HarborOne Bancorp, Inc. (the “Company” or “HarborOne”) (NASDAQ:
HONE), the holding company for HarborOne Bank (the “Bank”),
announced net income of $13.8 million, or $0.30 per basic and
diluted share, for the third quarter of 2022, compared to net
income of $10.0 million, or $0.21 per basic and diluted share, for
the preceding quarter and $12.3 million, or $0.24 per diluted
share, for the same period last year.
Selected Third Quarter Financial Highlights:
- Net income increased $3.8 million, or 37.8%.
- Return on average assets was 1.14%, and return on average
equity was 8.76%.
- Loan growth of $285.4 million, or 7.3%.
- Total deposit growth $35.2 million, or 0.91% and core deposit
growth of $22.9 million, or 0.70%.
- Continued share repurchase program.
“I am proud of our team’s ability to manage the volatile
interest rate environment,” said Joseph F. Casey, President and
Chief Executive Officer. He added: “The Company continues to drive
revenue through expanded margin which was up 30 basis points
year-over-year resulting in net interest income expansion of $12.4
million, or 12.7%. Our mortgage segment remains profitable as the
increasing value of our servicing rights, coupled with expense
reductions, partially offset declining origination volume and
gain-on-sale margins.”
Net Interest Income
The Company’s net interest and dividend income was $39.3 million
for the quarter ended September 30, 2022, up $2.1 million, or 5.7%,
from $37.2 million for the quarter ended June 30, 2022, and up $6.5
million, or 19.9%, from $32.8 million for the quarter ended
September 30, 2021. The interest rate spread and net interest
margin were 3.30% and 3.47%, respectively, for the quarter ended
September 30, 2022, compared to 3.39% and 3.48%, respectively, for
the quarter ended June 30, 2022, and 2.97% and 3.08%, respectively,
for the quarter ended September 30, 2021. On a linked-quarter
basis, the increase in net interest and dividend income primarily
reflects an increase in the average loan balance coupled with
increased yields on loans and investments primarily due to rate
increases, partially offset by decreases in fees recognized in
connection with U.S. Small Business Administration (“SBA”) Paycheck
Protection Program (“PPP”) loans and higher rates on deposits. The
cost of funds was 51 basis points for the quarter ended September
30, 2022, compared to 27 basis points in the preceding quarter.
The $4.7 million increase in total interest and dividend income
on a linked-quarter basis reflected a 20-basis-point increase in
the yield on interest-earning assets. The yield on loans increased
15 basis points, from 3.96% to 4.11%. Interest on loans in the
third quarter included $454,000 in prepayment penalties on
commercial loans and $188,000 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 $1.1 million and $353,000, respectively.
The three months ended September 30, 2022 and June 30, 2022 include
the recognition of deferred fees on PPP loans in the amount of
$24,000 and $368,000, respectively. The yield on investments
increased 8 basis points, from 1.92% to 2.00%.
The increase in net interest and dividend income from the prior
year quarter reflects an increase of $8.7 million, or 24.4%, in
total interest and dividend income and an increase of $2.2 million,
or 73.8%, 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 57 basis points, while
the average balance increased $272.3 million, and the cost of
interest-bearing liabilities increased 24 basis points, while the
average balance increased $271.6 million.
Noninterest Income
Total noninterest income increased $142,000, or 1.0%, to $14.2
million for the quarter ended September 30, 2022, from $14.1
million for the quarter ended June 30, 2022. Mortgage loan closings
for the quarter ended September 30, 2022 were $250.5 million with a
gain on loan sales of $3.8 million, compared to $297.5 million in
mortgage closings and $4.5 million in gain on sales for the
preceding quarter. Deposit account fees were $4.9 million for the
quarter ended September 30, 2022, flat compared to the quarter
ended June 30, 2022. Other income for the quarter ended September
30, 2022 increased $82,000.
Although declining mortgage demand and volume has negatively
impacted mortgage banking income, the change in the fair value of
mortgage servicing rights has provided a positive offset. The
increase in the fair value of mortgage servicing rights for the
three months ended September 30, 2022 was $2.6 million, as compared
to an increase of $1.6 million in the fair value of mortgage
servicing rights for the three months ended June 30, 2022. The
10-year Treasury Constant Maturity rate increased 85 basis points
versus the second quarter of 2022. The impact of principal payments
on the underlying mortgages on the mortgage servicing rights was
consistent at $747,000 and $771,000 for the quarters ended
September 30, 2022 and June 30, 2022, respectively. 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.
Total noninterest income decreased $7.8 million, or 35.3%,
compared to the quarter ended September 30, 2021, primarily due to
a $7.6 million, or 48.4%, decrease in mortgage banking income,
driven by the decrease in loan closings and narrowing gain-on-sale
margins.
