074,332
20,087
3.77
Consumer loans (2)
103,512
2,384
4.64
229,304
5,020
4.41
Total loans
3,717,798
71,098
3.86
3,460,202
67,966
3.96
Total interest-earning assets
4,247,242
75,459
3.58
4,202,602
71,734
3.44
Noninterest-earning assets
319,362
403,990
Total assets
$
4,566,604
$
4,606,592
Interest-bearing liabilities:
Savings accounts
$
1,216,578
992
0.16
$
1,088,822
998
0.18
NOW accounts
306,287
74
0.05
221,731
78
0.07
Money market accounts
872,122
938
0.22
857,530
977
0.23
Certificates of deposit
503,243
1,399
0.56
598,977
2,673
0.90
Brokered deposits
100,000
237
0.48
100,000
296
0.60
Total interest-bearing deposits
2,998,230
3,640
0.24
2,867,060
5,022
0.35
FHLB advances
45,176
307
1.37
99,588
1,083
2.19
Subordinated debentures
34,190
1,047
6.18
34,063
1,047
6.20
Total borrowings
79,366
1,354
3.44
133,651
2,130
3.21
Total interest-bearing liabilities
3,077,596
4,994
0.33
3,000,711
7,152
0.48
Noninterest-bearing
liabilities:
Noninterest-bearing deposits
753,414
745,613
Other noninterest-bearing liabilities
80,943
155,640
Total liabilities
3,911,953
3,901,964
Total stockholders' equity
654,651
704,628
Total liabilities and stockholders'
equity
$
4,566,604
$
4,606,592
Tax equivalent net interest income
70,465
64,582
Tax equivalent interest rate spread
(3)
3.25
%
2.96
%
Less: tax equivalent adjustment
—
—
Net interest income as reported
$
70,465
$
64,582
Net interest-earning assets (4)
$
1,169,646
$
1,201,891
Net interest margin (5)
3.35
%
3.10
%
Tax equivalent effect
—
—
Net interest margin on a fully tax
equivalent basis
3.35
%
3.10
%
Average interest-earning assets to average
interest-bearing liabilities
138.01
%
140.05
%
Supplemental information:
Total deposits, including demand
deposits
$
3,751,644
$
3,640
$
3,612,673
$
5,022
Cost of total deposits
0.20
%
0.28
%
Total funding liabilities, including
demand deposits
$
3,831,010
$
4,994
$
3,746,324
$
7,152
Cost of total funding liabilities
0.26
%
0.38
%
(1) Includes securities available
for sale and securities held to maturity.
(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
June 30, 2022
March 31, 2022
December 31, 2021
September 30, 2021
June 30, 2021
(in thousands)
Interest-earning assets:
Investment securities (1)
$
391,448
$
393,364
$
394,301
$
358,927
$
325,205
Other interest-earning assets
64,678
150,569
286,026
372,892
397,979
Loans held for sale
29,474
29,842
63,833
84,399
115,240
Loans
Commercial loans (2)
2,384,630
2,291,343
2,165,739
2,121,432
2,152,105
Residential real estate loans (2)
1,330,772
1,220,703
1,171,608
1,121,898
1,064,481
Consumer loans (2)
88,943
118,242
143,577
170,366
205,856
Total loans
3,804,345
3,630,288
3,480,924
3,413,696
3,422,442
Total interest-earning assets
4,289,945
4,204,063
4,225,084
4,229,914
4,260,866
Noninterest-earning assets
311,998
326,811
337,310
347,060
339,438
Total assets
$
4,601,943
$
4,530,874
$
4,562,394
$
4,576,974
$
4,600,304
Interest-bearing liabilities:
Savings accounts
$
1,266,912
$
1,165,683
$
1,147,855
$
1,136,131
$
1,118,494
NOW accounts
311,241
301,279
300,459
283,725
231,075
Money market accounts
885,305
858,792
839,977
832,340
853,586
Certificates of deposit
484,484
522,211
543,208
570,570
589,964
Brokered deposits
100,000
100,000
100,000
100,000
100,000
Total interest-bearing deposits
3,047,942
2,947,965
2,931,499
2,922,766
