HarborOne Bancorp, Inc. Announces 2023 First Quarter Earnings

Rhea-AI Summary

HarborOne Bancorp (NASDAQ: HONE) reported a net income of $7.3 million, or $0.16 per diluted share, in Q1 2023, down from $9.6 million and $12.3 million in Q4 2022 and Q1 2022, respectively. Aiming for efficiency, the company anticipates annual cost savings of $4.1 million from recent measures, including branch closures. Capital return to shareholders reached $3.3 million through dividends with a 7% increase in the quarterly dividend. Net interest income decreased to $34.4 million, impacted by rising funding costs, while noninterest income fell by 12.2% to $8.7 million. Total assets grew by 4.0% to $5.57 billion, driven by a $73.0 million increase in loans. Despite challenges, management maintains confidence in credit quality and liquidity, managing a disciplined underwriting approach amid economic uncertainties.

Positive

• Anticipated annual cost savings of $4.1 million from efficiency measures.
• Increased quarterly dividend by 7%, returning $3.3 million to shareholders.
• Loan growth of $73.0 million (1.6%) and deposit growth of $52.2 million (1.2%) in Q1 2023.
• Strong credit quality with nonperforming loans at 0.27%, down from 0.32%.

Negative

• Net income decreased by 23.9% compared to the previous quarter and 40.2% year-over-year.
• Net interest income dropped to $34.4 million from $39.2 million in Q4 2022.
• Total noninterest income fell by 12.2% quarter-over-quarter and 54.4% year-over-year.
• Tangible-common-equity-to-tangible-assets ratio decreased to 9.60%.

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 $7.3 million, or $0.16 per diluted share, for the first quarter of 2023, compared to net income of $9.6 million, or $0.21 per diluted share, for the preceding quarter and net income of $12.3 million, or $0.25 per diluted share, for the same period last year.

Selected Financial Highlights:

• Recent Company-wide cost savings measures and organizational efficiencies will provide approximately $4.1 million in annual cost savings; a branch closure and a branch relocation will provide additional long-term expense savings.
• Returned $3.3 million of capital to shareholders via dividends and increased quarterly dividend by 7%.
• Continued share repurchase program returning $26.8 million to shareholders, representing 2.0 million shares.
• Disciplined underwriting continues to provide strong credit quality, with nonperforming loans to total loans of 0.27% compared to 0.32% on a linked-quarter basis.
• Loan growth of $73.0 million, or 1.6%, and deposit growth of $52.2 million, or 1.2%, on a linked-quarter basis.

“While significant challenges presented themselves in Q1, I have tremendous confidence in our ability to manage through the current environment. Our excellent credit quality, strong capital position, and deposit growth provide the foundation for that confidence,” said Joseph F. Casey, President and CEO. “Our team remains highly focused on ensuring stability in our deposit base. The Company has been proactive in reducing expenses at both HarborOne Mortgage and the Bank and will continue to look for additional opportunities. Our resilience and strategic discipline position us well to drive long-term value for our shareholders.”

Net Interest Income
The Company’s net interest and dividend income was $34.4 million for the quarter ended March 31, 2023, compared to $39.2 million for the quarter ended December 31, 2022, and $33.3 million for the quarter ended March 31, 2022. The tax equivalent interest rate spread and net interest margin were 2.28% and 2.78%, respectively, for the quarter ended March 31, 2023, compared to 2.88% and 3.23%, respectively, for the quarter ended December 31, 2022, and 3.12% and 3.21%, respectively, for the quarter ended March 31, 2022.

On a linked-quarter basis, the decreases in net interest and dividend income, tax equivalent interest rate spread, and net interest margin primarily reflect an increase in interest-bearing liabilities, with higher cost of funding, partially offset by increased loan balances and yields with liability repricing outpacing assets. The cost of funds was 188 basis points for the quarter ended March 31, 2023, compared to 114 basis points for the preceding quarter.

The $1.1 million increase in net interest and dividend income from the prior year quarter reflects an increase of $20.3 million, or 57.1%, in total interest and dividend income and an increase of $19.2 million, or 823.7%, 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 108 basis points, while the average balance increased $849.7 million, and the cost of interest-bearing liabilities increased 192 basis points, while the average balance increased $887.5 million.