Noninterest Expense
Total noninterest expenses were $34.5 million for the quarter
ended September 30, 2022, a decrease of $481,000, or 1.4%, from the
quarter ended June 30, 2022. Compensation and benefits decreased
$464,000, or 2.2%, and professional fees decreased $223,000, or
13.3%, partially offset by a $254,000 increase in occupancy and
equipment expenses. The decrease in compensation expense reflects a
$477,000 decrease in commission expense consistent with the
decrease in mortgage originations. The increase in occupancy and
equipment expense reflects an increase in expenses for utilities
and software licenses.
Total noninterest expenses decreased $4.8 million, or 12.2%,
from the quarter ended September 30, 2021. Compensation and
benefits decreased $3.8 million and loan expenses decreased
$968,000, consistent with the decrease in residential mortgage loan
closings and corresponding decrease in mortgage origination
commissions. The decrease in compensation and benefits also
reflects proactive cost reduction measures taken at HarborOne
Mortgage beginning in the second quarter of 2021.
Income Tax Provision
The effective tax rate was 25.4% for the quarter ended September
30, 2022, compared to 27.6% for the quarter ended June 30, 2022 and
28.6% for the quarter ended September 30, 2021. The third quarter
2022 effective rate was impacted by a tax benefit recorded for
Industrial Revenue Bonds. The 2022 effective tax rate is expected
to be approximately 27%.
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 continued to be strong with total
nonperforming assets of $23.4 million at September 30, 2022,
compared to $24.4 million at June 30, 2022 and $36.5 million at
September 30, 2021. Nonperforming assets as a percentage of total
assets were 0.47% at September 30, 2022, 0.52% at June 30, 2022,
and 0.80% at September 30, 2021.
The funded loan provision for credit losses for the three and
nine months ended September 30, 2022 was $262,000 and $2.0 million,
respectively, and reflects provisioning for loan growth partially
offset by a reduction in pandemic related uncertainty. Net
recoveries totaled $799,000, or 0.08% of average loans outstanding
on an annualized basis, for the quarter ended September 30, 2022.
Net recoveries totaled $504,000, or 0.05% of average loans
outstanding on an annualized basis, for the quarter ended June 30,
2022, and net charge-offs totaled $1.7 million, or 0.19% of average
loans outstanding on an annualized basis, for the quarter ended
September 30, 2021. The third quarter 2022 recovery reflects the
disposition of assets from a SBA guaranteed credit.
The ACL was $44.6 million, or 1.06% of total loans, at September
30, 2022, compared to $43.6 million, or 1.11% of total loans, at
June 30, 2022 and an allowance for loss under the incurred loss
model of $48.0 million, or 1.39% of total loans, at September 30,
2021. The ACL on unfunded commitments, included in other
liabilities on the unaudited Consolidated Balance Sheets, amounted
to $5.5 million at September 30, 2022 as compared to $5.1 million
at June 30, 2022 and the associated provision was $406,000 and $1.6
million for the three and nine months ended September 30, 2022.
There was no ACL on unfunded commitments at December 31, 2021 or
September 30, 2021. The increase from the prior quarter reflects
$95.3 million in new construction originations in the third
quarter, with $72.4 million in unfunded balances as of September
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 September 30, 2022, business-oriented hotels
included 13 loans with a total outstanding balance of $93.9
million, non-anchored retail space included 31 loans with a total
outstanding balance of $56.3 million and metro office space
included 2 loans with a total outstanding balance of $14.9 million.
As of September 30, 2022 there were two business-oriented hotel
credits with a carrying value of $10.3 million that were rated
substandard and on nonaccrual. One of those credits in the amount
of $2.0 million was provided a principal deferral that resulted in
a troubled-debt restructuring designation in the third quarter. One
business-oriented hotel credit in the amount of $9.5 million was
downgraded to a watch risk rating during the third quarter of 2022.
The other loans in these groups were performing in accordance with
their terms.
Balance Sheet
Total assets increased $283.6 million, or 6.0%, to $4.99 billion
at September 30, 2022, from $4.70 billion at June 30, 2022. The
increase primarily reflects an increase of $285.4 million in loans.
Securities available for sale were negatively impacted by
unrealized losses of $70.4 million as of September 30, 2022, as
compared to $49.9 million of unrealized losses as of June 30, 2022,
and $3.6 million of unrealized losses as of December 31, 2021.
Loans increased $285.4 million, or 7.3%, to $4.20 billion at
September 30, 2022, from $3.91 billion at June 30, 2022. The
increase in loans for the three months ended September 30, 2022 was
primarily due to increases in commercial real estate loans of
$194.3 million, commercial construction loans of $26.3 million and
residential real estate loans of $97.7 million, partially offset by
decreases in commercial and industrial loans of $10.1 million and
consumer loans of $22.8 million. As of September 30, 2022,
outstanding PPP loans amounted to $2.0 million, and there was
$24,000 in deferred processing fee income. We expect to complete
the forgiveness process for the remaining PPP loans by
year-end.
