HarborOne Bancorp, Inc. Announces 2022 Second Quarter Earnings

Rhea-AI Summary

HarborOne Bancorp reported a net income of $10.0 million or $0.21 per share for Q2 2022, a decline from $12.3 million in Q1 2022 and $14.3 million in Q2 2021. Loan growth reached $174.6 million (4.7%), while core deposits grew $96.3 million (3.0%). Net interest margin increased 27 basis points to 3.48%. Total noninterest income dropped 26.0% to $14.1 million, primarily due to mortgage banking income decline. Noninterest expenses rose slightly to $35.0 million.

Positive

• Loan growth of $174.6 million (4.7%) in Q2 2022.
• Core deposit growth increased by $96.3 million (3.0%).
• Net interest margin improved by 27 basis points to 3.48%.

Negative

• Net income decreased from $12.3 million in Q1 2022 and $14.3 million in Q2 2021.
• Total noninterest income fell by $5.0 million (26.0%) from Q1 2022.
• Mortgage banking income decreased by 49.2% year-over-year.

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 $10.0 million, or $0.21 per basic and diluted share, for the second quarter of 2022, compared to net income of $12.3 million, or $0.25 per diluted share, for the preceding quarter and $14.3 million, or $0.27 per diluted share, for the same period last year.

Selected Second Quarter Financial Highlights:

• Return on average assets was 0.87%, and return on average equity was 6.22%.
• Loan growth of $174.6 million, or 4.7%.
• Core deposit growth of $96.3 million, or 3.0%.
• Net interest margin increased 27 basis points to 3.48%.
• Continued share repurchase program.

“HarborOne had a solid quarter of growth in loans, deposits, and margin, with a continued focus on strong credit quality in the first half of the year,” said Joseph Casey, President and CEO. He added: “While mortgage banking saw a significant decline in origination volume and gain on sale margin, our mortgage banking team has identified over $1.0 million in expense savings to commence during the third quarter.”

Net Interest Income

The Company’s net interest and dividend income was $37.2 million for the quarter ended June 30, 2022, up $3.9 million, or 11.8%, from $33.3 million for the quarter ended March 31, 2022, and up $4.7 million, or 14.3%, from $32.5 million for the quarter ended June 30, 2021. The tax equivalent interest rate spread and net interest margin were 3.38% and 3.48%, respectively, for the quarter ended June 30, 2022, compared to 3.12% and 3.21%, respectively, for the quarter ended March 31, 2022, and 2.93% and 3.06%, respectively, for the quarter ended June 30, 2021. On a linked-quarter basis, the increase in net interest and dividend income primarily reflects increased yields on loans and investments primarily due to rate increases and prepayment penalties on commercial loan payoffs, partially offset by decreases in fees recognized in connection with U.S. Small Business Administration Paycheck Protection Program (“PPP”) loans and higher rates on deposits. The cost of funds was 27 basis points for the quarter ended June 30, 2022, compared to 25 basis points in the preceding quarter.

The $4.3 million increase in total interest and dividend income on a linked-quarter basis reflected a 30 basis-point increase in the yield on interest-earning assets. The yield on loans increased 21 basis points, from 3.75% to 3.96%. Interest on loans in the second quarter included $1.1 million in prepayment penalties on commercial loans and $353,000 in accretion income from the fair value discount on loans acquired in connection with the merger with Coastway Bancorp, Inc. Prepayment penalties and accretion income in the preceding quarter were $305,000 and $284,000, respectively. The three months ended June 30, 2022 and March 31, 2022 include the recognition of deferred fees on PPP loans in the amount of $368,000 and $487,000, respectively. The yield on investments increased 17 basis points, from, 1.75% to 1.92%.

The increase in net interest and dividend income from the prior year quarter reflects an increase of $4.0 million, or 11.1%, in total interest and dividend income and a decrease of $695,000, or 20.7%, in total interest expense. The changes reflect rate and volume changes in both interest-bearing assets and liabilities. The yield on interest-earning assets increased 35 basis points, while the average balance increased $29.1 million, and the cost of interest-bearing liabilities decreased 11 basis points, while the average balance increased $92.9 million.

Noninterest Income

Total noninterest income decreased $5.0 million, or 26.0%, to $14.1 million for the quarter ended June 30, 2022, from $19.1 million for the quarter ended March 31, 2022. Mortgage loan closings for the quarter ended June 30, 2022 were $297.5 million with a gain on loan sales of $4.5 million, compared to $253.8 million in mortgage closings and $5.3 million in gain on sales for the preceding quarter. The locked residential mortgage pipeline continues to be negatively impacted by decreased mortgage volumes due to rising rates and low for-sale inventory.

The change in the fair value of mortgage servicing rights positively impacted mortgage banking income, however the increase in the fair value of mortgage servicing rights for the three months ended June 30, 2022 was $1.6 million, as compared to an increase of $6.1 million in the fair value of mortgage servicing rights for the three months ended March 31, 2022. The 10-year Treasury Constant Maturity rate increased 66 basis points versus the first quarter of 2022, and prepayments were consistent with the first quarter of 2022. The change in the fair value of the mortgage servicing rights is generally consistent with the change in the 10-year Treasury Constant Maturity rate. As interest rates rise and prepayment speeds slow, mortgage servicing rights values tend to increase; conversely, as interest rates fall and prepayment speeds quicken, mortgage servicing rights values tend to decrease.

Deposit account fees increased $420,000, or 9.4%, to $4.9 million for the quarter ended June 30, 2022, from $4.5 million for the quarter ended March 31, 2022, primarily due to an increase in interchange fees. Other income for the quarter ended June 30, 2022 decreased $241,000. The first quarter of 2022 included a positive credit valuation adjustment of $239,000 on the termination of an interest rate swap and a $189,000 corporate capital distribution from the National Credit Union Association partially offset by a write-down on the final disposition of a branch real estate asset held for sale. No similar transactions were recorded in other income during the second quarter of 2022.