2,893,119
FHLB advances
34,763
55,706
55,714
84,438
96,823
Subordinated debentures
34,207
34,173
34,144
34,111
34,080
Total borrowings
68,970
89,879
89,858
118,549
130,903
Total interest-bearing liabilities
3,116,912
3,037,844
3,021,357
3,041,315
3,024,022
Noninterest-bearing
liabilities:
Noninterest-bearing deposits
768,088
738,578
768,361
756,927
784,521
Other noninterest-bearing liabilities
75,186
86,763
92,034
90,366
88,577
Total liabilities
3,960,186
3,863,185
3,881,752
3,888,608
3,897,120
Total stockholders' equity
641,757
667,689
680,642
688,366
703,184
Total liabilities and stockholders'
equity
$
4,601,943
$
4,530,874
$
4,562,394
$
4,576,974
$
4,600,304
Annualized Yield Trend -
Quarters Ended
June 30, 2022
March 31, 2022
December 31, 2021
September 30, 2021
June 30, 2021
Interest-earning assets:
Investment securities (1)
1.92
%
1.75
%
1.55
%
1.43
%
0.98
%
Other interest-earning assets
0.81
%
0.16
%
0.19
%
0.18
%
0.14
%
Loans held for sale
4.51
%
3.59
%
3.11
%
3.13
%
2.97
%
Commercial loans (2)
4.25
%
3.91
%
4.15
%
4.19
%
4.11
%
Residential real estate loans (2)
3.37
%
3.37
%
3.34
%
3.31
%
3.67
%
Consumer loans (2)
4.71
%
4.59
%
4.56
%
4.50
%
4.44
%
Total loans
3.96
%
3.75
%
3.90
%
3.91
%
4.00
%
Total interest-earning assets
3.73
%
3.43
%
3.41
%
3.36
%
3.38
%
Interest-bearing liabilities:
Savings accounts
0.20
%
0.13
%
0.09
%
0.13
%
0.17
%
NOW accounts
0.05
%
0.05
%
0.05
%
0.06
%
0.07
%
Money market accounts
0.30
%
0.14
%
0.15
%
0.19
%
0.20
%
Certificates of deposit
0.55
%
0.57
%
0.64
%
0.76
%
0.84
%
Brokered deposits
0.20
%
0.76
%
0.71
%
0.64
%
0.62
%
Total interest-bearing deposits
0.27
%
0.22
%
0.22
%
0.28
%
0.32
%
FHLB advances
1.36
%
1.37
%
1.37
%
2.03
%
2.20
%
Subordinated debentures
6.14
%
6.21
%
6.09
%
6.09
%
6.17
%
Total borrowings
3.74
%
3.21
%
3.17
%
3.20
%
3.23
%
Total interest-bearing liabilities
0.34
%
0.31
%
0.31
%
0.39
%
0.45
%
(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
June 30,
March 31,
December 31,
September 30,
June 30,
Performance Ratios
(annualized):
2022
2022
2021
2021
2021
(dollars in thousands)
Return on average assets (ROAA)
0.87
%
1.08
%
1.10
%
1.07
%
1.24
%
Return on average equity (ROAE)
6.22
%
7.35
%
7.40
%
7.12
%
8.12
%
Total noninterest expense
$
34,954
$
34,835
$
38,188
$
39,274
$
38,598
Less: Amortization of other intangible
assets
235
235
235
324
324
Total adjusted noninterest expense
$
34,719
$
34,600
$
37,953
$
38,950
$
38,274
Net interest and dividend income
$
37,195
$
33,270
$
33,985
$
32,803
$
32,530
Total noninterest income
14,103
19,061
19,164
22,010
21,703
Total revenue
$
51,298
$
52,331
$
53,149
$
54,813
$
54,233
Efficiency ratio (1)
67.68
%
66.12
%
71.41
%
71.06
%
70.57
%
(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
2022
2022
2021
2021
2021
(dollars in thousands)
Total nonperforming assets
$
24,441
$
26,109
$
36,186
$
36,514
$
32,731
Nonperforming assets to total assets
0.52
%
0.57
%
0.79
%
0.80
%
0.71
%
Allowance for credit losses on loans to
total loans
1.11
%
1.12
%
1.26
%
1.39
%
1.50
%
Net (recoveries) charge-offs
$
(504
)
$
2,730
$
1,174
$
1,658
$
(175
)
Annualized net (recoveries)
charge-offs/average loans
(0.05
)
%
0.30
%
0.13
%
0.19
%
(0.02
)
%
Allowance for credit losses on loans to
nonperforming loans
166.81
%
159.96
%
125.60
%
131.52
%
158.08
%
HarborOne Bancorp,
Inc.
