HarborOne Bancorp, Inc. (the “Company” or “HarborOne”) (NASDAQ:
HONE), the holding company for HarborOne Bank (the “Bank”),
announced net income of $45.6 million, or $0.97 per diluted share,
for the year ended December 31, 2022, a decrease of $12.9 million,
or 22.1%, compared to net income of $58.5 million, or $1.14 per
diluted share, for the year ended December 31, 2021. For the fourth
quarter of 2022, net income was $9.6 million, or $0.21 per diluted
share, compared to $13.8 million, or $0.30 per diluted share, for
the preceding quarter and $12.6 million, or $0.25 per diluted
share, for the quarter ended December 31, 2021.
Selected Financial Highlights:
- Net interest income up $17.6 million, or 13.4% year over year,
driven by higher rates and loan growth.
- Strong asset quality; nonperforming loans to total loans was
0.32% compared to 1.00% last year.
- Robust loan growth of $941.9 million, or 26.1%, year over
year.
- Total deposit growth of $506.8 million, or 13.8% and core
deposit growth of $335.4 million, or 11.0%.
- Despite a reduction in mortgage banking income, HarborOne
Mortgage posted positive earnings in 2022.
- Continued share repurchase program.
“I am very proud of our team’s 2022 accomplishments. Despite a
challenging rate environment, our focused customer engagement
produced loan growth of 26%, deposit growth of 14%, and net
interest income growth of 13% ; all while reducing expenses by
13%,” said Joseph F. Casey, President and Chief Executive Officer.
He added: “Our mortgage team, in particular, faced the rapidly
rising mortgage rates and dramatic reduction in refinance volume
head on, implementing significant cost reductions in order to
maintain profitability for the year.”
Net Interest Income
The Company’s net interest and dividend income was $39.2 million
for the quarter ended December 31, 2022, compared to $39.3 million
for the quarter ended September 30, 2022, and up $5.2 million, or
15.3%, from $34.0 million for the quarter ended December 31, 2021.
The tax equivalent interest rate spread and net interest margin
were 2.88% and 3.23%, respectively, for the quarter ended December
31, 2022, compared to 3.30% and 3.47%, respectively, for the
quarter ended September 30, 2022, and 3.10% and 3.19%,
respectively, for the quarter ended December 31, 2021. On a
linked-quarter basis, the decreases in net interest and dividend
income, tax equivalent interest rate spread, and net interest
margin primarily reflect higher rates on deposits partially offset
by increased loan balances and yields. The cost of funds was 114
basis points for the quarter ended December 31, 2022, compared to
51 basis points for the preceding quarter.
The $7.4 million increase in total interest and dividend income
on a linked-quarter basis reflected a 34-basis-point increase in
the yield on interest-earning assets and a $333.7 million increase
in average earning assets. The yield on loans increased 36 basis
points, from 4.11% to 4.47%. The yield on investments increased 9
basis points, from 2.00% to 2.09%.
The increase in net interest and dividend income from the prior
year quarter reflects an increase of $15.6 million, or 42.8%, in
total interest and dividend income and an increase of $10.4
million, or 437.4%, 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 86
basis points, while the average balance increased $610.8 million,
and the cost of interest-bearing liabilities increased 108 basis
points, while the average balance increased $620.0 million.
Noninterest Income
Total noninterest income decreased $4.3, or 30.5%, to $9.9
million for the quarter ended December 31, 2022, from $14.2 million
for the quarter ended September 30, 2022. Mortgage loan closings
for the quarter ended December 31, 2022 were $222.4 million with a
gain on loan sales of $2.3 million, compared to $250.5 million in
mortgage closings and $3.8 million in gain on sales for the
preceding quarter. Deposit account fees were $5.0 million for the
quarter ended December 31, 2022, compared to $4.9 million for the
quarter ended September 30, 2022. Other income for the quarter
ended December 31, 2022 increased $1.6 million, primarily
reflecting a $1.2 million increase in swap fee income.
The decrease in the fair value of mortgage servicing rights for
the three months ended December 31, 2022 was $2.1 million, as
compared to an increase of $2.6 million in the fair value of
mortgage servicing rights for the three months ended September 30,
2022. The valuation was negatively impacted by key benchmark
mortgage rates used in the valuation that declined, as well as an
increase in the discount rate to reflect secondary market servicing
conditions. The impact of principal payments on the underlying
mortgages on the mortgage servicing rights was $570,000 and
$747,000 for the quarters ended December 31, 2022 and September 30,
2022, respectively.
Total noninterest income decreased $9.3 million, or 48.3%,
compared to the quarter ended December 31, 2021, primarily due to a
$11.2 million, or 84.9%, decrease in mortgage banking income,
driven by the decrease in loan closings and narrowing gain-on-sale
margins.