Total noninterest income decreased $7.6 million, or 35.0%, as compared to the quarter ended June 30, 2021, primarily due to a $7.8 million, or 49.2%, decrease in mortgage banking income, driven by the decrease in loan closings and narrowing gain-on-sale margins. The decrease in mortgage banking income was offset by a $346,000 increase in deposit account fees.

Noninterest Expense

Total noninterest expenses were $35.0 million for the quarter ended June 30, 2022, an increase of $119,000, or 0.3%, from the quarter ended March 31, 2022. Compensation and benefits increased $732,000, or 3.5%, and other expenses increased $401,000, or 14.0%, partially offset by an $853,000 decrease in occupancy and equipment expenses. The increase in compensation expense reflects a $924,000 increase in salary expense due to annual salary increases effective at the end of the first quarter and $439,000 in expense related to the benefit accruals and equity award acceleration in connection with the retirement of the Company’s former CEO James W. Blake, partially offset by a decrease in payroll tax expenses. The increase in other expenses reflects increases in cloud computing and employment agency fees. The decrease in occupancy and equipment expense reflects decreases in expenses for utilities, seasonal landscaping, and service maintenance contracts.

Total noninterest expenses decreased $3.6 million, or 9.4%, from the quarter ended June 30, 2021. Compensation and benefits decreased $3.7 million and loan expenses decreased $865,000, consistent with the decrease in residential mortgage loan closings and corresponding decrease in mortgage origination commissions.

Income Tax Provision

The effective tax rate was 27.6% for the quarter ended June 30, 2022, compared to 28.5% for the quarter ended March 31, 2022 and 28.3% for the quarter ended June 30, 2021.

Asset Quality and Allowance for Credit Losses

Effective January 1, 2022, the Company adopted Accounting Standards Update No. 2016-13, commonly referred to as CECL, which requires the measurement of expected lifetime credit losses for financial assets measured at amortized cost, as well as unfunded commitments that are considered off-balance sheet credit exposures. CECL requires that the allowance for credit losses (“ACL”) be calculated based on current expected credit losses over the full remaining expected life of the financial assets and also consider expected future changes in macroeconomic conditions. Upon adoption of CECL on January 1, 2022, the Company’s ACL on loans decreased by $1.3 million, and the ACL on unfunded commitments increased by $3.9 million, for a net increase of $2.6 million. The after-tax impact of $1.9 million was recognized as a one-time, cumulative-effect adjustment that decreased retained earnings.

Credit quality performance has remained strong with total nonperforming assets of $24.4 million at June 30, 2022, compared to $26.1 million at March 31, 2022 and $32.7 million at June 30, 2021. Nonperforming assets as a percentage of total assets were 0.52% at June 30, 2022, 0.57% at March 31, 2022, and 0.71% at June 30, 2021.

The funded loan provision for credit losses for the three and six months ended June 30, 2022 was $1.3 million and $1.7 million, respectively. Net recoveries totaled $504,000, or 0.05% of average loans outstanding on an annualized basis, for the quarter ended June 30, 2022. Net charge-offs totaled $2.7 million, or 0.30% of average loans outstanding on an annualized basis, for the quarter ended March 31, 2022, and net recoveries totaled $175,000, or 0.02% of average loans outstanding on an annualized basis, for the quarter ended June 30, 2021.

The ACL was $43.6 million, or 1.11% of total loans, at June 30, 2022, compared to $41.8 million, or 1.12% of total loans, at March 31, 2022 and an allowance for loss under the incurred loss model of $51.3 million, or 1.50% of total loans, at June 30, 2021. The ACL on unfunded commitments, included in other liabilities on the unaudited Consolidated Balance Sheets, amounted to $5.1 million at June 30, 2022 as compared to $3.8 million at March 31, 2022 and the associated provision was $1.3 million and $1.2 million for the three and six months ended June 30, 2022. There was no ACL on unfunded commitments at December 31, 2021 or June 30, 2021. The increase from the prior quarter reflects $125.2 million in new construction originations in the second quarter, with $98.1 million in unfunded balances as of June 30, 2022.

We have not experienced any significant negative trends in the at-risk sectors identified in response to conditions that developed during the COVID-19 pandemic; however management continues to monitor certain credit types within those sectors that may be susceptible to increased credit risk as a result of trends that were precipitated by the COVID-19 pandemic and may be exacerbated by current economic conditions. Management is focused on business-oriented hotels, non-anchored retail space and metro office space. As of June 30, 2022, business-oriented hotels included 14 loans with a total outstanding balance of $123.3 million, non-anchored retail space included 35 loans with a total outstanding balance of $58.8 million and metro office space included 2 loans with a total outstanding balance of $14.9 million. As of June 30, 2022 there were two business-oriented hotel credits with a carrying value of $10.6 million that were on nonaccrual. The other loans in these groups were performing in accordance with their terms.

Balance Sheet

Total assets increased $112.7 million, or 2.5%, to $4.70 billion at June 30, 2022, from $4.59 billion at March 31, 2022. The increase primarily reflects an increase of $174.6 million in loans, partially offset by decreases of $55.4 million in cash and cash equivalents and $27.1 million in securities available for sale. Securities available for sale were negatively impacted by unrealized losses of $49.9 million as of June 30, 2022 and $30.0 million as March 31, 2022, as compared to $3.6 million of unrealized losses as of December 31, 2021.