Total deposits were $3.88 billion at September 30, 2022 and
$3.85 billion at June 30, 2022. Compared to the prior quarter,
non-certificate accounts increased $22.9 million, and term
certificate accounts increased $12.3 million. FHLB borrowings
increased $240.0 million to $345.7 million at September 30, 2022
from $105.7 million at June 30, 2022. At September 30, 2022, FHLB
borrowings were primarily short-term borrowings.
Total stockholders’ equity was $611.4 million at September 30,
2022, compared to $624.5 million at June 30, 2022 and $680.0
million at September 30, 2021. Stockholders’ equity decreased 2.1%
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 repurchased 783,502 shares at an
average price of $13.82 during the three months ended September 30,
2022 and announced a fifth share repurchase program on September
21, 2022 to commence at the completion of the share repurchase
program announced on April 12, 2022. The
tangible-common-equity-to-tangible-assets ratio was 10.97% at
September 30, 2022, 11.92% at June 30, 2022, and 13.50% at
September 30, 2021. At September 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 31 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 26 offices in Maine,
Massachusetts, Rhode Island, and New Hampshire, 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, 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;
cybersecurity incidents, fraud, natural disasters, war, terrorism,
civil unrest, the ongoing COVID-19 pandemic, and future pandemics;
changes in regulation; changes in accounting standards and
practices; the risk that goodwill and intangibles recorded in the
Company’s financial statements will become impaired; demand for
loans in the Company’s market area; the Company’s ability to
attract and maintain deposits; risks related to the implementation
of acquisitions, dispositions, and restructurings; the risk that
the Company may not be successful in the implementation of its
business strategy; changes in assumptions used in making such
forward-looking statements and the risk factors described in the
Annual Report on Form 10‑K and Quarterly Reports on Form 10‑Q as
filed with the SEC, which are available at the SEC’s website,
www.sec.gov. Should one or more of these risks materialize or
should underlying beliefs or assumptions prove incorrect,
HarborOne’s actual results could differ materially from those
discussed. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date
of this release. The Company disclaims any obligation to publicly
update or revise any forward-looking statements to reflect changes
in underlying assumptions or factors, new information, future
events or other changes, except as required by law.
Use of Non-GAAP Measures
In addition to results presented in accordance with generally
accepted accounting principles (“GAAP”), this press release
contains certain non-GAAP financial measures. The Company’s
management believes that the supplemental non-GAAP information,
which consists of the efficiency ratio, tangible common equity to
tangible assets ratio and tangible book value per share, is
utilized by regulators and market analysts to evaluate a company’s
financial condition and therefore, such information is useful to
investors. These disclosures should not be viewed as a substitute
for financial results determined in accordance with GAAP, nor are
they necessarily comparable to non-GAAP performance measures which
may be presented by other companies. Because non-GAAP financial
measures are not standardized, it may not be possible to compare
these financial measures with other companies’ non-GAAP financial
measures having the same or similar names.
HarborOne Bancorp,
Inc.
Consolidated Balance Sheet
Trend
(Unaudited)
September 30,
June 30,
March 31,
December 31,
September 30,
(in thousands)
2022
2022
2022
2021
2021
Assets
Cash and due from banks
$
39,910
$
35,843
$
41,862
$
35,549
$
42,589
Short-term investments
46,044
48,495
97,870
159,170
277,050
Total cash and cash equivalents
85,954
84,338
139,732
194,719
319,639
Securities available for sale, at fair
value
304,852
334,398
361,529
394,036
390,552
Securities held to maturity, at amortized
cost
15,000
10,000
—
—
—
Federal Home Loan Bank stock, at cost
15,973
5,625
5,931
5,931
6,828
Asset held for sale
—
—
678
881
881
Loans held for sale, at fair value
18,805
31,679
25,690
45,642
77,052
Loans:
Commercial real estate
2,041,905
1,847,619
1,816,484
1,699,877
1,573,284
Commercial construction
185,062
158,762
154,059
136,563
152,685
