HarborOne Bancorp, Inc. Announces 2022 Third Quarter Earnings

Rhea-AI Summary

HarborOne Bancorp reported a third-quarter net income of $13.8 million, or $0.30 per share, reflecting a 37.8% increase from the previous quarter. Loan growth reached $285.4 million (7.3%), contributing to a total asset increase of $283.6 million (6.0%). Net interest income rose 12.7% to $39.3 million. However, total noninterest income decreased 35.3% year-over-year. The effective tax rate improved to 25.4% from 27.6% in the prior quarter. The bank maintains strong capital ratios while facing unrealized losses on securities.

Positive

• Net income increased by $3.8 million, or 37.8%.
• Loan growth of $285.4 million (7.3%).
• Net interest income rose by $12.4 million (12.7%).
• Return on average assets at 1.14%.

Negative

• Total noninterest income decreased by $7.8 million (35.3%).
• Unrealized losses on securities increased to $70.4 million.

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 $13.8 million, or $0.30 per basic and diluted share, for the third quarter of 2022, compared to net income of $10.0 million, or $0.21 per basic and diluted share, for the preceding quarter and $12.3 million, or $0.24 per diluted share, for the same period last year.

Selected Third Quarter Financial Highlights:

• Net income increased $3.8 million, or 37.8%.
• Return on average assets was 1.14%, and return on average equity was 8.76%.
• Loan growth of $285.4 million, or 7.3%.
• Total deposit growth $35.2 million, or 0.91% and core deposit growth of $22.9 million, or 0.70%.
• Continued share repurchase program.

“I am proud of our team’s ability to manage the volatile interest rate environment,” said Joseph F. Casey, President and Chief Executive Officer. He added: “The Company continues to drive revenue through expanded margin which was up 30 basis points year-over-year resulting in net interest income expansion of $12.4 million, or 12.7%. Our mortgage segment remains profitable as the increasing value of our servicing rights, coupled with expense reductions, partially offset declining origination volume and gain-on-sale margins.”

Net Interest Income

The Company’s net interest and dividend income was $39.3 million for the quarter ended September 30, 2022, up $2.1 million, or 5.7%, from $37.2 million for the quarter ended June 30, 2022, and up $6.5 million, or 19.9%, from $32.8 million for the quarter ended September 30, 2021. The interest rate spread and net interest margin were 3.30% and 3.47%, respectively, for the quarter ended September 30, 2022, compared to 3.39% and 3.48%, respectively, for the quarter ended June 30, 2022, and 2.97% and 3.08%, respectively, for the quarter ended September 30, 2021. On a linked-quarter basis, the increase in net interest and dividend income primarily reflects an increase in the average loan balance coupled with increased yields on loans and investments primarily due to rate increases, partially offset by decreases in fees recognized in connection with U.S. Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans and higher rates on deposits. The cost of funds was 51 basis points for the quarter ended September 30, 2022, compared to 27 basis points in the preceding quarter.

The $4.7 million increase in total interest and dividend income on a linked-quarter basis reflected a 20-basis-point increase in the yield on interest-earning assets. The yield on loans increased 15 basis points, from 3.96% to 4.11%. Interest on loans in the third quarter included $454,000 in prepayment penalties on commercial loans and $188,000 in accretion income from the fair value discount on loans acquired in connection with the merger with Coastway Bancorp, Inc. Prepayment penalties and accretion income in the preceding quarter were $1.1 million and $353,000, respectively. The three months ended September 30, 2022 and June 30, 2022 include the recognition of deferred fees on PPP loans in the amount of $24,000 and $368,000, respectively. The yield on investments increased 8 basis points, from 1.92% to 2.00%.

The increase in net interest and dividend income from the prior year quarter reflects an increase of $8.7 million, or 24.4%, in total interest and dividend income and an increase of $2.2 million, or 73.8%, in total interest expense. The changes reflect rate and volume changes in both interest-bearing assets and liabilities. The yield on interest-earning assets increased 57 basis points, while the average balance increased $272.3 million, and the cost of interest-bearing liabilities increased 24 basis points, while the average balance increased $271.6 million.

Noninterest Income

Total noninterest income increased $142,000, or 1.0%, to $14.2 million for the quarter ended September 30, 2022, from $14.1 million for the quarter ended June 30, 2022. Mortgage loan closings for the quarter ended September 30, 2022 were $250.5 million with a gain on loan sales of $3.8 million, compared to $297.5 million in mortgage closings and $4.5 million in gain on sales for the preceding quarter. Deposit account fees were $4.9 million for the quarter ended September 30, 2022, flat compared to the quarter ended June 30, 2022. Other income for the quarter ended September 30, 2022 increased $82,000.

Although declining mortgage demand and volume has negatively impacted mortgage banking income, the change in the fair value of mortgage servicing rights has provided a positive offset. The increase in the fair value of mortgage servicing rights for the three months ended September 30, 2022 was $2.6 million, as compared to an increase of $1.6 million in the fair value of mortgage servicing rights for the three months ended June 30, 2022. The 10-year Treasury Constant Maturity rate increased 85 basis points versus the second quarter of 2022. The impact of principal payments on the underlying mortgages on the mortgage servicing rights was consistent at $747,000 and $771,000 for the quarters ended September 30, 2022 and June 30, 2022, respectively. The change in the fair value of the mortgage servicing rights is generally consistent with the change in the 10-year Treasury Constant Maturity rate. As interest rates rise and prepayment speeds slow, mortgage servicing rights values tend to increase; conversely, as interest rates fall and prepayment speeds quicken, mortgage servicing rights values tend to decrease.