Noninterest Expense
Total noninterest expenses were $34.6 million for the quarter
ended December 31, 2022, an increase of $171,000, or 0.5%, from the
quarter ended September 30, 2022. Other expenses increased $1.1
million, or 31.9% for the quarter ended December 31 2022, primarily
as a result of a legal settlement. In the fourth quarter of 2022,
the Company reached an agreement-in-principle to settle a purported
class action lawsuit concerning overdraft fees on re-presented
transactions. The matter was filed in the Massachusetts Superior
Court in June 2022, and it is expected to be refiled in federal
court for final settlement purposes, where the settlement remains
subject to court approval. As of December 31, 2022, the Company
estimated the settlement expense, including related costs, to be
$950,000. The increase was offset by an $887,000, or 4.2%, decrease
in compensation expense, primarily reflecting a $715,000 decrease
in salaries and mortgage origination commissions.
Total noninterest expenses decreased $3.5 million, or 9.3%, from
the quarter ended December 30, 2021. Compensation and benefits
decreased $4.5 million and loan expenses decreased $563,000,
consistent with the decrease in residential mortgage loan closings
and corresponding decrease in mortgage origination commissions. The
decrease in compensation and benefits also reflects the impact of
proactive cost reduction measures taken at HarborOne Mortgage, LLC
beginning in the second quarter of 2021.
Income Tax Provision
The effective tax rate for the quarter and year ended December
31, 2022 was 22.4% and 26.1%, respectively, compared to 23.2% and
27.3% for the quarter and year ended December 31, 2021. The 2022
effective tax rate was impacted by a tax benefit recorded for
Industrial Revenue Bonds and a reserve release upon the expiration
of the statute of limitations.
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 $14.8 million at December 31, 2022,
compared to $23.4 million at September 30, 2022 and $36.2 million
at December 31, 2021. Nonperforming assets as a percentage of total
assets were 0.28% at December 31, 2022, 0.47% at September 30,
2022, and 0.79% at December 31, 2021. During 2022, two large
commercial credits were resolved, reducing nonperforming assets
significantly.
The provision for funded loan credit losses for the quarter and
year ended December 31, 2022 was $2.7 million and $4.7 million,
respectively, and reflects provisioning for loan growth partially
offset by a reduction in pandemic-related uncertainty. Net
charge-offs totaled $2.1 million, or 0.19%, and $3.5 million, or
0.09%, of average loans outstanding on an annualized basis, for the
quarter and year ended December 31, 2022, respectively. Net
recoveries totaled $799,000, or 0.08% of average loans outstanding
on an annualized basis, for the quarter ended September 30, 2022,
and net charge-offs totaled $1.2 million, or 0.13% of average loans
outstanding on an annualized basis, for the quarter ended December
31, 2021.
The ACL was $45.2 million, or 0.99% of total loans, at December
31, 2022, compared to $44.6 million, or 1.06% of total loans, at
September 30, 2022 and an allowance for loss under the incurred
loss model of $45.4 million, or 1.26% of total loans, at December
31, 2021. The ACL on unfunded commitments, included in other
liabilities on the unaudited Consolidated Balance Sheets, amounted
to $4.9 million at December 31, 2022 as compared to $5.5 million at
September 30, 2022, reflecting a negative provision of $575,000 for
the quarter ended December 31, 2022. For the year ended December
31, 2022, the provision for unfunded commitments was $966,000, and
there was no ACL on unfunded commitments at December 31, 2021. The
decrease from the prior quarter primarily reflects the movement of
commercial loans from construction loans to permanent loans.
We have not experienced any significant negative trends in the
at-risk sectors previously 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 loans secured by business-oriented hotels, non-anchored retail
space and metro office space. As of December 31, 2022,
business-oriented hotels loans included 12 loans with a total
outstanding balance of $86.0 million, non-anchored retail space
loans included 28 loans with a total outstanding balance of $40.5
million, and metro office space loans included two loans with a
total outstanding balance of $14.9 million. As of December 31, 2022
there was one business-oriented hotel credit with a carrying value
of $2.1 million that was rated substandard and on nonaccrual. This
credit was provided a principal deferral that resulted in a
troubled debt restructuring designation in the third quarter. The
other loans in these groups were performing in accordance with
their terms.
Balance Sheet
Total assets increased $371.9 million, or 7.5%, to $5.36 billion
at December 31, 2022, from $4.99 billion at September 30, 2022. The
increase primarily reflects an increase of $352.3 million in loans.
Securities available for sale were negatively impacted by
unrealized losses of $68.3 million as of December 31, 2022, as
compared to $70.4 million of unrealized losses as of September 30,
2022 and $3.6 million of unrealized losses as of December 31,
2021.
Loans increased $352.3 million, or 8.4%, to $4.55 billion at
December 31, 2022, from $4.20 billion at September 30, 2022. The
increase in loans for the three months ended December 31, 2022 was
primarily due to increases in commercial real estate loans of
$208.4 million, commercial and industrial loans of $27.2 million,
commercial construction loans of $14.2 million, and residential
real estate loans of $113.5 million, partially offset by decreases
in consumer loans of $11.0 million.
Total deposits were $4.19 billion at December 31, 2022 and $3.88
billion at September 30, 2022. Compared to the prior quarter,
non-certificate accounts increased $106.7 million, and term
certificate accounts increased $199.7 million. FHLB borrowings
increased $55.0 million to $400.7 million at December 31, 2022 from
$345.7 million at September 30, 2022. At December 31, 2022, FHLB
borrowings were primarily short-term borrowings.