Commercial and industrial
397,112
407,182
410,787
421,608
414,814
Total commercial loans
2,624,079
2,413,563
2,381,330
2,258,048
2,140,783
Residential real estate
1,520,809
1,423,074
1,252,920
1,217,980
1,160,689
Consumer
52,466
75,312
103,100
131,705
156,272
Loans
4,197,354
3,911,949
3,737,350
3,607,733
3,457,744
Less: Allowance for credit losses on
loans
(44,621)
(43,560)
(41,765)
(45,377)
(47,988)
Net loans
4,152,733
3,868,389
3,695,585
3,562,356
3,409,756
Mortgage servicing rights, at fair
value
49,861
47,130
45,043
38,268
36,540
Goodwill
69,802
69,802
69,802
69,802
69,802
Other intangible assets
2,461
2,695
2,930
3,164
3,399
Other assets
272,202
249,988
244,405
238,606
252,645
Total assets
$
4,987,643
$
4,704,044
$
4,591,325
$
4,553,405
$
4,567,094
Liabilities and Stockholders'
Equity
Deposits:
Demand deposit accounts
$
795,945
$
775,154
$
771,172
$
743,051
$
756,917
NOW accounts
308,191
316,839
310,090
313,733
300,577
Regular savings and club accounts
1,289,825
1,282,913
1,218,656
1,138,979
1,144,595
Money market deposit accounts
889,517
885,673
864,316
858,970
832,441
Term certificate accounts
599,632
587,354
597,746
627,916
659,850
Total deposits
3,883,110
3,847,933
3,761,980
3,682,649
3,694,380
Short-term borrowed funds
330,000
90,000
—
—
—
Long-term borrowed funds
15,684
15,693
55,702
55,711
55,720
Subordinated debt
34,254
34,222
34,191
34,159
34,128
Other liabilities and accrued expenses
113,225
91,718
90,387
101,625
102,834
Total liabilities
4,376,273
4,079,566
3,942,260
3,874,144
3,887,062
Common stock
593
593
591
585
585
Additional paid-in capital
480,617
479,519
477,302
469,934
468,526
Unearned compensation - ESOP
(28,083)
(28,542)
(29,002)
(29,461)
(29,921)
Retained earnings
350,049
339,471
332,734
325,699
315,683
Treasury stock
(143,125)
(132,296)
(113,513)
(85,859)
(73,723)
Accumulated other comprehensive loss
(48,681)
(34,267)
(19,047)
(1,637)
(1,118)
Total stockholders' equity
611,370
624,478
649,065
679,261
680,032
Total liabilities and stockholders'
equity
$
4,987,643
$
4,704,044
$
4,591,325
$
4,553,405
$
4,567,094
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)
2022
2022
2022
2021
2021
Interest and dividend income:
Interest and fees on loans
$
42,065
$
37,522
$
33,576
$
34,177
$
33,680
Interest on loans held for sale
377
331
264
501
665
Interest on securities
1,971
1,873
1,701
1,541
1,293
Other interest and dividend income
143
131
61
134
170
Total interest and dividend income
44,556
39,857
35,602
36,353
35,808
Interest expense:
Interest on deposits
3,491
2,019
1,621
1,651
2,050
Interest on FHLB borrowings
1,209
119
188
193
431
Interest on subordinated debentures
524
524
523
524
524
Total interest expense
5,224
2,662
2,332
2,368
3,005
Net interest and dividend income
39,332
37,195
33,270
33,985
32,803
Provision (benefit) for credit losses
668
2,546
338
(1,436)
(1,627)
Net interest and dividend income, after
provision (benefit) for credit losses
38,664
34,649
32,932
35,421
34,430
Noninterest income:
Mortgage banking income:
Gain on sale of mortgage loans
3,809
4,538
5,322
10,063
12,756
Changes in mortgage servicing rights fair
value
1,816
862
5,285
(245)
(992)
Other
2,453
2,612
2,558
3,359
3,882
Total mortgage banking income
8,078
8,012
13,165
13,177
15,646
Deposit account fees
4,870
4,892
4,472
4,783
4,658
Income on retirement plan annuities
119
112
107
109
108
Gain on sale and call of securities,
net
—
—
—
—
241
Bank-owned life insurance income
503
494
483
506
515
Other income
675
593
834
589
842
Total noninterest income
14,245
14,103
19,061
19,164
22,010
Noninterest expenses:
Compensation and benefits
20,991
21,455
20,723
24,564
24,760
Occupancy and equipment
4,829
4,575
5,428
4,923
4,765
Data processing
2,311
2,259
2,241
2,244
2,205
Loan expense
355
385
478
732
1,323
Marketing
850
986
1,218
1,120
880
Professional fees
1,457
1,680
1,539
1,443
1,362
Deposit insurance
357
354
349
345
341
Prepayment penalties on Federal Home Loan
Bank advances
—
—
—
—
1,095
Other expenses
3,323
3,260
2,859
2,817
2,543
Total noninterest expenses
34,473
34,954
34,835
38,188
39,274
Income before income taxes
18,436
13,798
17,158
16,397
17,166
Income tax provision
4,678
3,811
4,891
3,807
4,907
Net income
$
13,758
$
9,987
$
12,267
$
12,590
$
12,259
Earnings per common share:
Basic
$
0.30
$
0.21
$
0.26
$
0.26
$
0.25
Diluted
$
0.30
$
0.21
$
0.25
$
0.25
$
0.24
Weighted average shares outstanding:
Basic
45,830,737
46,980,830
47,836,410
48,918,539
49,801,123
Diluted
46,420,527
47,536,033
48,690,420
49,828,379
50,663,415
HarborOne Bancorp,
Inc.