Total noninterest income decreased $7.8 million, or 35.3%, compared to the quarter ended September 30, 2021, primarily due to a $7.6 million, or 48.4%, decrease in mortgage banking income, driven by the decrease in loan closings and narrowing gain-on-sale margins.

Noninterest Expense

Total noninterest expenses were $34.5 million for the quarter ended September 30, 2022, a decrease of $481,000, or 1.4%, from the quarter ended June 30, 2022. Compensation and benefits decreased $464,000, or 2.2%, and professional fees decreased $223,000, or 13.3%, partially offset by a $254,000 increase in occupancy and equipment expenses. The decrease in compensation expense reflects a $477,000 decrease in commission expense consistent with the decrease in mortgage originations. The increase in occupancy and equipment expense reflects an increase in expenses for utilities and software licenses.

Total noninterest expenses decreased $4.8 million, or 12.2%, from the quarter ended September 30, 2021. Compensation and benefits decreased $3.8 million and loan expenses decreased $968,000, consistent with the decrease in residential mortgage loan closings and corresponding decrease in mortgage origination commissions. The decrease in compensation and benefits also reflects proactive cost reduction measures taken at HarborOne Mortgage beginning in the second quarter of 2021.

Income Tax Provision

The effective tax rate was 25.4% for the quarter ended September 30, 2022, compared to 27.6% for the quarter ended June 30, 2022 and 28.6% for the quarter ended September 30, 2021. The third quarter 2022 effective rate was impacted by a tax benefit recorded for Industrial Revenue Bonds. The 2022 effective tax rate is expected to be approximately 27%.

Asset Quality and Allowance for Credit Losses

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

Credit quality performance continued to be strong with total nonperforming assets of $23.4 million at September 30, 2022, compared to $24.4 million at June 30, 2022 and $36.5 million at September 30, 2021. Nonperforming assets as a percentage of total assets were 0.47% at September 30, 2022, 0.52% at June 30, 2022, and 0.80% at September 30, 2021.

The funded loan provision for credit losses for the three and nine months ended September 30, 2022 was $262,000 and $2.0 million, respectively, and reflects provisioning for loan growth partially offset by a reduction in pandemic related uncertainty. Net recoveries totaled $799,000, or 0.08% of average loans outstanding on an annualized basis, for the quarter ended September 30, 2022. Net recoveries totaled $504,000, or 0.05% of average loans outstanding on an annualized basis, for the quarter ended June 30, 2022, and net charge-offs totaled $1.7 million, or 0.19% of average loans outstanding on an annualized basis, for the quarter ended September 30, 2021. The third quarter 2022 recovery reflects the disposition of assets from a SBA guaranteed credit.

The ACL was $44.6 million, or 1.06% of total loans, at September 30, 2022, compared to $43.6 million, or 1.11% of total loans, at June 30, 2022 and an allowance for loss under the incurred loss model of $48.0 million, or 1.39% of total loans, at September 30, 2021. The ACL on unfunded commitments, included in other liabilities on the unaudited Consolidated Balance Sheets, amounted to $5.5 million at September 30, 2022 as compared to $5.1 million at June 30, 2022 and the associated provision was $406,000 and $1.6 million for the three and nine months ended September 30, 2022. There was no ACL on unfunded commitments at December 31, 2021 or September 30, 2021. The increase from the prior quarter reflects $95.3 million in new construction originations in the third quarter, with $72.4 million in unfunded balances as of September 30, 2022.

We have not experienced any significant negative trends in the at-risk sectors identified in response to conditions that developed during the COVID-19 pandemic; however management continues to monitor certain credit types within those sectors that may be susceptible to increased credit risk as a result of trends that were precipitated by the COVID-19 pandemic and may be exacerbated by current economic conditions. Management is focused on business-oriented hotels, non-anchored retail space and metro office space. As of September 30, 2022, business-oriented hotels included 13 loans with a total outstanding balance of $93.9 million, non-anchored retail space included 31 loans with a total outstanding balance of $56.3 million and metro office space included 2 loans with a total outstanding balance of $14.9 million. As of September 30, 2022 there were two business-oriented hotel credits with a carrying value of $10.3 million that were rated substandard and on nonaccrual. One of those credits in the amount of $2.0 million was provided a principal deferral that resulted in a troubled-debt restructuring designation in the third quarter. One business-oriented hotel credit in the amount of $9.5 million was downgraded to a watch risk rating during the third quarter of 2022. The other loans in these groups were performing in accordance with their terms.

Balance Sheet

Total assets increased $283.6 million, or 6.0%, to $4.99 billion at September 30, 2022, from $4.70 billion at June 30, 2022. The increase primarily reflects an increase of $285.4 million in loans. Securities available for sale were negatively impacted by unrealized losses of $70.4 million as of September 30, 2022, as compared to $49.9 million of unrealized losses as of June 30, 2022, and $3.6 million of unrealized losses as of December 31, 2021.