Loans increased $174.6 million, or 4.7%, to $3.91 billion at June 30, 2022, from $3.74 billion at March 31, 2022. The increase in loans for the three months ended June 30, 2022 was primarily due to an increase in residential real estate loans of $170.2 million and an increase in commercial real estate loans of $31.1 million, partially offset by a decrease in consumer loans of $27.8 million. As of June 30, 2022, outstanding PPP loans amounted to $2.5 million, and there was $93,000 in deferred processing fee income. We expect to complete the forgiveness process for the remaining PPP loans by the end of the third quarter of 2022.

Total deposits were $3.85 billion at June 30, 2022 and $3.76 billion at March 31, 2022. Compared to the prior quarter, non-certificate accounts increased $96.3 million, and term certificate accounts decreased $10.4 million. FHLB borrowings increased $50.0 million to $105.7 million at June 30, 2022 from $55.7 million at March 31, 2022. At June 30, 2022, FHLB borrowings are were primarily short-term borrowings.

Total stockholders’ equity was $624.5 million at June 30, 2022, compared to $649.1 million at March 31, 2022 and $705.5 million at June 30, 2021. Stockholders’ equity decreased 3.8% when compared to the prior quarter, as earnings were offset by share repurchases and elevated levels of unrealized losses on available-for-sale investment securities included in other comprehensive income. The Company announced a fourth share repurchase program on April 12, 2022, and repurchased 1,337,602 shares at an average price of $13.83 during the three months ended June 30, 2022. The tangible-common-equity-to-tangible-assets ratio was 11.92% at June 30, 2022, 12.75% at March 31, 2022, and 13.91% at June 30, 2021. At June 30, 2022, the Company and the Bank had strong capital positions and exceeded all regulatory capital requirements.

About HarborOne Bancorp, Inc.

HarborOne Bancorp, Inc. is the holding company for HarborOne Bank, a Massachusetts-chartered savings bank. HarborOne Bank serves the financial needs of consumers, businesses, and municipalities throughout Eastern Massachusetts and Rhode Island through a network of 30 full-service branches located in Massachusetts and Rhode Island, and a commercial lending office in each of Boston, Massachusetts and Providence, Rhode Island. The Bank also provides a range of educational services through “HarborOne U,” with classes on small business, financial literacy and personal enrichment at two campuses located adjacent to our Brockton and Mansfield locations. HarborOne Mortgage, LLC, a subsidiary of HarborOne Bank, is a full-service mortgage lender with 27 offices in Massachusetts, Rhode Island, and New Hampshire, and is licensed to lend in seven additional states.

Forward Looking Statements

Certain statements herein constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. We may also make forward-looking statements in other documents we file with the Securities and Exchange Commission (“SEC”), in our annual reports to shareholders, in press releases and other written materials, and in oral statements made by our officers, directors or employees. Such statements may be identified by words such as “believes,” “will,” “would,” “expects,” “project,” “may,” “could,” “developments,” “strategic,” “launching,” “opportunities,” “anticipates,” “estimates,” “intends,” “plans,” “targets” and similar expressions. These statements are based upon the current beliefs and expectations of the Company’s management and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements as a result of numerous factors. Factors that could cause such differences to exist include, but are not limited to, ongoing disruptions due to the COVID-19 pandemic and the measures taken to contain its spread on our employees, customers, business operations, credit quality, financial position, liquidity and results of operations; changes in general business and economic conditions (including inflation) on a national basis and in the local markets in which the Company operates, including changes that adversely affect borrowers’ ability to service and repay the Company’s loans; changes in customer behavior; ongoing turbulence in the capital and debt markets and the impact of such conditions on the Company’s business activities; changes in interest rates; increases in loan default and charge-off rates; changes related to the discontinuation and replacement of LIBOR; decreases in the value of securities in the Company’s investment portfolio; fluctuations in real estate values; the possibility that future credit losses may be higher than currently expected due to changes in economic assumptions, customer behavior or adverse economic developments; the adequacy of loan loss reserves; decreases in deposit levels necessitating increased borrowing to fund loans and investments; competitive pressures from other financial institutions; acquisitions may not produce results at levels or within time frames originally anticipated; operational risks including, but not limited to, cybersecurity incidents, fraud, natural disasters, war, terrorism, civil unrest and future pandemics; changes in regulation; changes in accounting standards and practices; the risk that goodwill and intangibles recorded in the Company’s financial statements will become impaired; demand for loans in the Company’s market area; the Company’s ability to attract and maintain deposits; risks related to the implementation of acquisitions, dispositions, and restructurings; the risk that the Company may not be successful in the implementation of its business strategy; changes in assumptions used in making such forward-looking statements and the risk factors described in the Annual Report on Form 10‑K and Quarterly Reports on Form 10‑Q as filed with the SEC, which are available at the SEC’s website, www.sec.gov. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, HarborOne’s actual results could differ materially from those discussed. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. The Company disclaims any obligation to publicly update or revise any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes, except as required by law.

Use of Non-GAAP Measures

In addition to results presented in accordance with generally accepted accounting principles (“GAAP”), this press release contains certain non-GAAP financial measures. The Company’s management believes that the supplemental non-GAAP information, which consists of the tax equivalent basis for yields, the efficiency ratio, tangible common equity to tangible assets ratio and tangible book value per share, is utilized by regulators and market analysts to evaluate a company’s financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names.