Total stockholders’ equity was $617.0 million at December 31,
2022, compared to $611.4 million at September 30, 2022 and $679.3
million at December 31, 2021. Stockholders’ equity increased 0.9%
when compared to the prior quarter, as earnings were offset by
share repurchases. The Company repurchased 349,738 shares at an
average price of $13.63 during the three months ended December 31,
2022 and announced a fifth share repurchase program on September
21, 2022 to commence following the completion of the share
repurchase program announced on April 12, 2022. The
tangible-common-equity-to-tangible-assets ratio was 10.31% at
December 31, 2022, 10.97% at September 30, 2022, and 13.53% at
December 31, 2021. At December 31, 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. HarborOne 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)
December 31,
September 30,
June 30,
March 31,
December 31,
(in thousands)
2022
2022
2022
2022
2021
Assets
Cash and due from banks
$
39,712
$
39,910
$
35,843
$
41,862
$
35,549
Short-term investments
58,305
46,044
48,495
97,870
159,170
Total cash and cash equivalents
98,017
85,954
84,338
139,732
194,719
Securities available for sale, at fair
value
301,149
304,852
334,398
361,529
394,036
Securities held to maturity, at amortized
cost
19,949
15,000
10,000
—
—
Federal Home Loan Bank stock, at cost
20,071
15,973
5,625
5,931
5,931
Asset held for sale
—
—
—
678
881
Loans held for sale, at fair value
18,544
18,805
31,679
25,690
45,642
Loans:
Commercial real estate
2,250,344
2,041,905
1,847,619
1,816,484
1,699,877
Commercial construction
199,311
185,062
158,762
154,059
136,563
Commercial and industrial
424,275
397,112
407,182
410,787
421,608
Total commercial loans
2,873,930
2,624,079
2,413,563
2,381,330
2,258,048
Residential real estate
1,634,319
1,520,809
1,423,074
1,252,920
1,217,980
Consumer
41,421
52,466
75,312
103,100
131,705
Loans
4,549,670
4,197,354
3,911,949
3,737,350
3,607,733
Less: Allowance for credit losses on
loans
(45,236
)
(44,621
)
(43,560
)
(41,765
)
(45,377
)
Net loans
4,504,434
4,152,733
3,868,389
3,695,585
3,562,356
Mortgage servicing rights, at fair
value
48,138
49,861
47,130
45,043
38,268
Goodwill
69,802
69,802
69,802
69,802
69,802
Other intangible assets
2,272
2,461
2,695
2,930
3,164
Other assets
277,169
272,202
249,988
244,405
238,606
Total assets
$
5,359,545
$
4,987,643
$
4,704,044
$
4,591,325
$
4,553,405
Liabilities and Stockholders'
Equity
Deposits:
Demand deposit accounts
$
762,576
$
795,945
$
775,154
$
771,172
$
743,051
NOW accounts
297,692
308,191
316,839
310,090
313,733
Regular savings and club accounts
1,468,172
1,289,825
1,282,913
1,218,656
1,138,979
Money market deposit accounts
861,704
889,517
885,673
864,316
858,970
Term certificate accounts
799,355
599,632
587,354
597,746
627,916
Total deposits
4,189,499
3,883,110
3,847,933
3,761,980
3,682,649
Short-term borrowed funds
385,000
330,000
90,000
—
—
Long-term borrowed funds
15,675
15,684
15,693
55,702
55,711
Subordinated debt
34,285
34,254
34,222
34,191
34,159
Other liabilities and accrued expenses
118,110
113,225
91,718
90,387
101,625
Total liabilities
4,742,569
4,376,273
4,079,566
3,942,260
3,874,144
Common stock
596
593
593
591
585
Additional paid-in capital
483,031
480,617
479,519
477,302
469,934
Unearned compensation - ESOP
(27,623
)
(28,083
)
(28,542
)
(29,002
)
(29,461
)
Retained earnings
356,438
350,049
339,471
332,734
325,699
Treasury stock
(148,384
)
(143,125
)
(132,296
)
(113,513
)
(85,859
)
Accumulated other comprehensive loss
(47,082
)
(48,681
)
(34,267
)
(19,047
)
(1,637
)
Total stockholders' equity
616,976
611,370
624,478
649,065
679,261
Total liabilities and stockholders'
equity
$
5,359,545
$
4,987,643
$
4,704,044
$
4,591,325
$
4,553,405
HarborOne Bancorp,
Inc.