Loans increased $285.4 million, or 7.3%, to $4.20 billion at September 30, 2022, from $3.91 billion at June 30, 2022. The increase in loans for the three months ended September 30, 2022 was primarily due to increases in commercial real estate loans of $194.3 million, commercial construction loans of $26.3 million and residential real estate loans of $97.7 million, partially offset by decreases in commercial and industrial loans of $10.1 million and consumer loans of $22.8 million. As of September 30, 2022, outstanding PPP loans amounted to $2.0 million, and there was $24,000 in deferred processing fee income. We expect to complete the forgiveness process for the remaining PPP loans by year-end.

Total deposits were $3.88 billion at September 30, 2022 and $3.85 billion at June 30, 2022. Compared to the prior quarter, non-certificate accounts increased $22.9 million, and term certificate accounts increased $12.3 million. FHLB borrowings increased $240.0 million to $345.7 million at September 30, 2022 from $105.7 million at June 30, 2022. At September 30, 2022, FHLB borrowings were primarily short-term borrowings.

Total stockholders’ equity was $611.4 million at September 30, 2022, compared to $624.5 million at June 30, 2022 and $680.0 million at September 30, 2021. Stockholders’ equity decreased 2.1% when compared to the prior quarter, as earnings were offset by share repurchases and elevated levels of unrealized losses on available-for-sale investment securities included in other comprehensive income. The Company repurchased 783,502 shares at an average price of $13.82 during the three months ended September 30, 2022 and announced a fifth share repurchase program on September 21, 2022 to commence at the completion of the share repurchase program announced on April 12, 2022. The tangible-common-equity-to-tangible-assets ratio was 10.97% at September 30, 2022, 11.92% at June 30, 2022, and 13.50% at September 30, 2021. At September 30, 2022, the Company and the Bank had strong capital positions and exceeded all regulatory capital requirements.

About HarborOne Bancorp, Inc.

HarborOne Bancorp, Inc. is the holding company for HarborOne Bank, a Massachusetts-chartered savings bank. HarborOne Bank serves the financial needs of consumers, businesses, and municipalities throughout Eastern Massachusetts and Rhode Island through a network of 31 full-service branches located in Massachusetts and Rhode Island, and a commercial lending office in each of Boston, Massachusetts and Providence, Rhode Island. The Bank also provides a range of educational services through “HarborOne U,” with classes on small business, financial literacy and personal enrichment at two campuses located adjacent to our Brockton and Mansfield locations. HarborOne Mortgage, LLC, a subsidiary of HarborOne Bank, is a full-service mortgage lender with 26 offices in Maine, Massachusetts, Rhode Island, and New Hampshire, and is licensed to lend in six additional states.

Forward Looking Statements

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

Use of Non-GAAP Measures

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

HarborOne Bancorp, Inc.
Consolidated Balance Sheet Trend
(Unaudited)
		September 30,			June 30,			March 31,			December 31,			September 30,
(in thousands)		2022			2022			2022			2021			2021
Assets
Cash and due from banks		$	39,910		$	35,843		$	41,862		$	35,549		$	42,589
Short-term investments			46,044			48,495			97,870			159,170			277,050
Total cash and cash equivalents			85,954			84,338			139,732			194,719			319,639
Securities available for sale, at fair value			304,852			334,398			361,529			394,036			390,552
Securities held to maturity, at amortized cost			15,000			10,000			—			—			—
Federal Home Loan Bank stock, at cost			15,973			5,625			5,931			5,931			6,828
Asset held for sale			—			—			678			881			881
Loans held for sale, at fair value			18,805			31,679			25,690			45,642			77,052
Loans:
Commercial real estate			2,041,905			1,847,619			1,816,484			1,699,877			1,573,284
Commercial construction			185,062			158,762			154,059			136,563			152,685
Commercial and industrial			397,112			407,182			410,787			421,608			414,814
Total commercial loans			2,624,079			2,413,563			2,381,330			2,258,048			2,140,783
Residential real estate			1,520,809			1,423,074			1,252,920			1,217,980			1,160,689
Consumer			52,466			75,312			103,100			131,705			156,272
Loans			4,197,354			3,911,949			3,737,350			3,607,733			3,457,744
Less: Allowance for credit losses on loans			(44,621)			(43,560)			(41,765)			(45,377)			(47,988)
Net loans			4,152,733			3,868,389			3,695,585			3,562,356			3,409,756
Mortgage servicing rights, at fair value			49,861			47,130			45,043			38,268			36,540
Goodwill			69,802			69,802			69,802			69,802			69,802
Other intangible assets			2,461			2,695			2,930			3,164			3,399
Other assets			272,202			249,988			244,405			238,606			252,645
Total assets		$	4,987,643		$	4,704,044		$	4,591,325		$	4,553,405		$	4,567,094
Liabilities and Stockholders' Equity
Deposits:
Demand deposit accounts		$	795,945		$	775,154		$	771,172		$	743,051		$	756,917
NOW accounts			308,191			316,839			310,090			313,733			300,577
Regular savings and club accounts			1,289,825			1,282,913			1,218,656			1,138,979			1,144,595
Money market deposit accounts			889,517			885,673			864,316			858,970			832,441
Term certificate accounts			599,632			587,354			597,746			627,916			659,850
Total deposits			3,883,110			3,847,933			3,761,980			3,682,649			3,694,380
Short-term borrowed funds			330,000			90,000			—			—			—
Long-term borrowed funds			15,684			15,693			55,702			55,711			55,720
Subordinated debt			34,254			34,222			34,191			34,159			34,128
Other liabilities and accrued expenses			113,225			91,718			90,387			101,625			102,834
Total liabilities			4,376,273			4,079,566			3,942,260			3,874,144			3,887,062
Common stock			593			593			591			585			585
Additional paid-in capital			480,617			479,519			477,302			469,934			468,526
Unearned compensation - ESOP			(28,083)			(28,542)			(29,002)			(29,461)			(29,921)
Retained earnings			350,049			339,471			332,734			325,699			315,683
Treasury stock			(143,125)			(132,296)			(113,513)			(85,859)			(73,723)
Accumulated other comprehensive loss			(48,681)			(34,267)			(19,047)			(1,637)			(1,118)
Total stockholders' equity			611,370			624,478			649,065			679,261			680,032
Total liabilities and stockholders' equity		$	4,987,643		$	4,704,044		$	4,591,325		$	4,553,405		$	4,567,094