HarborOne Bancorp, Inc. Consolidated Balance Sheet Trend (Unaudited)
		June 30,				March 31,				December 31,				September 30,				June 30,
(in thousands)		2022				2022				2021				2021				2021
Assets
Cash and due from banks		$	35,843			$	41,862			$	35,549			$	42,589			$	41,328
Short-term investments			48,495				97,870				159,170				277,050				374,319
Total cash and cash equivalents			84,338				139,732				194,719				319,639				415,647
Securities available for sale, at fair value			334,398				361,529				394,036				390,552				353,848
Securities held to maturity, at amortized cost			10,000				—				—				—				—
Federal Home Loan Bank stock, at cost			5,625				5,931				5,931				6,828				7,241
Asset held for sale			—				678				881				881				—
Loans held for sale, at fair value			31,679				25,690				45,642				77,052				103,886
Loans:
Commercial real estate			1,847,619				1,816,484				1,699,877				1,573,284				1,561,873
Commercial construction			158,762				154,059				136,563				152,685				107,585
Commercial and industrial			407,182				410,787				421,608				414,814				467,479
Total commercial loans			2,413,563				2,381,330				2,258,048				2,140,783				2,136,937
Residential real estate			1,423,074				1,252,920				1,217,980				1,160,689				1,096,370
Consumer			75,312				103,100				131,705				156,272				186,430
Loans			3,911,949				3,737,350				3,607,733				3,457,744				3,419,737
Less: Allowance for credit losses on loans			(43,560	)			(41,765	)			(45,377	)			(47,988	)			(51,273	)
Net loans			3,868,389				3,695,585				3,562,356				3,409,756				3,368,464
Mortgage servicing rights, at fair value			47,130				45,043				38,268				36,540				35,955
Goodwill			69,802				69,802				69,802				69,802				69,802
Other intangible assets			2,695				2,930				3,164				3,399				3,723
Other assets			249,988				244,405				238,606				252,645				257,856
Total assets		$	4,704,044			$	4,591,325			$	4,553,405			$	4,567,094			$	4,616,422
Liabilities and Stockholders' Equity
Deposits:
Demand deposit accounts		$	775,154			$	771,172			$	743,051			$	756,917			$	800,118
NOW accounts			316,839				310,090				313,733				300,577				250,099
Regular savings and club accounts			1,282,913				1,218,656				1,138,979				1,144,595				1,123,123
Money market deposit accounts			885,673				864,316				858,970				832,441				832,006
Term certificate accounts			587,354				597,746				627,916				659,850				682,594
Total deposits			3,847,933				3,761,980				3,682,649				3,694,380				3,687,940
Short-term borrowed funds			90,000				—				—				—				—
Long-term borrowed funds			15,693				55,702				55,711				55,720				87,479
Subordinated debt			34,222				34,191				34,159				34,128				34,096
Other liabilities and accrued expenses			91,718				90,387				101,625				102,834				101,436
Total liabilities			4,079,566				3,942,260				3,874,144				3,887,062				3,910,951
Common stock			593				591				585				585				585
Additional paid-in capital			479,519				477,302				469,934				468,526				467,194
Unearned compensation - ESOP			(28,542	)			(29,002	)			(29,461	)			(29,921	)			(30,380	)
Retained earnings			339,471				332,734				325,699				315,683				305,831
Treasury stock			(132,296	)			(113,513	)			(85,859	)			(73,723	)			(38,588	)
Accumulated other comprehensive income (loss)			(34,267	)			(19,047	)			(1,637	)			(1,118	)			829
Total stockholders' equity			624,478				649,065				679,261				680,032				705,471
Total liabilities and stockholders' equity		$	4,704,044			$	4,591,325			$	4,553,405			$	4,567,094			$	4,616,422

HarborOne Bancorp, Inc. Consolidated Statements of Net Income - Trend (Unaudited)
		Quarters Ended
		June 30,			March 31,			December 31,				September 30,				June 30,
(in thousands, except share data)		2022			2022			2021				2021				2021
Interest and dividend income:
Interest and fees on loans		$	37,522		$	33,576		$	34,177			$	33,680			$	34,106
Interest on loans held for sale			331			264			501				665				852
Interest on securities			1,873			1,701			1,541				1,293				793
Other interest and dividend income			131			61			134				170				136
Total interest and dividend income			39,857			35,602			36,353				35,808				35,887
Interest expense:
Interest on deposits			2,019			1,621			1,651				2,050				2,302
Interest on FHLB borrowings			119			188			193				431				531
Interest on subordinated debentures			524			523			524				524				524
Total interest expense			2,662			2,332			2,368				3,005				3,357
Net interest and dividend income			37,195			33,270			33,985				32,803				32,530
Provision for credit losses			2,546			338			(1,436	)			(1,627	)			(4,286	)
Net interest and dividend income, after provision for credit losses			34,649			32,932			35,421				34,430				36,816
Noninterest income:
Mortgage banking income:
Gain on sale of mortgage loans			4,538			5,322			10,063				12,756				14,262
Changes in mortgage servicing rights fair value			862			5,285			(245	)			(992	)			(2,552	)
Other			2,612			2,558			3,359				3,882				4,075
Total mortgage banking income			8,012			13,165			13,177				15,646				15,785
Deposit account fees			4,892			4,472			4,783				4,658				4,546
Income on retirement plan annuities			112			107			109				108				106
Gain on sale and call of securities, net			—			—			—				241				—
Bank-owned life insurance income			494			483			506				515				508
Other income			593			834			589				842				758
Total noninterest income			14,103			19,061			19,164				22,010				21,703
Noninterest expenses:
Compensation and benefits			21,455			20,723			24,564				24,760				25,146
Occupancy and equipment			4,575			5,428			4,923				4,765				4,702
Data processing			2,259			2,241			2,244				2,205				2,362
Loan expense			385			478			732				1,323				1,250
Marketing			986			1,218			1,120				880				831
Professional fees			1,680			1,539			1,443				1,362				1,487
Deposit insurance			354			349			345				341				332
Prepayment penalties on Federal Home Loan Bank advances			—			—			—				1,095				—
Other expenses			3,260			2,859			2,817				2,543				2,488
Total noninterest expenses			34,954			34,835			38,188				39,274				38,598
Income before income taxes			13,798			17,158			16,397				17,166				19,921
Income tax provision			3,811			4,891			3,807				4,907				5,645
Net income		$	9,987		$	12,267		$	12,590			$	12,259			$	14,276
Earnings per common share:
Basic		$	0.21		$	0.26		$	0.26			$	0.25			$	0.28
Diluted		$	0.21		$	0.25		$	0.25			$	0.24			$	0.27
Weighted average shares outstanding:
Basic			46,980,830			47,836,410			48,918,539				49,801,123				51,778,293
Diluted			47,536,033			48,690,420			49,828,379				50,663,415				52,650,071