Consolidated Statements of Net
Income - Trend
(Unaudited)
Quarters Ended
December 31,
September 30,
June 30,
March 31,
December 31,
(in thousands, except share data)
2022
2022
2022
2022
2021
Interest and dividend income:
Interest and fees on loans
$
49,177
$
42,065
$
37,522
$
33,576
$
34,177
Interest on loans held for sale
334
377
331
264
501
Interest on securities
2,045
1,971
1,873
1,701
1,541
Other interest and dividend income
359
143
131
61
134
Total interest and dividend income
51,915
44,556
39,857
35,602
36,353
Interest expense:
Interest on deposits
8,499
3,491
2,019
1,621
1,651
Interest on FHLB borrowings
3,703
1,209
119
188
193
Interest on subordinated debentures
524
524
524
523
524
Total interest expense
12,726
5,224
2,662
2,332
2,368
Net interest and dividend income
39,189
39,332
37,195
33,270
33,985
Provision (benefit) for credit losses
2,108
668
2,546
338
(1,436
)
Net interest and dividend income, after
provision (benefit) for credit losses
37,081
38,664
34,649
32,932
35,421
Noninterest income:
Mortgage banking income:
Gain on sale of mortgage loans
2,301
3,809
4,538
5,322
10,063
Changes in mortgage servicing rights fair
value
(2,631
)
1,816
862
5,285
(245
)
Other
2,325
2,453
2,612
2,558
3,359
Total mortgage banking income
1,995
8,078
8,012
13,165
13,177
Deposit account fees
5,031
4,870
4,892
4,472
4,783
Income on retirement plan annuities
118
119
112
107
109
Gain on sale and call of securities,
net
—
—
—
—
—
Bank-owned life insurance income
501
503
494
483
506
Other income
2,255
675
593
834
589
Total noninterest income
9,900
14,245
14,103
19,061
19,164
Noninterest expenses:
Compensation and benefits
20,104
20,991
21,455
20,723
24,564
Occupancy and equipment
4,935
4,829
4,575
5,428
4,923
Data processing
2,359
2,311
2,259
2,241
2,244
Loan expense
169
355
385
478
732
Marketing
862
850
986
1,218
1,120
Professional fees
1,446
1,457
1,680
1,539
1,443
Deposit insurance
385
357
354
349
345
Prepayment penalties on Federal Home Loan
Bank advances
—
—
—
—
—
Other expenses
4,384
3,323
3,260
2,859
2,817
Total noninterest expenses
34,644
34,473
34,954
34,835
38,188
Income before income taxes
12,337
18,436
13,798
17,158
16,397
Income tax provision
2,760
4,678
3,811
4,891
3,807
Net income
$
9,577
$
13,758
$
9,987
$
12,267
$
12,590
Earnings per common share:
Basic
$
0.21
$
0.30
$
0.21
$
0.26
$
0.26
Diluted
$
0.21
$
0.30
$
0.21
$
0.25
$
0.25
Weighted average shares outstanding:
Basic
45,321,491
45,830,737
46,980,830
47,836,410
48,918,539
Diluted
45,861,658
46,420,527
47,536,033
48,690,420
49,828,379
HarborOne Bancorp,
Inc.
Consolidated Statements of Net
Income
(Unaudited)
For the Years Ended December
31,
(dollars in thousands, except share
data)
2022
2021
$ Change
% Change
Interest and dividend income:
Interest and fees on loans
$
162,340
$
135,823
$
26,517
19.5
%
Interest on loans held for sale
1,306
3,342
(2,036
)
(60.9
)
Interest on securities
7,590
4,212
3,378
80.2
Other interest and dividend income
694
518
176
34.0
Total interest and dividend income
171,930
143,895
28,035
19.5
Interest expense:
Interest on deposits
15,630
8,723
6,907
79.2
Interest on FHLB borrowings
5,219
1,707
3,512
205.7
Interest on subordinated debentures
2,095
2,095
—
0.0
Total interest expense
22,944
12,525
10,419
83.2
Net interest and dividend income
148,986
131,370
17,616
13.4
Provision (benefit) for credit losses
5,660
(7,258
)
12,918
178.0
Net interest and dividend income, after
provision (benefit) for credit losses
143,326
138,628
4,698
3.4
Noninterest income:
Mortgage banking income:
Gain on sale of mortgage loans
15,970
61,883
(45,913
)
(74.2
)
Changes in mortgage servicing rights fair
value
5,332
(380
)
5,712
NM
Other
9,948
15,831
(5,883
)
(37.2
)
Total mortgage banking income
31,250
77,334
(46,084
)
(59.6
)
Deposit account fees
19,265
17,839
1,426
8.0
Income on retirement plan annuities
456
427
29
6.8
Gain on sale and call of securities,
net
—
241
(241
)
(100.0
)
Bank-owned life insurance income
1,981
2,022
(41
)
(2.0
)
Other income
4,357
2,823
1,534
54.3
Total noninterest income
57,309
100,686
(43,377
)
(43.1
)
Noninterest expenses:
Compensation and benefits
83,273
101,924
(18,651
)
(18.3
)
Occupancy and equipment
19,767
19,646
121
0.6
Data processing
9,170
9,154
16
0.2
Loan expense
1,387
5,740
(4,353
)
(75.8
)
Marketing
3,916
3,644
272
7.5
Professional fees
6,122
5,875
247
4.2
Deposit insurance
1,445
1,338
107
8.0
Prepayment penalties on Federal Home Loan
Bank advances
—
1,095
(1,095
)
(100.0
)
Other expenses
13,826
10,446
3,380
32.4
Total noninterest expenses
138,906
158,862
(19,956
)
(12.6
)
Income before income taxes
61,729
80,452
(18,723
)
(23.3
)
Income tax provision
16,140
21,935
(5,795
)
(26.4
)
Net income
$
45,589
$
58,517
$
(12,928
)
(22.1
)%
Earnings per common share:
Basic
$
0.98
$
1.15
Diluted
$
0.97
$
1.14
Weighted average shares outstanding:
Basic
46,483,664
50,746,302
Diluted
47,118,457
51,523,135
HarborOne Bancorp,
Inc.