Selected Financial
Highlights
(Unaudited)
Quarters Ended
June 30,
March 31,
December 31,
September 30,
June 30,
Capital and Share Related
2022
2022
2021
2021
2021
(dollars in thousands, except share
data)
Common stock outstanding
49,989,007
51,257,696
52,390,478
53,232,110
55,735,623
Book value per share
$
12.49
$
12.66
$
12.97
$
12.77
$
12.66
Tangible common equity:
Total stockholders' equity
$
624,478
$
649,065
$
679,261
$
680,032
$
705,471
Less: Goodwill
69,802
69,802
69,802
69,802
69,802
Less: Other intangible assets (1)
2,695
2,930
3,164
3,399
3,723
Tangible common equity
$
551,981
$
576,333
$
606,295
$
606,831
$
631,946
Tangible book value per share (2)
$
11.04
$
11.24
$
11.57
$
11.40
$
11.34
Tangible assets:
Total assets
$
4,704,044
$
4,591,325
$
4,553,405
$
4,567,094
$
4,616,422
Less: Goodwill
69,802
69,802
69,802
69,802
69,802
Less: Other intangible assets
2,695
2,930
3,164
3,399
3,723
Tangible assets
$
4,631,547
$
4,518,593
$
4,480,439
$
4,493,893
$
4,542,897
Tangible common equity / tangible assets
(3)
11.92
%
12.75
%
13.53
%
13.50
%
13.91
%
(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,
2022
2022
2021
2022
2022
2021
(in thousands)
Net interest and dividend income
$
411
$
350
$
855
$
37,246
$
33,424
$
32,134
Provision for credit losses
—
—
—
2,546
338
(4,286
)
Net interest and dividend income, after
provision for loan losses
411
350
855
34,700
33,086
36,420
Mortgage banking income:
Gain on sale of mortgage loans
4,538
5,322
14,262
—
—
—
Intersegment gain (loss)
1,097
837
910
(1,095
)
(608
)
(910
)
Changes in mortgage servicing rights fair
value
735
4,695
(2,133
)
127
590
(419
)
Other
2,393
2,325
3,799
219
233
276
Total mortgage banking income (loss)
8,763
13,179
16,838
(749
)
215
(1,053
)
Other noninterest income
7
9
20
6,084
5,887
5,898
Total noninterest income
8,770
13,188
16,858
5,335
6,102
4,845
Noninterest expense
7,242
7,761
14,101
27,131
26,825
24,128
Income before income taxes
1,939
5,777
3,612
12,904
12,363
17,137
Provision for income taxes
549
1,541
1,013
3,550
3,557
4,863
Net income
$
1,390
$
4,236
$
2,599
$
9,354
$
8,806
$
12,274
HarborOne Mortgage
HarborOne Bank
For the Six Months
Ended
For the Six Months
Ended
June 30,
June 30,
June 30,
June 30,
2022
2021
2022
2021
(in thousands)
Net interest and dividend income
$
761
$
2,105
$
70,670
$
63,382
Provision (benefit) for credit losses
—
—
2,884
(4,195
)
Net interest and dividend income, after
provision (benefit) for credit losses
761
2,105
67,786
67,577
Mortgage banking income:
Gain on sale of mortgage loans
9,860
39,064
—
—
Intersegment gain (loss)
1,934
1,572
(1,703
)
(1,572
)
Changes in mortgage servicing rights fair
value
5,430
990
717
(133
)
Other
4,718
8,014
452
576
Total mortgage banking income (loss)
21,942
49,640
(534
)
(1,129
)
Other noninterest income
16
12
11,971
10,989
Total noninterest income
21,958
49,652
11,437
9,860
Noninterest expense
15,003
32,158
53,956
48,591
Income before income taxes
7,716
19,599
25,267
28,846
Provision for income taxes
2,090
5,346
7,107
8,298
Net income
$
5,626
$
14,253
$
18,160
$
20,548
Category: Earnings
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220725005856/en/
Linda Simmons, EVP, CFO (508) 895-1379
HarborOne Bancorp (NASDAQ:HONE)
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