HarborOne Bancorp, Inc. Consolidated Statements of Net Income (Unaudited)
		For the Six Months Ended June 30,
(dollars in thousands, except share data)		2022			2021				$ Change				% Change
Interest and dividend income:
Interest and fees on loans		$	71,098		$	67,966			$	3,132			4.6		%
Interest on loans held for sale			595			2,176				(1,581	)		(72.7	)
Interest on securities			3,574			1,378				2,196			159.4
Other interest and dividend income			192			214				(22	)		(10.3	)
Total interest and dividend income			75,459			71,734				3,725			5.2
Interest expense:
Interest on deposits			3,640			5,022				(1,382	)		(27.5	)
Interest on FHLB borrowings			307			1,083				(776	)		(71.7	)
Interest on subordinated debentures			1,047			1,047				—			0.0
Total interest expense			4,994			7,152				(2,158	)		(30.2	)
Net interest and dividend income			70,465			64,582				5,883			9.1
Provision for credit losses			2,884			(4,195	)			7,079			168.7
Net interest and dividend income, after provision for credit losses			67,581			68,777				(1,196	)		(1.7	)
Noninterest income:
Mortgage banking income:
Gain on sale of mortgage loans			9,860			39,064				(29,204	)		(74.8	)
Changes in mortgage servicing rights fair value			6,147			857				5,290			617.3
Other			5,170			8,590				(3,420	)		(39.8	)
Total mortgage banking income			21,177			48,511				(27,334	)		(56.3	)
Deposit account fees			9,364			8,398				966			11.5
Income on retirement plan annuities			219			210				9			4.3
Bank-owned life insurance income			977			1,001				(24	)		(2.4	)
Other income			1,427			1,392				35			2.5
Total noninterest income			33,164			59,512				(26,348	)		(44.3	)
Noninterest expenses:
Compensation and benefits			42,178			52,600				(10,422	)		(19.8	)
Occupancy and equipment			10,003			9,958				45			0.5
Data processing			4,500			4,705				(205	)		(4.4	)
Loan expense			863			3,685				(2,822	)		(76.6	)
Marketing			2,204			1,644				560			34.1
Professional fees			3,219			3,070				149			4.9
Deposit insurance			703			652				51			7.8
Other expenses			6,119			5,086				1,033			20.3
Total noninterest expenses			69,789			81,400				(11,611	)		(14.3	)
Income before income taxes			30,956			46,889				(15,933	)		(34.0	)
Income tax provision			8,702			13,221				(4,519	)		(34.2	)
Net income		$	22,254		$	33,668			$	(11,414	)		(33.9	)	%
Earnings per common share:
Basic		$	0.47		$	0.65
Diluted		$	0.46		$	0.64
Weighted average shares outstanding:
Basic			47,406,257			52,155,754
Diluted			48,110,863			52,823,354

HarborOne Bancorp, Inc. Average Balances / Yields (Unaudited)
		Quarters Ended
		June 30, 2022								March 31, 2022								June 30, 2021
		Average								Average								Average
		Outstanding						Yield/		Outstanding						Yield/		Outstanding						Yield/
		Balance			Interest			Cost (6)		Balance			Interest			Cost (6)		Balance			Interest			Cost (6)
		(dollars in thousands)
Interest-earning assets:
Investment securities (1)		$	391,448		$	1,873		1.92	%	$	393,364		$	1,701		1.75	%	$	325,205		$	793		0.98	%
Other interest-earning assets			64,678			131		0.81			150,569			61		0.16			397,979			136		0.14
Loans held for sale			29,474			331		4.51			29,842			264		3.59			115,240			852		2.97
Loans
Commercial loans (2)			2,384,630			25,295		4.25			2,291,343			22,095		3.91			2,152,105			22,079		4.11
Residential real estate loans (2)			1,330,772			11,182		3.37			1,220,703			10,142		3.37			1,064,481			9,747		3.67
Consumer loans (2)			88,943			1,045		4.71			118,242			1,339		4.59			205,856			2,280		4.44
Total loans			3,804,345			37,522		3.96			3,630,288			33,576		3.75			3,422,442			34,106		4.00
Total interest-earning assets			4,289,945			39,857		3.73			4,204,063			35,602		3.43			4,260,866			35,887		3.38
Noninterest-earning assets			311,998								326,811								339,438
Total assets		$	4,601,943							$	4,530,874							$	4,600,304
Interest-bearing liabilities:
Savings accounts		$	1,266,912			626		0.20		$	1,165,683			366		0.13		$	1,118,494			461		0.17
NOW accounts			311,241			38		0.05			301,279			36		0.05			231,075			41		0.07
Money market accounts			885,305			635		0.30			858,792			303		0.14			853,586			417		0.20
Certificates of deposit			484,484			670		0.55			522,211			729		0.57			589,964			1,229		0.84
Brokered deposits			100,000			50		0.20			100,000			187		0.76			100,000			154		0.62
Total interest-bearing deposits			3,047,942			2,019		0.27			2,947,965			1,621		0.22			2,893,119			2,302		0.32
FHLB advances			34,763			119		1.36			55,706			188		1.37			96,823			531		2.20
Subordinated debentures			34,207			524		6.14			34,173			523		6.21			34,080			524		6.17
Total borrowings			68,970			643		3.74			89,879			711		3.21			130,903			1,055		3.23
Total interest-bearing liabilities			3,116,912			2,662		0.34			3,037,844			2,332		0.31			3,024,022			3,357		0.45
Noninterest-bearing liabilities:
Noninterest-bearing deposits			768,088								738,578								784,521
Other noninterest-bearing liabilities			75,186								86,763								88,577
Total liabilities			3,960,186								3,863,185								3,897,120
Total stockholders' equity			641,757								667,689								703,184
Total liabilities and stockholders' equity		$	4,601,943							$	4,530,874							$	4,600,304
Tax equivalent net interest income						37,195								33,270								32,530
Tax equivalent interest rate spread (3)								3.38	%							3.12	%							2.93	%
Less: tax equivalent adjustment						—								—								—
Net interest income as reported					$	37,195							$	33,270							$	32,530
Net interest-earning assets (4)		$	1,173,033							$	1,166,219							$	1,236,844
Net interest margin (5)								3.48	%							3.21	%							3.06	%
Tax equivalent effect								—								—								—
Net interest margin on a fully tax equivalent basis								3.48	%							3.21	%							3.06	%
Average interest-earning assets to average interest-bearing liabilities			137.63	%							138.39	%							140.90	%
Supplemental information:
Total deposits, including demand deposits		$	3,816,030		$	2,019				$	3,686,543		$	1,621				$	3,677,640		$	2,302
Cost of total deposits								0.21	%							0.18	%							0.25	%
Total funding liabilities, including demand deposits		$	3,885,000		$	2,662				$	3,776,422		$	2,332				$	3,808,543		$	3,357
Cost of total funding liabilities								0.27	%							0.25	%							0.35	%
(1) Includes securities available for sale and securities held to maturity.
(2) Includes nonaccruing loan balances and interest received on such loans.
(3) Tax equivalent interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(4) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
(5) Net interest margin represents net interest income divided by average total interest-earning assets.
(6) Annualized.