Average Balances /
Yields
(Unaudited)
Quarters Ended
December 31, 2022
September 30, 2022
December 31, 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)
$
388,247
$
2,045
2.09
%
$
390,577
$
1,971
2.00
%
$
394,301
$
1,541
1.55
%
Other interest-earning assets
42,640
359
3.34
27,723
143
2.05
286,026
134
0.19
Loans held for sale
22,350
334
5.93
28,046
377
5.33
63,833
501
3.11
Loans
Commercial loans (2)(3)
2,770,667
34,351
4.92
2,522,359
28,298
4.45
2,165,739
22,658
4.15
Residential real estate loans (3)
1,566,389
14,352
3.64
1,470,305
12,972
3.50
1,171,608
9,870
3.34
Consumer loans (3)
45,629
632
5.50
63,220
795
4.99
143,577
1,649
4.56
Total loans
4,382,685
49,335
4.47
4,055,884
42,065
4.11
3,480,924
34,177
3.90
Total interest-earning assets
4,835,922
52,073
4.27
4,502,230
44,556
3.93
4,225,084
36,353
3.41
Noninterest-earning assets
311,372
308,734
337,310
Total assets
$
5,147,294
$
4,810,964
$
4,562,394
Interest-bearing liabilities:
Savings accounts
$
1,408,493
3,591
1.01
$
1,293,598
1,211
0.37
$
1,147,855
247
0.09
NOW accounts
291,890
40
0.05
305,777
42
0.05
300,459
40
0.05
Money market accounts
878,609
3,312
1.50
893,452
1,382
0.61
839,977
307
0.15
Certificates of deposit
487,121
1,062
0.86
486,923
787
0.64
543,208
878
0.64
Brokered deposits
148,460
494
1.32
102,875
69
0.27
100,000
179
0.71
Total interest-bearing deposits
3,214,573
8,499
1.05
3,082,625
3,491
0.45
2,931,499
1,651
0.22
FHLB advances
392,508
3,703
3.74
196,036
1,209
2.45
55,714
193
1.37
Subordinated debentures
34,268
524
6.07
34,237
524
6.07
34,144
524
6.09
Total borrowings
426,776
4,227
3.93
230,273
1,733
2.99
89,858
717
3.17
Total interest-bearing liabilities
3,641,349
12,726
1.39
3,312,898
5,224
0.63
3,021,357
2,368
0.31
Noninterest-bearing
liabilities:
Noninterest-bearing deposits
788,572
789,214
768,361
Other noninterest-bearing liabilities
101,621
80,304
92,034
Total liabilities
4,531,542
4,182,416
3,881,752
Total stockholders' equity
615,752
628,548
680,642
Total liabilities and stockholders'
equity
$
5,147,294
$
4,810,964
$
4,562,394
Tax equivalent net interest income
39,347
39,332
33,985
Tax equivalent interest rate spread
(4)
2.88
%
3.30
%
3.10
%
Less: tax equivalent adjustment
158
—
—
Net interest income as reported
$
39,189
$
39,332
$
33,985
Net interest-earning assets (5)
$
1,194,573
$
1,189,332
$
1,203,727
Net interest margin (6)
3.22
%
3.47
%
3.19
%
Tax equivalent effect
0.01
—
—
Net interest margin on a fully tax
equivalent basis
3.23
%
3.47
%
3.19
%
Ratio of interest-earning assets to
interest-bearing liabilities
132.81
%
135.90
%
139.84
%
Supplemental information:
Total deposits, including demand
deposits
$
4,003,145
$
8,499
$
3,871,839
$
3,491
$
3,699,860
$
1,651
Cost of total deposits
0.84
%
0.36
%
0.18
%
Total funding liabilities, including
demand deposits
$
4,429,921
$
12,726
$
4,102,112
$
5,224
$
3,789,718
$
2,368
Cost of total funding liabilities
1.14
%
0.51
%
0.25
%
(1) Includes securities available for sale
and securities held to maturity.
(2) Includes industrial revenue bonds for
the quarter ended December 31, 2022. Interest income from tax
exempt loans is computed on a taxable equivalent basis using a rate
of 21% for the quarters presented. The yield on commercial loans
before tax equivalent adjustment at December 31, 2022 was
4.90%.
(3) Includes nonaccruing loan balances and
interest received on such loans.
(4) Net interest rate spread represents
the difference between the yield on average interest-earning assets
and the cost of average interest-bearing liabilities.