HarborOne Bancorp, Inc.
Consolidated Statements of Net Income - Trend
(Unaudited)
		Quarters Ended
		September 30,			June 30,			March 31,			December 31,			September 30,
(in thousands, except share data)		2022			2022			2022			2021			2021
Interest and dividend income:
Interest and fees on loans		$	42,065		$	37,522		$	33,576		$	34,177		$	33,680
Interest on loans held for sale			377			331			264			501			665
Interest on securities			1,971			1,873			1,701			1,541			1,293
Other interest and dividend income			143			131			61			134			170
Total interest and dividend income			44,556			39,857			35,602			36,353			35,808
Interest expense:
Interest on deposits			3,491			2,019			1,621			1,651			2,050
Interest on FHLB borrowings			1,209			119			188			193			431
Interest on subordinated debentures			524			524			523			524			524
Total interest expense			5,224			2,662			2,332			2,368			3,005
Net interest and dividend income			39,332			37,195			33,270			33,985			32,803
Provision (benefit) for credit losses			668			2,546			338			(1,436)			(1,627)
Net interest and dividend income, after provision (benefit) for credit losses			38,664			34,649			32,932			35,421			34,430
Noninterest income:
Mortgage banking income:
Gain on sale of mortgage loans			3,809			4,538			5,322			10,063			12,756
Changes in mortgage servicing rights fair value			1,816			862			5,285			(245)			(992)
Other			2,453			2,612			2,558			3,359			3,882
Total mortgage banking income			8,078			8,012			13,165			13,177			15,646
Deposit account fees			4,870			4,892			4,472			4,783			4,658
Income on retirement plan annuities			119			112			107			109			108
Gain on sale and call of securities, net			—			—			—			—			241
Bank-owned life insurance income			503			494			483			506			515
Other income			675			593			834			589			842
Total noninterest income			14,245			14,103			19,061			19,164			22,010
Noninterest expenses:
Compensation and benefits			20,991			21,455			20,723			24,564			24,760
Occupancy and equipment			4,829			4,575			5,428			4,923			4,765
Data processing			2,311			2,259			2,241			2,244			2,205
Loan expense			355			385			478			732			1,323
Marketing			850			986			1,218			1,120			880
Professional fees			1,457			1,680			1,539			1,443			1,362
Deposit insurance			357			354			349			345			341
Prepayment penalties on Federal Home Loan Bank advances			—			—			—			—			1,095
Other expenses			3,323			3,260			2,859			2,817			2,543
Total noninterest expenses			34,473			34,954			34,835			38,188			39,274
Income before income taxes			18,436			13,798			17,158			16,397			17,166
Income tax provision			4,678			3,811			4,891			3,807			4,907
Net income		$	13,758		$	9,987		$	12,267		$	12,590		$	12,259
Earnings per common share:
Basic		$	0.30		$	0.21		$	0.26		$	0.26		$	0.25
Diluted		$	0.30		$	0.21		$	0.25		$	0.25		$	0.24
Weighted average shares outstanding:
Basic			45,830,737			46,980,830			47,836,410			48,918,539			49,801,123
Diluted			46,420,527			47,536,033			48,690,420			49,828,379			50,663,415