Consolidated Statements of Net
Income
(Unaudited)
For the Nine Months Ended
September 30,
(dollars in thousands, except share
data)
2022
2021
$ Change
% Change
Interest and dividend income:
Interest and fees on loans
$
113,163
$
101,646
$
11,517
11.3
%
Interest on loans held for sale
972
2,841
(1,869)
(65.8)
Interest on securities
5,545
2,671
2,874
107.6
Other interest and dividend income
335
384
(49)
(12.8)
Total interest and dividend income
120,015
107,542
12,473
11.6
Interest expense:
Interest on deposits
7,131
7,072
59
0.8
Interest on FHLB borrowings
1,516
1,514
2
0.1
Interest on subordinated debentures
1,571
1,571
—
0.0
Total interest expense
10,218
10,157
61
0.6
Net interest and dividend income
109,797
97,385
12,412
12.7
Provision (benefit) for credit losses
3,552
(5,822)
9,374
161.0
Net interest and dividend income, after
provision (benefit) for credit losses
106,245
103,207
3,038
2.9
Noninterest income:
Mortgage banking income:
Gain on sale of mortgage loans
13,669
51,820
(38,151)
(73.6)
Changes in mortgage servicing rights fair
value
7,963
(135)
8,098
NM
Other
7,623
12,472
(4,849)
(38.9)
Total mortgage banking income
29,255
64,157
(34,902)
(54.4)
Deposit account fees
14,234
13,056
1,178
9.0
Income on retirement plan annuities
338
318
20
6.3
Gain on sale and call of securities,
net
—
241
(241)
(100.0)
Bank-owned life insurance income
1,480
1,516
(36)
(2.4)
Other income
2,102
2,234
(132)
(5.9)
Total noninterest income
47,409
81,522
(34,113)
(41.8)
Noninterest expenses:
Compensation and benefits
63,169
77,360
(14,191)
(18.3)
Occupancy and equipment
14,832
14,723
109
0.7
Data processing
6,811
6,910
(99)
(1.4)
Loan expense
1,218
5,008
(3,790)
(75.7)
Marketing
3,054
2,524
530
21.0
Professional fees
4,676
4,432
244
5.5
Deposit insurance
1,060
993
67
6.7
Prepayment penalties on Federal Home Loan
Bank advances
—
1,095
(1,095)
(100.0)
Other expenses
9,442
7,629
1,813
23.8
Total noninterest expenses
104,262
120,674
(16,412)
(13.6)
Income before income taxes
49,392
64,055
(14,663)
(22.9)
Income tax provision
13,380
18,128
(4,748)
(26.2)
Net income
$
36,012
$
45,927
$
(9,915)
(21.6)
%
Earnings per common share:
Basic
$
0.77
$
0.89
Diluted
$
0.76
$
0.88
Weighted average shares outstanding:
Basic
46,875,312
51,362,252
Diluted
47,541,647
52,094,749
HarborOne Bancorp,
Inc.
Average Balances /
Yields
(Unaudited)
Quarters Ended
September 30, 2022
June 30, 2022
September 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)
$
390,577
$
1,971
2.00
%
$
391,448
$
1,873
1.92
%
$
358,927
$
1,293
1.43
%
Other interest-earning assets
27,723
143
2.05
64,678
131
0.81
372,892
170
0.18
Loans held for sale
28,046
377
5.33
29,474
331
4.51
84,399
665
3.13
Loans
Commercial loans (2)
2,522,359
28,298
4.45
2,384,630
25,295
4.25
2,121,432
22,394
4.19
Residential real estate loans (2)
1,470,305
12,972
3.50
1,330,772
11,182
3.37
1,121,898
9,352
3.31
Consumer loans (2)
63,220
795
4.99
88,943
1,045
4.71
170,366
1,934
4.50
Total loans
4,055,884
42,065
4.11
3,804,345
37,522
3.96
3,413,696
33,680
3.91
Total interest-earning assets
4,502,230
44,556
3.93
4,289,945
39,857
3.73
4,229,914
35,808
3.36
Noninterest-earning assets
308,734
311,998
347,060
Total assets
$
4,810,964
$
4,601,943
$
4,576,974
Interest-bearing liabilities:
Savings accounts
$
1,293,598
1,211
0.37
$
1,266,912
626
0.20
$
1,136,131
365
0.13
NOW accounts
305,777
42
0.05
311,241
38
0.05
283,725
45
0.06
Money market accounts
893,452
1,382
0.61
885,305
635
0.30
832,340
392
0.19
Certificates of deposit
486,923
787
0.64
484,484
670
0.55
570,570
1,087
0.76
Brokered deposits
102,875
69
0.27
100,000
50
0.20
100,000
161
0.64
Total interest-bearing deposits
3,082,625
3,491
0.45
3,047,942
2,019
0.27
2,922,766
2,050
0.28
FHLB advances
196,036
1,209
2.45
34,763
119
1.36
84,438
431
2.03
Subordinated debentures
34,237
524
6.07
34,207
524
6.14
34,111
524
6.09
Total borrowings
230,273
1,733
2.99
68,970
643
3.74
118,549
955
3.20
Total interest-bearing liabilities
3,312,898
5,224
0.63
3,116,912
2,662
0.34
3,041,315
3,005
0.39
Noninterest-bearing
liabilities:
Noninterest-bearing deposits
789,214
768,088
756,927
Other noninterest-bearing liabilities
80,304
75,186
90,366
Total liabilities
4,182,416
3,960,186
3,888,608
Total stockholders' equity
628,548
641,757
688,366
Total liabilities and stockholders'
equity
$
4,810,964
$
4,601,943
$
4,576,974
Net interest income as reported
39,332
37,195
32,803
Interest rate spread (3)
3.30
%
3.39
%
2.97
%
Net interest-earning assets (4)
$
1,189,332
$
1,173,033
$
1,188,599
Net interest margin (5)
3.47
%
3.48
%
3.08
%
Ratio of interest-earning assets to
interest-bearing liabilities
135.90
%
137.63
%
139.08
%
Supplemental information:
Total deposits, including demand
deposits
$
3,871,839
$
3,491
$
3,816,030
$
2,019
$
3,679,693
$
2,050
Cost of total deposits
0.36
%
0.21
%
0.22
%
Total funding liabilities, including
demand deposits
$
4,102,112
$
5,224
$
3,885,000
$
2,662
$
3,798,242
$
3,005
Cost of total funding liabilities
0.51
%
0.27
%
0.31
%
(1) Includes securities available for sale
and securities held to maturity.