Noninterest Income
Total noninterest income decreased $1.2 million, or 12.2%, to $8.7 million for the quarter ended March 31, 2023, from $9.9 million for the quarter ended December 31, 2022. Mortgage loan closings for the quarter ended March 31, 2023 were $125.6 million with a gain on loan sales of $2.2 million, compared to $222.4 million in mortgage closings and $2.3 million in gain on sales for the preceding quarter as higher gain-on-sale margins help offset the seasonal loss in production volume. Deposit account fees were $4.7 million for the quarter ended March 31, 2023, compared to $5.0 million for the quarter ended December 31, 2022. Other income for the quarter ended March 31, 2023 decreased $1.7 million, primarily reflecting a $1.1 million decrease in swap fee income.

The decrease in the fair value of mortgage servicing rights for the three months ended March 31, 2023 was $1.3 million, as compared to a decrease of $2.1 million in the fair value of mortgage servicing rights for the three months ended December 31, 2022. The valuation was negatively impacted by key benchmark mortgage rates used in the valuation. The impact of principal payments on the underlying mortgages on the mortgage servicing rights was $371,000 and $570,000 for the quarters ended March 31, 2023 and December 31, 2022, respectively.

Total noninterest income decreased $10.4 million, or 54.4%, compared to the quarter ended March 31, 2022, primarily due to a $10.4 million, or 79.1%, decrease in mortgage banking income, driven by the decrease in loan demand as a result of interest rate increases. The prior year quarter also reflected a $6.1 million increase in the fair value of mortgage servicing rights.

Noninterest Expense
Total noninterest expenses were $31.5 million for the quarter ended March 31, 2023, a decrease of $3.1 million, or 9.0%, from the quarter ended December 31, 2022. Compensation and benefits decreased $2.3 million primarily reflecting decreased mortgage origination commission and incentive accruals. Other expenses decreased $1.6 million, or 35.7% for the quarter ended March 31 2023, primarily as a result of a legal settlement accrued for in the fourth quarter of 2022.

Total noninterest expenses decreased $3.3 million, or 9.5%, from the quarter ended March 31, 2022. Compensation and benefits decreased $2.9 million primarily reflecting decreased mortgage origination commission and incentive accruals.

During the quarter, management evaluated potential cost saving measures across the Company. This resulted in a reduction in force at HarborOne Mortgage, LLC (“HarborOne Mortgage”) during the first quarter with an expected annual cost savings of $1.2 million and recognized severance expense of $249,000. During the second quarter of 2023 the Bank took further cost savings measures and organizational efficiencies with an estimated annual savings of $2.9 million and will recognize severance expense of $452,000. Additionally, the Bank sought and obtained regulatory approval in 2023 to close one branch and relocate another branch that will both provide additional long-term expense savings.

Income Tax Provision
The effective tax rate for the quarter ended March 31, 2023 was 24.9% compared to 22.4% for the quarter ended December 31, 2022. The 2022 effective tax rate was impacted by a tax benefit recorded for Industrial Revenue Bonds and a reserve release upon the expiration of the statute of limitations.

Asset Quality and Allowance for Credit Losses
Disciplined underwriting and active loan management continues to result in strong credit quality performance. Total nonperforming assets improved to $12.3 million at March 31, 2023, compared to $14.8 million at December 31, 2022 and $26.1 million at March 31, 2022. Nonperforming assets as a percentage of total assets were 0.22% at March 31, 2023, 0.28% at December 31, 2022, and 0.57% at March 31, 2022. During 2022, two large commercial credits were resolved, reducing nonperforming assets significantly.

The provision for funded loan credit losses for the quarter ended March 31, 2023 was $1.7 million and reflects provisioning for loan growth and increased economic uncertainty. Net recoveries totaled $11,000 for the quarter ended March 31, 2023. Net charge-offs totaled $2.1 million, or 0.19% of average loans outstanding on an annualized basis, for the quarter ended December 31, 2022, and 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.

The allowance for credit losses (“ACL”) was $47.0 million, or 1.02% of total loans, at March 31, 2023, compared to $45.2 million, or 0.99% of total loans, at December 31, 2022 and $41.8 million, or 1.12% of total loans, at March 31, 2022. The ACL on unfunded commitments, included in other liabilities on the unaudited Consolidated Balance Sheets, amounted to $5.0 million at March 31, 2023 as compared to $4.9 million at December 31, 2022 and $3.8 million at March 31, 2022.

We believe that we are well positioned to withstand any downturn in the credit cycle should one materialize. We continue to closely monitor our loan portfolio for signs of deterioration. Management is focused on commercial real estate in light of speculation that commercial real estate values may deteriorate as the market adjusts to higher vacancies and rates. Our commercial real estate portfolio is centered in New England with approximately 75% in Massachusetts and Rhode Island. Approximately 60% of commercial real estate loans are fixed-rate loans with limited near-term maturity risk.