HarborOne Bancorp, Inc.
Consolidated Statements of Net Income
(Unaudited)
		For the Nine Months Ended September 30,
(dollars in thousands, except share data)		2022			2021			$ Change			% Change
Interest and dividend income:
Interest and fees on loans		$	113,163		$	101,646		$	11,517		11.3	%
Interest on loans held for sale			972			2,841			(1,869)		(65.8)
Interest on securities			5,545			2,671			2,874		107.6
Other interest and dividend income			335			384			(49)		(12.8)
Total interest and dividend income			120,015			107,542			12,473		11.6
Interest expense:
Interest on deposits			7,131			7,072			59		0.8
Interest on FHLB borrowings			1,516			1,514			2		0.1
Interest on subordinated debentures			1,571			1,571			—		0.0
Total interest expense			10,218			10,157			61		0.6
Net interest and dividend income			109,797			97,385			12,412		12.7
Provision (benefit) for credit losses			3,552			(5,822)			9,374		161.0
Net interest and dividend income, after provision (benefit) for credit losses			106,245			103,207			3,038		2.9
Noninterest income:
Mortgage banking income:
Gain on sale of mortgage loans			13,669			51,820			(38,151)		(73.6)
Changes in mortgage servicing rights fair value			7,963			(135)			8,098		NM
Other			7,623			12,472			(4,849)		(38.9)
Total mortgage banking income			29,255			64,157			(34,902)		(54.4)
Deposit account fees			14,234			13,056			1,178		9.0
Income on retirement plan annuities			338			318			20		6.3
Gain on sale and call of securities, net			—			241			(241)		(100.0)
Bank-owned life insurance income			1,480			1,516			(36)		(2.4)
Other income			2,102			2,234			(132)		(5.9)
Total noninterest income			47,409			81,522			(34,113)		(41.8)
Noninterest expenses:
Compensation and benefits			63,169			77,360			(14,191)		(18.3)
Occupancy and equipment			14,832			14,723			109		0.7
Data processing			6,811			6,910			(99)		(1.4)
Loan expense			1,218			5,008			(3,790)		(75.7)
Marketing			3,054			2,524			530		21.0
Professional fees			4,676			4,432			244		5.5
Deposit insurance			1,060			993			67		6.7
Prepayment penalties on Federal Home Loan Bank advances			—			1,095			(1,095)		(100.0)
Other expenses			9,442			7,629			1,813		23.8
Total noninterest expenses			104,262			120,674			(16,412)		(13.6)
Income before income taxes			49,392			64,055			(14,663)		(22.9)
Income tax provision			13,380			18,128			(4,748)		(26.2)
Net income		$	36,012		$	45,927		$	(9,915)		(21.6)	%
Earnings per common share:
Basic		$	0.77		$	0.89
Diluted		$	0.76		$	0.88
Weighted average shares outstanding:
Basic			46,875,312			51,362,252
Diluted			47,541,647			52,094,749

HarborOne Bancorp, Inc.
Average Balances / Yields
(Unaudited)
		Quarters Ended
		September 30, 2022								June 30, 2022								September 30, 2021
		Average								Average								Average
		Outstanding						Yield/		Outstanding						Yield/		Outstanding						Yield/
		Balance			Interest			Cost(6)		Balance			Interest			Cost(6)		Balance			Interest			Cost(6)
		(dollars in thousands)
Interest-earning assets:
Investment securities (1)		$	390,577		$	1,971		2.00	%	$	391,448		$	1,873		1.92	%	$	358,927		$	1,293		1.43	%
Other interest-earning assets			27,723			143		2.05			64,678			131		0.81			372,892			170		0.18
Loans held for sale			28,046			377		5.33			29,474			331		4.51			84,399			665		3.13
Loans
Commercial loans (2)			2,522,359			28,298		4.45			2,384,630			25,295		4.25			2,121,432			22,394		4.19
Residential real estate loans (2)			1,470,305			12,972		3.50			1,330,772			11,182		3.37			1,121,898			9,352		3.31
Consumer loans (2)			63,220			795		4.99			88,943			1,045		4.71			170,366			1,934		4.50
Total loans			4,055,884			42,065		4.11			3,804,345			37,522		3.96			3,413,696			33,680		3.91
Total interest-earning assets			4,502,230			44,556		3.93			4,289,945			39,857		3.73			4,229,914			35,808		3.36
Noninterest-earning assets			308,734								311,998								347,060
Total assets		$	4,810,964							$	4,601,943							$	4,576,974
Interest-bearing liabilities:
Savings accounts		$	1,293,598			1,211		0.37		$	1,266,912			626		0.20		$	1,136,131			365		0.13
NOW accounts			305,777			42		0.05			311,241			38		0.05			283,725			45		0.06
Money market accounts			893,452			1,382		0.61			885,305			635		0.30			832,340			392		0.19
Certificates of deposit			486,923			787		0.64			484,484			670		0.55			570,570			1,087		0.76
Brokered deposits			102,875			69		0.27			100,000			50		0.20			100,000			161		0.64
Total interest-bearing deposits			3,082,625			3,491		0.45			3,047,942			2,019		0.27			2,922,766			2,050		0.28
FHLB advances			196,036			1,209		2.45			34,763			119		1.36			84,438			431		2.03
Subordinated debentures			34,237			524		6.07			34,207			524		6.14			34,111			524		6.09
Total borrowings			230,273			1,733		2.99			68,970			643		3.74			118,549			955		3.20
Total interest-bearing liabilities			3,312,898			5,224		0.63			3,116,912			2,662		0.34			3,041,315			3,005		0.39
Noninterest-bearing liabilities:
Noninterest-bearing deposits			789,214								768,088								756,927
Other noninterest-bearing liabilities			80,304								75,186								90,366
Total liabilities			4,182,416								3,960,186								3,888,608
Total stockholders' equity			628,548								641,757								688,366
Total liabilities and stockholders' equity		$	4,810,964							$	4,601,943							$	4,576,974
Net interest income as reported						39,332								37,195								32,803
Interest rate spread (3)								3.30	%							3.39	%							2.97	%
Net interest-earning assets (4)		$	1,189,332							$	1,173,033							$	1,188,599
Net interest margin (5)								3.47	%							3.48	%							3.08	%
Ratio of interest-earning assets to interest-bearing liabilities			135.90	%							137.63	%							139.08	%
Supplemental information:
Total deposits, including demand deposits		$	3,871,839		$	3,491				$	3,816,030		$	2,019				$	3,679,693		$	2,050
Cost of total deposits								0.36	%							0.21	%							0.22	%
Total funding liabilities, including demand deposits		$	4,102,112		$	5,224				$	3,885,000		$	2,662				$	3,798,242		$	3,005
Cost of total funding liabilities								0.51	%							0.27	%							0.31	%
(1) Includes securities available for sale and securities held to maturity.
(2) Includes nonaccruing loan balances and interest received on such loans.
(3) Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(4) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
(5) Net interest margin represents net interest income divided by average total interest-earning assets.
(6) Annualized.