(2) Includes nonaccruing loan balances and
interest received on such loans.
(3) 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 Nine Months
Ended
September 30, 2022
September 30, 2021
Average
Average
Outstanding
Yield/
Outstanding
Yield/
Balance
Interest
Cost
Balance
Interest
Cost
(dollars in thousands)
Interest-earning assets:
Investment securities (1)
$
391,786
$
5,545
1.89
%
$
318,817
$
2,671
1.12
%
Other interest-earning assets
80,540
335
0.56
317,837
384
0.16
Loans held for sale
29,114
972
4.46
130,622
2,841
2.91
Loans
Commercial loans (2)
2,400,290
75,688
4.22
2,144,726
65,253
4.07
Residential real estate loans (2)
1,341,508
34,296
3.42
1,090,361
29,439
3.61
Consumer loans (2)
89,934
3,179
4.73
209,443
6,954
4.44
Total loans
3,831,732
113,163
3.95
3,444,530
101,646
3.95
Total interest-earning assets
4,333,172
120,015
3.70
4,211,806
107,542
3.41
Noninterest-earning assets
315,781
338,980
Total assets
$
4,648,953
$
4,550,786
Interest-bearing liabilities:
Savings accounts
$
1,242,533
2,203
0.24
$
1,104,765
1,363
0.16
NOW accounts
306,115
116
0.05
242,623
123
0.07
Money market accounts
879,310
2,320
0.35
849,041
1,369
0.22
Certificates of deposit
497,744
2,186
0.59
589,404
3,760
0.85
Brokered deposits
100,969
306
0.41
100,000
457
0.61
Total interest-bearing deposits
3,026,671
7,131
0.32
2,885,833
7,072
0.33
FHLB advances
96,015
1,516
2.11
94,482
1,514
2.14
Subordinated debentures
34,206
1,571
6.14
34,080
1,571
6.16
Total borrowings
130,221
3,087
3.17
128,562
3,085
3.21
Total interest-bearing liabilities
3,156,892
10,218
0.43
3,014,395
10,157
0.45
Noninterest-bearing
liabilities:
Noninterest-bearing deposits
765,479
749,426
Other noninterest-bearing liabilities
80,727
90,763
Total liabilities
4,003,098
3,854,584
Total stockholders' equity
645,855
696,202
Total liabilities and stockholders'
equity
$
4,648,953
$
4,550,786
Net interest income as reported
109,797
97,385
Interest rate spread (3)
3.27
%
2.96
%
Net interest-earning assets (4)
$
1,176,280
$
1,197,411
Net interest margin (5)
3.39
%
3.09
%
Ratio of interest-earning assets to
interest-bearing liabilities
137.26
%
139.72
%
Supplemental information:
Total deposits, including demand
deposits
$
3,792,150
$
7,131
$
3,635,259
$
7,072
Cost of total deposits
0.25
%
0.26
%
Total funding liabilities, including
demand deposits
$
3,922,371
$
10,218
$
3,763,821
$
10,157
Cost of total funding liabilities
0.35
%
0.36
%
(1) Includes securities available for sale
and securities held to maturity.
(2) Includes nonaccruing loan balances and
interest received on such loans.