HarborOne Bancorp, Inc. Average Balances / Yields (Unaudited)
		For the Six Months Ended
		June 30, 2022								June 30, 2021
		Average								Average
		Outstanding						Yield/		Outstanding						Yield/
		Balance			Interest			Cost		Balance			Interest			Cost
		(dollars in thousands)
Interest-earning assets:
Investment securities (1)		$	392,401		$	3,574		1.84	%	$	298,430		$	1,378		0.93	%
Other interest-earning assets			107,386			192		0.36			289,853			214		0.15
Loans held for sale			29,657			595		4.05			154,117			2,176		2.85
Loans
Commercial loans (2)			2,338,245			47,390		4.09			2,156,566			42,859		4.01
Residential real estate loans (2)			1,276,041			21,324		3.37			1,074,332			20,087		3.77
Consumer loans (2)			103,512			2,384		4.64			229,304			5,020		4.41
Total loans			3,717,798			71,098		3.86			3,460,202			67,966		3.96
Total interest-earning assets			4,247,242			75,459		3.58			4,202,602			71,734		3.44
Noninterest-earning assets			319,362								403,990
Total assets		$	4,566,604							$	4,606,592
Interest-bearing liabilities:
Savings accounts		$	1,216,578			992		0.16		$	1,088,822			998		0.18
NOW accounts			306,287			74		0.05			221,731			78		0.07
Money market accounts			872,122			938		0.22			857,530			977		0.23
Certificates of deposit			503,243			1,399		0.56			598,977			2,673		0.90
Brokered deposits			100,000			237		0.48			100,000			296		0.60
Total interest-bearing deposits			2,998,230			3,640		0.24			2,867,060			5,022		0.35
FHLB advances			45,176			307		1.37			99,588			1,083		2.19
Subordinated debentures			34,190			1,047		6.18			34,063			1,047		6.20
Total borrowings			79,366			1,354		3.44			133,651			2,130		3.21
Total interest-bearing liabilities			3,077,596			4,994		0.33			3,000,711			7,152		0.48
Noninterest-bearing liabilities:
Noninterest-bearing deposits			753,414								745,613
Other noninterest-bearing liabilities			80,943								155,640
Total liabilities			3,911,953								3,901,964
Total stockholders' equity			654,651								704,628
Total liabilities and stockholders' equity		$	4,566,604							$	4,606,592
Tax equivalent net interest income						70,465								64,582
Tax equivalent interest rate spread (3)								3.25	%							2.96	%
Less: tax equivalent adjustment						—								—
Net interest income as reported					$	70,465							$	64,582
Net interest-earning assets (4)		$	1,169,646							$	1,201,891
Net interest margin (5)								3.35	%							3.10	%
Tax equivalent effect								—								—
Net interest margin on a fully tax equivalent basis								3.35	%							3.10	%
Average interest-earning assets to average interest-bearing liabilities			138.01	%							140.05	%
Supplemental information:
Total deposits, including demand deposits		$	3,751,644		$	3,640				$	3,612,673		$	5,022
Cost of total deposits								0.20	%							0.28	%
Total funding liabilities, including demand deposits		$	3,831,010		$	4,994				$	3,746,324		$	7,152
Cost of total funding liabilities								0.26	%							0.38	%
(1) Includes securities available for sale and securities held to maturity.
(2) Includes nonaccruing loan balances and interest received on such loans.
(3) Tax equivalent interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(4) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
(5) Net interest margin represents net interest income divided by average total interest-earning assets.