HarborOne Bancorp, Inc.
Average Balances / Yields
(Unaudited)
		For the Nine Months Ended
		September 30, 2022								September 30, 2021
		Average								Average
		Outstanding						Yield/		Outstanding						Yield/
		Balance			Interest			Cost		Balance			Interest			Cost
		(dollars in thousands)
Interest-earning assets:
Investment securities (1)		$	391,786		$	5,545		1.89	%	$	318,817		$	2,671		1.12	%
Other interest-earning assets			80,540			335		0.56			317,837			384		0.16
Loans held for sale			29,114			972		4.46			130,622			2,841		2.91
Loans
Commercial loans (2)			2,400,290			75,688		4.22			2,144,726			65,253		4.07
Residential real estate loans (2)			1,341,508			34,296		3.42			1,090,361			29,439		3.61
Consumer loans (2)			89,934			3,179		4.73			209,443			6,954		4.44
Total loans			3,831,732			113,163		3.95			3,444,530			101,646		3.95
Total interest-earning assets			4,333,172			120,015		3.70			4,211,806			107,542		3.41
Noninterest-earning assets			315,781								338,980
Total assets		$	4,648,953							$	4,550,786
Interest-bearing liabilities:
Savings accounts		$	1,242,533			2,203		0.24		$	1,104,765			1,363		0.16
NOW accounts			306,115			116		0.05			242,623			123		0.07
Money market accounts			879,310			2,320		0.35			849,041			1,369		0.22
Certificates of deposit			497,744			2,186		0.59			589,404			3,760		0.85
Brokered deposits			100,969			306		0.41			100,000			457		0.61
Total interest-bearing deposits			3,026,671			7,131		0.32			2,885,833			7,072		0.33
FHLB advances			96,015			1,516		2.11			94,482			1,514		2.14
Subordinated debentures			34,206			1,571		6.14			34,080			1,571		6.16
Total borrowings			130,221			3,087		3.17			128,562			3,085		3.21
Total interest-bearing liabilities			3,156,892			10,218		0.43			3,014,395			10,157		0.45
Noninterest-bearing liabilities:
Noninterest-bearing deposits			765,479								749,426
Other noninterest-bearing liabilities			80,727								90,763
Total liabilities			4,003,098								3,854,584
Total stockholders' equity			645,855								696,202
Total liabilities and stockholders' equity		$	4,648,953							$	4,550,786
Net interest income as reported						109,797								97,385
Interest rate spread (3)								3.27	%							2.96	%
Net interest-earning assets (4)		$	1,176,280							$	1,197,411
Net interest margin (5)								3.39	%							3.09	%
Ratio of interest-earning assets to interest-bearing liabilities			137.26	%							139.72	%
Supplemental information:
Total deposits, including demand deposits		$	3,792,150		$	7,131				$	3,635,259		$	7,072
Cost of total deposits								0.25	%							0.26	%
Total funding liabilities, including demand deposits		$	3,922,371		$	10,218				$	3,763,821		$	10,157
Cost of total funding liabilities								0.35	%							0.36	%
(1) Includes securities available for sale and securities held to maturity.
(2) Includes nonaccruing loan balances and interest received on such loans.
(3) Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(4) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
(5) Net interest margin represents net interest income divided by average total interest-earning assets.