(3) 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, 2022
June 30, 2022
March 31, 2022
December 31, 2021
September 30, 2021
(in thousands)
Interest-earning assets:
Investment securities (1)
$
390,577
$
391,448
$
393,364
$
394,301
$
358,927
Other interest-earning assets
27,723
64,678
150,569
286,026
372,892
Loans held for sale
28,046
29,474
29,842
63,833
84,399
Loans
Commercial loans (2)
2,522,359
2,384,630
2,291,343
2,165,739
2,121,432
Residential real estate loans (2)
1,470,305
1,330,772
1,220,703
1,171,608
1,121,898
Consumer loans (2)
63,220
88,943
118,242
143,577
170,366
Total loans
4,055,884
3,804,345
3,630,288
3,480,924
3,413,696
Total interest-earning assets
4,502,230
4,289,945
4,204,063
4,225,084
4,229,914
Noninterest-earning assets
308,734
311,998
326,811
337,310
347,060
Total assets
$
4,810,964
$
4,601,943
$
4,530,874
$
4,562,394
$
4,576,974
Interest-bearing liabilities:
Savings accounts
$
1,293,598
$
1,266,912
$
1,165,683
$
1,147,855
$
1,136,131
NOW accounts
305,777
311,241
301,279
300,459
283,725
Money market accounts
893,452
885,305
858,792
839,977
832,340
Certificates of deposit
486,923
484,484
522,211
543,208
570,570
Brokered deposits
102,875
100,000
100,000
100,000
100,000
Total interest-bearing deposits
3,082,625
3,047,942
2,947,965
2,931,499
2,922,766
FHLB advances
196,036
34,763
55,706
55,714
84,438
Subordinated debentures
34,237
34,207
34,173
34,144
34,111
Total borrowings
230,273
68,970
89,879
89,858
118,549
Total interest-bearing liabilities
3,312,898
3,116,912
3,037,844
3,021,357
3,041,315
Noninterest-bearing
liabilities:
Noninterest-bearing deposits
789,214
768,088
738,578
768,361
756,927
Other noninterest-bearing liabilities
80,304
75,186
86,763
92,034
90,366
Total liabilities
4,182,416
3,960,186
3,863,185
3,881,752
3,888,608
Total stockholders' equity
628,548
641,757
667,689
680,642
688,366
Total liabilities and stockholders'
equity
$
4,810,964
$
4,601,943
$
4,530,874
$
4,562,394
$
4,576,974
Annualized Yield Trend -
Quarters Ended
September 30, 2022
June 30, 2022
March 31, 2022
December 31, 2021
September 30, 2021
Interest-earning assets:
Investment securities (1)
2.00
%
1.92
%
1.75
%
1.55
%
1.43
%
Other interest-earning assets
2.05
%
0.81
%
0.16
%
0.19
%
0.18
%
Loans held for sale
5.33
%
4.51
%
3.59
%
3.11
%
3.13
%
Commercial loans (2)
4.45
%
4.25
%
3.91
%
4.15
%
4.19
%
Residential real estate loans (2)
3.50
%
3.37
%
3.37
%
3.34
%
3.31
%
Consumer loans (2)
4.99
%
4.71
%
4.59
%
4.56
%
4.50
%
Total loans
4.11
%
3.96
%
3.75
%
3.90
%
3.91
%
Total interest-earning assets
3.93
%
3.73
%
3.43
%
3.41
%
3.36
%
Interest-bearing liabilities:
Savings accounts
0.37
%
0.20
%
0.13
%
0.09
%
0.13
%
NOW accounts
0.05
%
0.05
%
0.05
%
0.05
%
0.06
%
Money market accounts
0.61
%
0.30
%
0.14
%
0.15
%
0.19
%
Certificates of deposit
0.64
%
0.55
%
0.57
%
0.64
%
0.76
%
Brokered deposits
0.27
%
0.20
%
0.76
%
0.71
%
0.64
%
Total interest-bearing deposits
0.45
%
0.27
%
0.22
%
0.22
%
0.28
%
FHLB advances
2.45
%
1.36
%
1.37
%
1.37
%
2.03
%
Subordinated debentures
6.07
%
6.14
%
6.21
%
6.09
%
6.09
%
Total borrowings
2.99
%
3.74
%
3.21
%
3.17
%
3.20
%
Total interest-bearing liabilities
0.63
%
0.34
%
0.31
%
0.31
%
0.39
%
(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):
2022
2022
2022
2021
2021
(dollars in thousands)
Return on average assets (ROAA)
1.14
%
0.87
%
1.08
%
1.10
%
1.07
%
Return on average equity (ROAE)
8.76
%
6.22
%
7.35
%
7.40
%
7.12
%
Total noninterest expense
$
34,473
$
34,954
$
34,835
$
38,188
$
39,274
Less: Amortization of other intangible
assets
235
235
235
235
324
Total adjusted noninterest expense
$
34,238
$
34,719
$
34,600
$
37,953
$
38,950
Net interest and dividend income
$
39,332
$
37,195
$
33,270
$
33,985
$
32,803
Total noninterest income
14,245
14,103
19,061
19,164
22,010
Total revenue
$
53,577
$
51,298
$
52,331
$
53,149
$
54,813
Efficiency ratio (1)
63.90
%
67.68
%
66.12
%
71.41
%
71.06
%
(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
2022
2022
2022
2021
2021
(dollars in thousands)
Total nonperforming assets
$
23,367
$
24,441
$
26,109
$
36,186
$
36,514
Nonperforming assets to total assets
0.47
%
0.52
%
0.57
%
0.79
%
0.80
%
Allowance for credit losses on loans to
total loans
1.06
%
1.11
%
1.12
%
1.26
%
1.39
%
Net (recoveries) charge-offs
$
(799)
$
(504)
$
2,730
$
1,174
$
1,658
Annualized net (recoveries)
charge-offs/average loans
(0.08)
%
(0.05)
%
0.30
%
0.13
%
0.19
%
Allowance for credit losses on loans to
nonperforming loans
191.60
%
178.41
%
159.96
%
125.60
%
131.52
%
HarborOne Bancorp,
Inc.