(5) Net interest-earning assets represents
total interest-earning assets less total interest-bearing
liabilities.
(6) Net interest margin represents net
interest income divided by average total interest-earning
assets.
(7) Annualized.
HarborOne Bancorp,
Inc.
Average Balances /
Yields
(Unaudited)
Years Ended
December 31, 2022
December 31, 2021
Average
Average
Outstanding
Yield/
Outstanding
Yield/
Balance
Interest
Cost
Balance
Interest
Cost
(dollars in thousands)
Interest-earning assets:
Investment securities (1)
$
390,894
$
7,590
1.94
%
$
337,843
$
4,212
1.25
%
Other interest-earning assets
70,987
694
0.98
309,819
518
0.17
Loans held for sale
27,409
1,306
4.76
113,788
3,342
2.94
Loans
Commercial loans (2)(3)
2,493,646
110,305
4.42
2,150,022
87,911
4.09
Residential real estate loans (3)
1,398,190
48,645
3.48
1,110,840
39,309
3.54
Consumer loans (3)
78,766
3,811
4.84
192,841
8,603
4.46
Total loans
3,970,602
162,761
4.10
3,453,703
135,823
3.93
Total interest-earning assets
4,459,892
172,351
3.86
4,215,153
143,895
3.41
Noninterest-earning assets
314,670
338,559
Total assets
$
4,774,562
$
4,553,712
Interest-bearing liabilities:
Savings accounts
$
1,284,364
5,794
0.45
$
1,115,626
1,610
0.14
NOW accounts
302,530
156
0.05
257,201
163
0.06
Money market accounts
879,133
5,632
0.64
846,756
1,676
0.20
Certificates of deposit
495,066
3,248
0.66
577,760
4,638
0.80
Brokered deposits
112,939
800
0.71
100,000
636
0.64
Total interest-bearing deposits
3,074,032
15,630
0.51
2,897,343
8,723
0.30
FHLB advances
170,748
5,219
3.06
84,711
1,707
2.02
Subordinated debentures
34,221
2,095
6.12
34,096
2,095
6.14
Total borrowings
204,969
7,314
3.57
118,807
3,802
3.20
Total interest-bearing liabilities
3,279,001
22,944
0.70
3,016,150
12,525
0.42
Noninterest-bearing
liabilities:
Noninterest-bearing deposits
771,299
754,198
Other noninterest-bearing liabilities
85,995
91,084
Total liabilities
4,136,295
3,861,432
Total stockholders' equity
638,267
692,280
Total liabilities and stockholders'
equity
$
4,774,562
$
4,553,712
Tax equivalent net interest income
149,407
131,370
Tax equivalent interest rate spread
(4)
3.16
%
2.99
%
Less: tax equivalent adjustment
421
—
Net interest income as reported
$
148,986
$
131,370
Net interest-earning assets (5)
$
1,180,891
$
1,199,003
Net interest margin (6)
3.34
%
3.12
%
Tax equivalent effect
0.01
—
Net interest margin on a fully tax
equivalent basis
3.35
%
3.12
%
Ratio of interest-earning assets to
interest-bearing liabilities
136.01
%
139.75
%
Supplemental information:
Total deposits, including demand
deposits
$
3,845,331
$
15,630
$
3,651,541
$
8,723
Cost of total deposits
0.41
%
0.24
%
Total funding liabilities, including
demand deposits
$
4,050,300
$
22,944
$
3,770,348
$
12,525
Cost of total funding liabilities
0.57
%
0.33
%
(1) Includes securities available for sale
and securities held to maturity.
(2) Includes industrial revenue bonds for
the year ended December 31, 2022. Interest income from tax exempt
loans is computed on a taxable equivalent basis using a rate of
21%. The yield on commercial loans before tax equivalent adjustment
at December 31, 2022 was 4.41%.
(3) Includes nonaccruing loan balances and
interest received on such loans.
(4) Net interest rate spread represents
the difference between the yield on average interest-earning assets
and the cost of average interest-bearing liabilities.
(5) Net interest-earning assets represents
total interest-earning assets less total interest-bearing
liabilities.