HarborOne Bancorp, Inc.
Average Balances and Yield Trend
(Unaudited)
		Average Balances - Trend - Quarters Ended
		September 30, 2022			June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021
		(in thousands)
Interest-earning assets:
Investment securities (1)		$	390,577		$	391,448		$	393,364		$	394,301		$	358,927
Other interest-earning assets			27,723			64,678			150,569			286,026			372,892
Loans held for sale			28,046			29,474			29,842			63,833			84,399
Loans
Commercial loans (2)			2,522,359			2,384,630			2,291,343			2,165,739			2,121,432
Residential real estate loans (2)			1,470,305			1,330,772			1,220,703			1,171,608			1,121,898
Consumer loans (2)			63,220			88,943			118,242			143,577			170,366
Total loans			4,055,884			3,804,345			3,630,288			3,480,924			3,413,696
Total interest-earning assets			4,502,230			4,289,945			4,204,063			4,225,084			4,229,914
Noninterest-earning assets			308,734			311,998			326,811			337,310			347,060
Total assets		$	4,810,964		$	4,601,943		$	4,530,874		$	4,562,394		$	4,576,974
Interest-bearing liabilities:
Savings accounts		$	1,293,598		$	1,266,912		$	1,165,683		$	1,147,855		$	1,136,131
NOW accounts			305,777			311,241			301,279			300,459			283,725
Money market accounts			893,452			885,305			858,792			839,977			832,340
Certificates of deposit			486,923			484,484			522,211			543,208			570,570
Brokered deposits			102,875			100,000			100,000			100,000			100,000
Total interest-bearing deposits			3,082,625			3,047,942			2,947,965			2,931,499			2,922,766
FHLB advances			196,036			34,763			55,706			55,714			84,438
Subordinated debentures			34,237			34,207			34,173			34,144			34,111
Total borrowings			230,273			68,970			89,879			89,858			118,549
Total interest-bearing liabilities			3,312,898			3,116,912			3,037,844			3,021,357			3,041,315
Noninterest-bearing liabilities:
Noninterest-bearing deposits			789,214			768,088			738,578			768,361			756,927
Other noninterest-bearing liabilities			80,304			75,186			86,763			92,034			90,366
Total liabilities			4,182,416			3,960,186			3,863,185			3,881,752			3,888,608
Total stockholders' equity			628,548			641,757			667,689			680,642			688,366
Total liabilities and stockholders' equity		$	4,810,964		$	4,601,943		$	4,530,874		$	4,562,394		$	4,576,974
		Annualized Yield Trend - Quarters Ended
		September 30, 2022			June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021
Interest-earning assets:
Investment securities (1)			2.00	%		1.92	%		1.75	%		1.55	%		1.43	%
Other interest-earning assets			2.05	%		0.81	%		0.16	%		0.19	%		0.18	%
Loans held for sale			5.33	%		4.51	%		3.59	%		3.11	%		3.13	%
Commercial loans (2)			4.45	%		4.25	%		3.91	%		4.15	%		4.19	%
Residential real estate loans (2)			3.50	%		3.37	%		3.37	%		3.34	%		3.31	%
Consumer loans (2)			4.99	%		4.71	%		4.59	%		4.56	%		4.50	%
Total loans			4.11	%		3.96	%		3.75	%		3.90	%		3.91	%
Total interest-earning assets			3.93	%		3.73	%		3.43	%		3.41	%		3.36	%
Interest-bearing liabilities:
Savings accounts			0.37	%		0.20	%		0.13	%		0.09	%		0.13	%
NOW accounts			0.05	%		0.05	%		0.05	%		0.05	%		0.06	%
Money market accounts			0.61	%		0.30	%		0.14	%		0.15	%		0.19	%
Certificates of deposit			0.64	%		0.55	%		0.57	%		0.64	%		0.76	%
Brokered deposits			0.27	%		0.20	%		0.76	%		0.71	%		0.64	%
Total interest-bearing deposits			0.45	%		0.27	%		0.22	%		0.22	%		0.28	%
FHLB advances			2.45	%		1.36	%		1.37	%		1.37	%		2.03	%
Subordinated debentures			6.07	%		6.14	%		6.21	%		6.09	%		6.09	%
Total borrowings			2.99	%		3.74	%		3.21	%		3.17	%		3.20	%
Total interest-bearing liabilities			0.63	%		0.34	%		0.31	%		0.31	%		0.39	%
(1) Includes securities available for sale and securities held to maturity.
(2) Includes nonaccruing loan balances and interest received on such loans.

HarborOne Bancorp, Inc.
Selected Financial Highlights
(Unaudited)
		Quarters Ended
		September 30,			June 30,			March 31,			December 31,			September 30,
Performance Ratios (annualized):		2022			2022			2022			2021			2021
(dollars in thousands)
Return on average assets (ROAA)			1.14	%		0.87	%		1.08	%		1.10	%		1.07	%
Return on average equity (ROAE)			8.76	%		6.22	%		7.35	%		7.40	%		7.12	%
Total noninterest expense		$	34,473		$	34,954		$	34,835		$	38,188		$	39,274
Less: Amortization of other intangible assets			235			235			235			235			324
Total adjusted noninterest expense		$	34,238		$	34,719		$	34,600		$	37,953		$	38,950
Net interest and dividend income		$	39,332		$	37,195		$	33,270		$	33,985		$	32,803
Total noninterest income			14,245			14,103			19,061			19,164			22,010
Total revenue		$	53,577		$	51,298		$	52,331		$	53,149		$	54,813
Efficiency ratio (1)			63.90	%		67.68	%		66.12	%		71.41	%		71.06	%
(1) This non-GAAP measure represents adjusted noninterest expense divided by total revenue

		At or for the Quarters Ended
		September 30,			June 30,			March 31,			December 31,			September 30,
Asset Quality		2022			2022			2022			2021			2021
(dollars in thousands)
Total nonperforming assets		$	23,367		$	24,441		$	26,109		$	36,186		$	36,514
Nonperforming assets to total assets			0.47	%		0.52	%		0.57	%		0.79	%		0.80	%
Allowance for credit losses on loans to total loans			1.06	%		1.11	%		1.12	%		1.26	%		1.39	%
Net (recoveries) charge-offs		$	(799)		$	(504)		$	2,730		$	1,174		$	1,658
Annualized net (recoveries) charge-offs/average loans			(0.08)	%		(0.05)	%		0.30	%		0.13	%		0.19	%
Allowance for credit losses on loans to nonperforming loans			191.60	%		178.41	%		159.96	%		125.60	%		131.52	%