HarborOne Bancorp, Inc. Average Balances and Yield Trend (Unaudited)
		Average Balances - Trend - Quarters Ended
		June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021
		(in thousands)
Interest-earning assets:
Investment securities (1)		$	391,448		$	393,364		$	394,301		$	358,927		$	325,205
Other interest-earning assets			64,678			150,569			286,026			372,892			397,979
Loans held for sale			29,474			29,842			63,833			84,399			115,240
Loans
Commercial loans (2)			2,384,630			2,291,343			2,165,739			2,121,432			2,152,105
Residential real estate loans (2)			1,330,772			1,220,703			1,171,608			1,121,898			1,064,481
Consumer loans (2)			88,943			118,242			143,577			170,366			205,856
Total loans			3,804,345			3,630,288			3,480,924			3,413,696			3,422,442
Total interest-earning assets			4,289,945			4,204,063			4,225,084			4,229,914			4,260,866
Noninterest-earning assets			311,998			326,811			337,310			347,060			339,438
Total assets		$	4,601,943		$	4,530,874		$	4,562,394		$	4,576,974		$	4,600,304
Interest-bearing liabilities:
Savings accounts		$	1,266,912		$	1,165,683		$	1,147,855		$	1,136,131		$	1,118,494
NOW accounts			311,241			301,279			300,459			283,725			231,075
Money market accounts			885,305			858,792			839,977			832,340			853,586
Certificates of deposit			484,484			522,211			543,208			570,570			589,964
Brokered deposits			100,000			100,000			100,000			100,000			100,000
Total interest-bearing deposits			3,047,942			2,947,965			2,931,499			2,922,766			2,893,119
FHLB advances			34,763			55,706			55,714			84,438			96,823
Subordinated debentures			34,207			34,173			34,144			34,111			34,080
Total borrowings			68,970			89,879			89,858			118,549			130,903
Total interest-bearing liabilities			3,116,912			3,037,844			3,021,357			3,041,315			3,024,022
Noninterest-bearing liabilities:
Noninterest-bearing deposits			768,088			738,578			768,361			756,927			784,521
Other noninterest-bearing liabilities			75,186			86,763			92,034			90,366			88,577
Total liabilities			3,960,186			3,863,185			3,881,752			3,888,608			3,897,120
Total stockholders' equity			641,757			667,689			680,642			688,366			703,184
Total liabilities and stockholders' equity		$	4,601,943		$	4,530,874		$	4,562,394		$	4,576,974		$	4,600,304
		Annualized Yield Trend - Quarters Ended
		June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021			June 30, 2021
Interest-earning assets:
Investment securities (1)			1.92	%		1.75	%		1.55	%		1.43	%		0.98	%
Other interest-earning assets			0.81	%		0.16	%		0.19	%		0.18	%		0.14	%
Loans held for sale			4.51	%		3.59	%		3.11	%		3.13	%		2.97	%
Commercial loans (2)			4.25	%		3.91	%		4.15	%		4.19	%		4.11	%
Residential real estate loans (2)			3.37	%		3.37	%		3.34	%		3.31	%		3.67	%
Consumer loans (2)			4.71	%		4.59	%		4.56	%		4.50	%		4.44	%
Total loans			3.96	%		3.75	%		3.90	%		3.91	%		4.00	%
Total interest-earning assets			3.73	%		3.43	%		3.41	%		3.36	%		3.38	%
Interest-bearing liabilities:
Savings accounts			0.20	%		0.13	%		0.09	%		0.13	%		0.17	%
NOW accounts			0.05	%		0.05	%		0.05	%		0.06	%		0.07	%
Money market accounts			0.30	%		0.14	%		0.15	%		0.19	%		0.20	%
Certificates of deposit			0.55	%		0.57	%		0.64	%		0.76	%		0.84	%
Brokered deposits			0.20	%		0.76	%		0.71	%		0.64	%		0.62	%
Total interest-bearing deposits			0.27	%		0.22	%		0.22	%		0.28	%		0.32	%
FHLB advances			1.36	%		1.37	%		1.37	%		2.03	%		2.20	%
Subordinated debentures			6.14	%		6.21	%		6.09	%		6.09	%		6.17	%
Total borrowings			3.74	%		3.21	%		3.17	%		3.20	%		3.23	%
Total interest-bearing liabilities			0.34	%		0.31	%		0.31	%		0.39	%		0.45	%
(1) Includes securities available for sale and securities held to maturity.
(2) Includes nonaccruing loan balances and interest received on such loans.

HarborOne Bancorp, Inc. Selected Financial Highlights (Unaudited)
		Quarters Ended
		June 30,			March 31,			December 31,			September 30,			June 30,
Performance Ratios (annualized):		2022			2022			2021			2021			2021
(dollars in thousands)
Return on average assets (ROAA)			0.87	%		1.08	%		1.10	%		1.07	%		1.24	%
Return on average equity (ROAE)			6.22	%		7.35	%		7.40	%		7.12	%		8.12	%
Total noninterest expense		$	34,954		$	34,835		$	38,188		$	39,274		$	38,598
Less: Amortization of other intangible assets			235			235			235			324			324
Total adjusted noninterest expense		$	34,719		$	34,600		$	37,953		$	38,950		$	38,274
Net interest and dividend income		$	37,195		$	33,270		$	33,985		$	32,803		$	32,530
Total noninterest income			14,103			19,061			19,164			22,010			21,703
Total revenue		$	51,298		$	52,331		$	53,149		$	54,813		$	54,233
Efficiency ratio (1)			67.68	%		66.12	%		71.41	%		71.06	%		70.57	%
(1) This non-GAAP measure represents adjusted noninterest expense divided by total revenue

		At or for the Quarters Ended
		June 30,				March 31,			December 31,			September 30,			June 30,
Asset Quality		2022				2022			2021			2021			2021
(dollars in thousands)
Total nonperforming assets		$	24,441			$	26,109		$	36,186		$	36,514		$	32,731
Nonperforming assets to total assets			0.52		%		0.57	%		0.79	%		0.80	%		0.71		%
Allowance for credit losses on loans to total loans			1.11		%		1.12	%		1.26	%		1.39	%		1.50		%
Net (recoveries) charge-offs		$	(504	)		$	2,730		$	1,174		$	1,658		$	(175	)
Annualized net (recoveries) charge-offs/average loans			(0.05	)	%		0.30	%		0.13	%		0.19	%		(0.02	)	%
Allowance for credit losses on loans to nonperforming loans			166.81		%		159.96	%		125.60	%		131.52	%		158.08		%