(6) 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
December 31, 2022
September 30, 2022
June 30, 2022
March 31, 2022
December 31, 2021
(in thousands)
Interest-earning assets:
Investment securities (1)
$
388,247
$
390,577
$
391,448
$
393,364
$
394,301
Other interest-earning assets
42,640
27,723
64,678
150,569
286,026
Loans held for sale
22,350
28,046
29,474
29,842
63,833
Loans
Commercial loans (2)
2,770,667
2,522,359
2,384,630
2,291,343
2,165,739
Residential real estate loans (2)
1,566,389
1,470,305
1,330,772
1,220,703
1,171,608
Consumer loans (2)
45,629
63,220
88,943
118,242
143,577
Total loans
4,382,685
4,055,884
3,804,345
3,630,288
3,480,924
Total interest-earning assets
4,835,922
4,502,230
4,289,945
4,204,063
4,225,084
Noninterest-earning assets
311,372
308,734
311,998
326,811
337,310
Total assets
$
5,147,294
$
4,810,964
$
4,601,943
$
4,530,874
$
4,562,394
Interest-bearing liabilities:
Savings accounts
$
1,408,493
$
1,293,598
$
1,266,912
$
1,165,683
$
1,147,855
NOW accounts
291,890
305,777
311,241
301,279
300,459
Money market accounts
878,609
893,452
885,305
858,792
839,977
Certificates of deposit
487,121
486,923
484,484
522,211
543,208
Brokered deposits
148,460
102,875
100,000
100,000
100,000
Total interest-bearing deposits
3,214,573
3,082,625
3,047,942
2,947,965
2,931,499
FHLB advances
392,508
196,036
34,763
55,706
55,714
Subordinated debentures
34,268
34,237
34,207
34,173
34,144
Total borrowings
426,776
230,273
68,970
89,879
89,858
Total interest-bearing liabilities
3,641,349
3,312,898
3,116,912
3,037,844
3,021,357
Noninterest-bearing
liabilities:
Noninterest-bearing deposits
788,572
789,214
768,088
738,578
768,361
Other noninterest-bearing liabilities
101,621
80,304
75,186
86,763
92,034
Total liabilities
4,531,542
4,182,416
3,960,186
3,863,185
3,881,752
Total stockholders' equity
615,752
628,548
641,757
667,689
680,642
Total liabilities and stockholders'
equity
$
5,147,294
$
4,810,964
$
4,601,943
$
4,530,874
$
4,562,394
Annualized Yield Trend -
Quarters Ended
December 31, 2022
September 30, 2022
June 30, 2022
March 31, 2022
December 31, 2021
Interest-earning assets:
Investment securities (1)
2.09
%
2.00
%
1.92
%
1.75
%
1.55
%
Other interest-earning assets
3.34
%
2.05
%
0.81
%
0.16
%
0.19
%
Loans held for sale
5.93
%
5.33
%
4.51
%
3.59
%
3.11
%
Commercial loans (2)(3)
4.92
%
4.45
%
4.25
%
3.91
%
4.15
%
Residential real estate loans (3)
3.64
%
3.50
%
3.37
%
3.37
%
3.34
%
Consumer loans (3)
5.50
%
4.99
%
4.71
%
4.59
%
4.56
%
Total loans
4.47
%
4.11
%
3.96
%
3.75
%
3.90
%
Total interest-earning assets
4.27
%
3.93
%
3.73
%
3.43
%
3.41
%
Interest-bearing liabilities:
Savings accounts
1.01
%
0.37
%
0.20
%
0.13
%
0.09
%
NOW accounts
0.05
%
0.05
%
0.05
%
0.05
%
0.05
%
Money market accounts
1.50
%
0.61
%
0.30
%
0.14
%
0.15
%
Certificates of deposit
0.86
%
0.64
%
0.55
%
0.57
%
0.64
%
Brokered deposits
1.32
%
0.27
%
0.20
%
0.76
%
0.71
%
Total interest-bearing deposits
1.05
%
0.45
%
0.27
%
0.22
%
0.22
%
FHLB advances
3.74
%
2.45
%
1.36
%
1.37
%
1.37
%
Subordinated debentures
6.07
%
6.07
%
6.14
%
6.21
%
6.09
%
Total borrowings
3.93
%
2.99
%
3.74
%
3.21
%
3.17
%
Total interest-bearing liabilities
1.39
%
0.63
%
0.34
%
0.31
%
0.31
%
(1) Includes securities available for sale
and securities held to maturity.
(2) Includes industrial revenue bonds for
the quarter ended December 31, 2022. Interest income from tax
exempt loans is computed on a taxable equivalent basis using a rate
of 21% for the quarters presented. The yield on commercial loans
before tax equivalent adjustment at December 31, 2022 was
4.90%.
(3) Includes nonaccruing loan balances and
interest received on such loans.
HarborOne Bancorp,
Inc.
Selected Financial
Highlights
(Unaudited)
Quarters Ended
December 31,
September 30,
June 30,
March 31,
December 31,
Performance Ratios
(annualized):
2022
2022
2022
2022
2021
(dollars in thousands)
Return on average assets (ROAA)
0.74
%
1.14
%
0.87
%
1.08
%
1.10
%
Return on average equity (ROAE)
6.22
%
8.76
%
6.22
%
7.35
%
7.40
%
Total noninterest expense
$
34,644
$
34,473
$
34,954
$
34,835
$
38,188
Less: Amortization of other intangible
assets
189
235
235
235
235
Total adjusted noninterest expense
$
34,455
$
34,238
$
34,719
$
34,600
$
37,953
Net interest and dividend income
$
39,189
$
39,332
$
37,195
$
33,270
$
33,985
Total noninterest income
9,900
14,245
14,103
19,061
19,164
Total revenue
$
49,089
$
53,577
$
51,298
$
52,331
$
53,149
Efficiency ratio (1)
70.19
%
63.90
%
67.68
%
66.12
%
71.41
%
(1) This non-GAAP measure represents
adjusted noninterest expense divided by total revenue
At or for the Quarters
Ended
December 31,
September 30,
June 30,
March 31,
December 31,
Asset Quality
2022
2022
2022
2022
2021
(dollars in thousands)
Total nonperforming assets
$
14,840
$
23,367
$
24,441
$
26,109
$
36,186
Nonperforming assets to total assets
0.28
%
0.47
%
0.52
%
0.57
%
0.79
%
Allowance for credit losses on loans to
total loans
0.99
%
1.06
%
1.11
%
1.12
%
1.26
%
Net charge-offs (recoveries)
$
2,067
$
(799)
$
(504)
$
2,730
$
1,174
Annualized net charge-offs
(recoveries)/average loans
0.19
%
(0.08)
%
(0.05)
%
0.30
%
0.13
%
Allowance for credit losses on loans to
nonperforming loans
305.93
%
191.60
%
178.41
%
159.96
%
125.60
%
HarborOne Bancorp,
Inc.
