HarborOne Bancorp, Inc. Announces 2022 Fourth Quarter Earnings

Rhea-AI Summary

HarborOne Bancorp, Inc. (NASDAQ: HONE) reported a net income of $45.6 million for 2022, a 22.1% drop from $58.5 million in 2021. For Q4 2022, net income was $9.6 million, down from $13.8 million in Q3 2022. Key highlights include a 13.4% increase in net interest income to $39.2 million, driven by growth in loans and deposit growth of 13.8%. Nonperforming loans decreased significantly to 0.32% of total loans. However, total noninterest income fell 30.5% QoQ. The Company's total assets rose by 7.5% to $5.36 billion, reflecting strong loan growth.

Positive

• Net interest income up 13.4% to $39.2 million year-over-year.
• Robust loan growth of 26.1% amounting to $941.9 million.
• Strong asset quality with nonperforming loans at 0.32%.

Negative

• Net income decreased 22.1% from $58.5 million to $45.6 million year-over-year.
• Noninterest income dropped 30.5% QoQ, primarily due to a decline in mortgage banking income.

BROCKTON, Mass.--(BUSINESS WIRE)-- 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

Source: HarborOne Bancorp, Inc.

FAQ

What were HarborOne's Q4 2022 earnings results?

HarborOne reported a net income of $9.6 million, or $0.21 per diluted share for Q4 2022.

What factors contributed to the decline in HarborOne's net income?

The decline was primarily due to a decrease in noninterest income, specifically from mortgage banking.

How did HarborOne perform in terms of loan growth in 2022?

HarborOne experienced robust loan growth of $941.9 million, or 26.1%, year-over-year.

What is the current status of HarborOne's asset quality?

As of December 31, 2022, nonperforming loans were at 0.32%, significantly improved from the previous year.