Selected Financial
Highlights
(Unaudited)
Quarters Ended
September 30,
June 30,
March 31,
December 31,
September 30,
Capital and Share Related
2022
2022
2022
2021
2021
(dollars in thousands, except share
data)
Common stock outstanding
49,202,660
49,989,007
51,257,696
52,390,478
53,232,110
Book value per share
$
12.43
$
12.49
$
12.66
$
12.97
$
12.77
Tangible common equity:
Total stockholders' equity
$
611,370
$
624,478
$
649,065
$
679,261
$
680,032
Less: Goodwill
69,802
69,802
69,802
69,802
69,802
Less: Other intangible assets (1)
2,461
2,695
2,930
3,164
3,399
Tangible common equity
$
539,107
$
551,981
$
576,333
$
606,295
$
606,831
Tangible book value per share (2)
$
10.96
$
11.04
$
11.24
$
11.57
$
11.40
Tangible assets:
Total assets
$
4,987,643
$
4,704,044
$
4,591,325
$
4,553,405
$
4,567,094
Less: Goodwill
69,802
69,802
69,802
69,802
69,802
Less: Other intangible assets
2,461
2,695
2,930
3,164
3,399
Tangible assets
$
4,915,380
$
4,631,547
$
4,518,593
$
4,480,439
$
4,493,893
Tangible common equity / tangible assets
(3)
10.97
%
11.92
%
12.75
%
13.53
%
13.50
%
(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,
2022
2022
2021
2022
2022
2021
(in thousands)
Net interest and dividend income
$
437
$
411
$
792
$
39,373
$
37,246
$
32,494
Provision (benefit) for credit losses
—
—
—
668
2,546
(1,627)
Net interest and dividend income, after
provision for loan losses
437
411
792
38,705
34,700
34,121
Mortgage banking income:
Gain on sale of mortgage loans
3,809
4,538
12,756
—
—
—
Intersegment gain (loss)
698
1,097
2,366
(904)
(1,095)
(1,373)
Changes in mortgage servicing rights fair
value
1,652
735
(918)
164
127
(74)
Other
2,235
2,393
3,619
218
219
263
Total mortgage banking income (loss)
8,394
8,763
17,823
(522)
(749)
(1,184)
Other noninterest income (loss)
(13)
7
25
6,180
6,084
6,339
Total noninterest income
8,381
8,770
17,848
5,658
5,335
5,155
Noninterest expense
6,610
7,242
12,387
27,707
27,131
26,570
Income before income taxes
2,208
1,939
6,253
16,656
12,904
12,706
Provision for income taxes
687
549
1,559
4,166
3,550
3,575
Net income
$
1,521
$
1,390
$
4,694
$
12,490
$
9,354
$
9,131
HarborOne Mortgage
HarborOne Bank
For the Nine Months
Ended
For the Nine Months
Ended
September 30,
September 30,
September 30,
September 30,
2022
2021
2022
2021
(in thousands)
Net interest and dividend income
$
1,198
$
2,897
$
110,043
$
95,876
Provision (benefit) for credit losses
—
—
3,552
(5,822)
Net interest and dividend income, after
provision (benefit) for credit losses
1,198
2,897
106,491
101,698
Mortgage banking income:
Gain on sale of mortgage loans
13,669
51,820
—
—
Intersegment gain (loss)
2,632
3,938
(2,607)
(2,945)
Changes in mortgage servicing rights fair
value
7,082
72
881
(207)
Other
6,953
11,633
670
839
Total mortgage banking income (loss)
30,336
67,463
(1,056)
(2,313)
Other noninterest income
3
37
18,151
17,328
Total noninterest income
30,339
67,500
17,095
15,015
Noninterest expense
21,613
44,545
81,663
75,161
Income before income taxes
9,924
25,852
41,923
41,552
Provision for income taxes
2,777
6,905
11,273
11,873
Net income
$
7,147
$
18,947
$
30,650
$
29,679
Category: Earnings Release
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221025006139/en/
Linda Simmons, EVP, CFO (508) 895-1379
HarborOne Bancorp (NASDAQ:HONE)
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