Selected Financial
Highlights
(Unaudited)
Quarters Ended
December 31,
September 30,
June 30,
March 31,
December 31,
Capital and Share Related
2022
2022
2022
2022
2021
(dollars in thousands, except share
data)
Common stock outstanding
48,961,452
49,202,660
49,989,007
51,257,696
52,390,478
Book value per share
$
12.60
$
12.43
$
12.49
$
12.66
$
12.97
Tangible common equity:
Total stockholders' equity
$
616,976
$
611,370
$
624,478
$
649,065
$
679,261
Less: Goodwill
69,802
69,802
69,802
69,802
69,802
Less: Other intangible assets (1)
2,272
2,461
2,695
2,930
3,164
Tangible common equity
$
544,902
$
539,107
$
551,981
$
576,333
$
606,295
Tangible book value per share (2)
$
11.13
$
10.96
$
11.04
$
11.24
$
11.57
Tangible assets:
Total assets
$
5,359,545
$
4,987,643
$
4,704,044
$
4,591,325
$
4,553,405
Less: Goodwill
69,802
69,802
69,802
69,802
69,802
Less: Other intangible assets
2,272
2,461
2,695
2,930
3,164
Tangible assets
$
5,287,471
$
4,915,380
$
4,631,547
$
4,518,593
$
4,480,439
Tangible common equity / tangible assets
(3)
10.31
%
10.97
%
11.92
%
12.75
%
13.53
%
(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
December 31,
September 30,
December 31,
December 31,
September 30,
December 31,
2022
2022
2021
2022
2022
2021
(in thousands)
Net interest and dividend income
$
419
$
437
$
571
$
39,258
$
39,373
$
33,909
Provision (benefit) for credit losses
—
—
—
2,108
668
(1,436)
Net interest and dividend income, after
provision for loan losses
419
437
571
37,150
38,705
35,345
Mortgage banking income:
Gain on sale of mortgage loans
2,301
3,809
10,063
—
—
—
Intersegment gain (loss)
553
698
496
(997)
(904)
(720)
Changes in mortgage servicing rights fair
value
(2,368)
1,652
(315)
(263)
164
70
Other
2,122
2,235
3,108
203
218
251
Total mortgage banking income (loss)
2,608
8,394
13,352
(1,057)
(522)
(399)
Other noninterest income (loss)
126
(13)
7
7,779
6,180
5,980
Total noninterest income
2,734
8,381
13,359
6,722
5,658
5,581
Noninterest expense
5,452
6,610
10,467
28,744
27,707
27,396
(Loss) income before income taxes
(2,299)
2,208
3,463
15,128
16,656
13,530
Provision for income taxes
—
687
664
2,817
4,166
3,060
Net (loss) income
$
(2,299)
$
1,521
$
2,799
$
12,311
$
12,490
$
10,470
HarborOne Mortgage
HarborOne Bank
For the Years Ended
For the Years Ended
December 31,
December 31,
December 31,
December 31,
2022
2021
2022
2021
(in thousands)
Net interest and dividend income
$
1,617
$
3,468
$
149,301
$
129,785
Provision (benefit) for credit losses
—
—
5,660
(7,258)
Net interest and dividend income, after
provision (benefit) for credit losses
1,617
3,468
143,641
137,043
Mortgage banking income:
Gain on sale of mortgage loans
15,970
61,883
—
—
Intersegment gain (loss)
3,185
4,434
(3,604)
(3,665)
Changes in mortgage servicing rights fair
value
4,714
(243)
618
(137)
Other
9,075
14,741
873
1,090
Total mortgage banking income (loss)
32,944
80,815
(2,113)
(2,712)
Other noninterest income
129
44
25,930
23,308
Total noninterest income
33,073
80,859
23,817
20,596
Noninterest expense
27,065
55,012
110,407
102,557
Income before income taxes
7,625
29,315
57,051
55,082
Provision for income taxes
2,777
7,569
14,090
14,933
Net income
$
4,848
$
21,746
$
42,961
$
40,149
Category: Earnings Release
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230126005225/en/
Linda Simmons, EVP, CFO (508) 895-1379
HarborOne Bancorp (NASDAQ:HONE)
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