HarborOne Bancorp, Inc.
Selected Financial Highlights
(Unaudited)
		Quarters Ended
		September 30,			June 30,			March 31,			December 31,			September 30,
Capital and Share Related		2022			2022			2022			2021			2021
(dollars in thousands, except share data)
Common stock outstanding			49,202,660			49,989,007			51,257,696			52,390,478			53,232,110
Book value per share		$	12.43		$	12.49		$	12.66		$	12.97		$	12.77
Tangible common equity:
Total stockholders' equity		$	611,370		$	624,478		$	649,065		$	679,261		$	680,032
Less: Goodwill			69,802			69,802			69,802			69,802			69,802
Less: Other intangible assets (1)			2,461			2,695			2,930			3,164			3,399
Tangible common equity		$	539,107		$	551,981		$	576,333		$	606,295		$	606,831
Tangible book value per share (2)		$	10.96		$	11.04		$	11.24		$	11.57		$	11.40
Tangible assets:
Total assets		$	4,987,643		$	4,704,044		$	4,591,325		$	4,553,405		$	4,567,094
Less: Goodwill			69,802			69,802			69,802			69,802			69,802
Less: Other intangible assets			2,461			2,695			2,930			3,164			3,399
Tangible assets		$	4,915,380		$	4,631,547		$	4,518,593		$	4,480,439		$	4,493,893
Tangible common equity / tangible assets (3)			10.97	%		11.92	%		12.75	%		13.53	%		13.50	%
(1) Other intangible assets are core deposit intangibles.
(2) This non-GAAP ratio is total stockholders' equity less goodwill and intangible assets divided by common stock outstanding.
(3) This non-GAAP ratio is total stockholders' equity less goodwill and intangible assets to total assets less goodwill and intangible assets.

HarborOne Bancorp, Inc.
Segments Statements of Net Income
(Unaudited)
		HarborOne Mortgage									HarborOne Bank
		For the Quarter Ended									For the Quarter Ended
		September 30,			June 30,			September 30,			September 30,			June 30,			September 30,
		2022			2022			2021			2022			2022			2021
		(in thousands)
Net interest and dividend income		$	437		$	411		$	792		$	39,373		$	37,246		$	32,494
Provision (benefit) for credit losses			—			—			—			668			2,546			(1,627)
Net interest and dividend income, after provision for loan losses			437			411			792			38,705			34,700			34,121
Mortgage banking income:
Gain on sale of mortgage loans			3,809			4,538			12,756			—			—			—
Intersegment gain (loss)			698			1,097			2,366			(904)			(1,095)			(1,373)
Changes in mortgage servicing rights fair value			1,652			735			(918)			164			127			(74)
Other			2,235			2,393			3,619			218			219			263
Total mortgage banking income (loss)			8,394			8,763			17,823			(522)			(749)			(1,184)
Other noninterest income (loss)			(13)			7			25			6,180			6,084			6,339
Total noninterest income			8,381			8,770			17,848			5,658			5,335			5,155
Noninterest expense			6,610			7,242			12,387			27,707			27,131			26,570
Income before income taxes			2,208			1,939			6,253			16,656			12,904			12,706
Provision for income taxes			687			549			1,559			4,166			3,550			3,575
Net income		$	1,521		$	1,390		$	4,694		$	12,490		$	9,354		$	9,131

		HarborOne Mortgage						HarborOne Bank
		For the Nine Months Ended						For the Nine Months Ended
		September 30,			September 30,			September 30,			September 30,
		2022			2021			2022			2021
		(in thousands)
Net interest and dividend income		$	1,198		$	2,897		$	110,043		$	95,876
Provision (benefit) for credit losses			—			—			3,552			(5,822)
Net interest and dividend income, after provision (benefit) for credit losses			1,198			2,897			106,491			101,698
Mortgage banking income:
Gain on sale of mortgage loans			13,669			51,820			—			—
Intersegment gain (loss)			2,632			3,938			(2,607)			(2,945)
Changes in mortgage servicing rights fair value			7,082			72			881			(207)
Other			6,953			11,633			670			839
Total mortgage banking income (loss)			30,336			67,463			(1,056)			(2,313)
Other noninterest income			3			37			18,151			17,328
Total noninterest income			30,339			67,500			17,095			15,015
Noninterest expense			21,613			44,545			81,663			75,161
Income before income taxes			9,924			25,852			41,923			41,552
Provision for income taxes			2,777			6,905			11,273			11,873
Net income		$	7,147		$	18,947		$	30,650		$	29,679

Category: Earnings Release

View source version on businesswire.com: https://www.businesswire.com/news/home/20221025006139/en/

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

Source: HarborOne Bancorp, Inc.

FAQ

What were HarborOne Bancorp's earnings for Q3 2022?

HarborOne Bancorp reported net income of $13.8 million, or $0.30 per share, for Q3 2022.

How did HarborOne Bancorp's loan growth perform in Q3 2022?

The company experienced loan growth of $285.4 million, or 7.3%, in Q3 2022.

What is the effective tax rate for HarborOne Bancorp in Q3 2022?

The effective tax rate was 25.4% for Q3 2022.

What challenges did HarborOne Bancorp face in Q3 2022?

The bank faced a decline in total noninterest income by $7.8 million and increased unrealized losses on securities.