HarborOne Bancorp, Inc. Selected Financial Highlights (Unaudited)
		Quarters Ended
		June 30,			March 31,			December 31,			September 30,			June 30,
Capital and Share Related		2022			2022			2021			2021			2021
(dollars in thousands, except share data)
Common stock outstanding			49,989,007			51,257,696			52,390,478			53,232,110			55,735,623
Book value per share		$	12.49		$	12.66		$	12.97		$	12.77		$	12.66
Tangible common equity:
Total stockholders' equity		$	624,478		$	649,065		$	679,261		$	680,032		$	705,471
Less: Goodwill			69,802			69,802			69,802			69,802			69,802
Less: Other intangible assets (1)			2,695			2,930			3,164			3,399			3,723
Tangible common equity		$	551,981		$	576,333		$	606,295		$	606,831		$	631,946
Tangible book value per share (2)		$	11.04		$	11.24		$	11.57		$	11.40		$	11.34
Tangible assets:
Total assets		$	4,704,044		$	4,591,325		$	4,553,405		$	4,567,094		$	4,616,422
Less: Goodwill			69,802			69,802			69,802			69,802			69,802
Less: Other intangible assets			2,695			2,930			3,164			3,399			3,723
Tangible assets		$	4,631,547		$	4,518,593		$	4,480,439		$	4,493,893		$	4,542,897
Tangible common equity / tangible assets (3)			11.92	%		12.75	%		13.53	%		13.50	%		13.91	%
(1) Other intangible assets are core deposit intangibles.
(2) This non-GAAP ratio is total stockholders' equity less goodwill and intangible assets divided by common stock outstanding.
(3) This non-GAAP ratio is total stockholders' equity less goodwill and intangible assets to total assets less goodwill and intangible assets.

HarborOne Bancorp, Inc. Segments Statements of Net Income (Unaudited)
		HarborOne Mortgage										HarborOne Bank
		For the Quarter Ended										For the Quarter Ended
		June 30,			March 31,			June 30,				June 30,				March 31,				June 30,
		2022			2022			2021				2022				2022				2021
		(in thousands)
Net interest and dividend income		$	411		$	350		$	855			$	37,246			$	33,424			$	32,134
Provision for credit losses			—			—			—				2,546				338				(4,286	)
Net interest and dividend income, after provision for loan losses			411			350			855				34,700				33,086				36,420
Mortgage banking income:
Gain on sale of mortgage loans			4,538			5,322			14,262				—				—				—
Intersegment gain (loss)			1,097			837			910				(1,095	)			(608	)			(910	)
Changes in mortgage servicing rights fair value			735			4,695			(2,133	)			127				590				(419	)
Other			2,393			2,325			3,799				219				233				276
Total mortgage banking income (loss)			8,763			13,179			16,838				(749	)			215				(1,053	)
Other noninterest income			7			9			20				6,084				5,887				5,898
Total noninterest income			8,770			13,188			16,858				5,335				6,102				4,845
Noninterest expense			7,242			7,761			14,101				27,131				26,825				24,128
Income before income taxes			1,939			5,777			3,612				12,904				12,363				17,137
Provision for income taxes			549			1,541			1,013				3,550				3,557				4,863
Net income		$	1,390		$	4,236		$	2,599			$	9,354			$	8,806			$	12,274

		HarborOne Mortgage						HarborOne Bank
		For the Six Months Ended						For the Six Months Ended
		June 30,			June 30,			June 30,				June 30,
		2022			2021			2022				2021
		(in thousands)
Net interest and dividend income		$	761		$	2,105		$	70,670			$	63,382
Provision (benefit) for credit losses			—			—			2,884				(4,195	)
Net interest and dividend income, after provision (benefit) for credit losses			761			2,105			67,786				67,577
Mortgage banking income:
Gain on sale of mortgage loans			9,860			39,064			—				—
Intersegment gain (loss)			1,934			1,572			(1,703	)			(1,572	)
Changes in mortgage servicing rights fair value			5,430			990			717				(133	)
Other			4,718			8,014			452				576
Total mortgage banking income (loss)			21,942			49,640			(534	)			(1,129	)
Other noninterest income			16			12			11,971				10,989
Total noninterest income			21,958			49,652			11,437				9,860
Noninterest expense			15,003			32,158			53,956				48,591
Income before income taxes			7,716			19,599			25,267				28,846
Provision for income taxes			2,090			5,346			7,107				8,298
Net income		$	5,626		$	14,253		$	18,160			$	20,548

Category: Earnings

View source version on businesswire.com: https://www.businesswire.com/news/home/20220725005856/en/

Linda Simmons, EVP, CFO (508) 895-1379

Source: HarborOne Bancorp, Inc.

FAQ

What were HarborOne Bancorp's earnings for Q2 2022?

HarborOne Bancorp reported net income of $10.0 million, or $0.21 per share for Q2 2022.

How did HarborOne Bancorp's loan growth perform in Q2 2022?

Loans grew by $174.6 million, representing a 4.7% increase in Q2 2022.

What is the net interest margin for HarborOne Bancorp in Q2 2022?

The net interest margin for Q2 2022 increased to 3.48%, up by 27 basis points.

How much did noninterest income decrease in Q2 2022 for HarborOne Bancorp?

Noninterest income decreased by $5.0 million, or 26.0%, in Q2 2022.

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

The decline was primarily driven by a decrease in mortgage banking income and lower total noninterest income.