Management has also identified certain sectors within the commercial real estate segment that may be particularly 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. This includes business-oriented hotels, non-anchored retail space and metro office space. As of March 31, 2023, business-oriented hotels loans included 12 loans with a total outstanding balance of $85.3 million, non-anchored retail space loans included 28 loans with a total outstanding balance of $40.2 million, and metro office space loans included two loans with a total outstanding balance of $14.8 million. As of March 31, 2023, there was one business-oriented hotel credit with a carrying value of $1.9 million that was rated substandard and on nonaccrual. This credit was provided a principal deferral in the third quarter of 2022. The other loans in these groups were performing in accordance with their terms.

Balance Sheet
Total assets increased $213.3 million, or 4.0%, to $5.57 billion at March 31, 2023, from $5.36 billion at December 31, 2022. The increase primarily reflects an increase of $152.5 million in short-term investments and a $73.0 million increase in loans. The increase in short-term investments reflects management’s pro-active liquidity-enhancing measures in response to financial industry concerns.

Available for sale securities were $303.1 million and $301.1 million at March 31, 2023 and December 31, 2022, respectively. The unrealized loss on securities available for sale decreased to $61.2 million as of March 31, 2023, as compared to $68.3 million of unrealized losses as of December 31, 2022. Securities held to maturity were $19.8 million, or 0.4% of total assets, with a fair value of $19.3 million.

Loans increased $73.0 million, or 1.6%, to $4.62 billion at March 31, 2023, from $4.55 billion at December 31, 2022. The increase in loans for the three months ended March 31, 2023 was primarily due to increases in commercial real estate loans of $36.4 million, commercial construction loans of $13.4 million, and residential real estate loans of $33.6 million, partially offset by decreases in commercial and industrial loans of $1.2 million and consumer loans of $9.2 million. Management continues to seek prudent commercial lending opportunities to deepen relationships with existing customers and develop new relationships with strong borrowers.

Total deposits were $4.24 billion at March 31, 2023 and $4.19 billion at December 31, 2022. Compared to the prior quarter, non-certificate accounts decreased $124.9 million, term certificate accounts increased $155.6 million, and brokered deposits increased $21.5 million. As of March 31, 2023, FDIC-insured deposits exceeded 70% of total deposits. Including Depositors Insurance Fund (“DIF”) excess insurance coverage that remains available until February 24, 2024, insured deposits are approximately 100% of total deposits. The Bank exited the DIF as of February 24, 2023; however, insurance remains in place for funds on deposit as of that date for one year or until maturity for term certificates, if that is a later date.

FHLB borrowings increased $190.0 million to $590.7 million at March 31, 2023 from $400.7 million at December 31, 2022. At March 31, 2023, FHLB borrowings were primarily short-term borrowings as the Bank utilized available credit to enhance liquidity. As of March 31, 2023, the Bank had $677.6 million in available borrowing capacity across multiple relationships.

Total stockholders’ equity was $599.8 million at March 31, 2023, compared to $617.0 million at December 31, 2022 and $649.1 million at March 31, 2022. Stockholders’ equity decreased 2.8% when compared to the prior quarter, as earnings were offset by share repurchases. The Company repurchased 2,033,192 shares at an average price of $13.19, including $0.13 per share of excise tax, during the three months ended March 31, 2023. A share repurchase program that commenced in the first quarter of 2023 is expected to be completed in the second quarter of 2023. Due to recent market volatility and increased economic uncertainty, share repurchase activity is expected to be reduced in the second quarter of 2023 compared to recent prior quarters. The tangible-common-equity-to-tangible-assets ratio was 9.60% at March 31, 2023, 10.31% at December 31, 2022, and 12.75% at March 31, 2022. At March 31, 2023, the Company and the Bank had strong capital positions, exceeded all regulatory capital requirements, and are considered well-capitalized.

About HarborOne Bancorp, Inc.
HarborOne Bancorp, Inc. is the holding company for HarborOne Bank, a Massachusetts-chartered trust company. HarborOne Bank serves the financial needs of consumers, businesses, and municipalities throughout Eastern Massachusetts and Rhode Island through a network of 31 full-service branches located in Massachusetts and Rhode Island, and a commercial lending office in each of Boston, Massachusetts and Providence, Rhode Island. HarborOne Bank also provides a range of educational services through “HarborOne U,” with classes on small business, financial literacy and personal enrichment at two campuses located adjacent to our Brockton and Mansfield locations. HarborOne Mortgage, LLC, a subsidiary of HarborOne Bank, is a full-service mortgage lender with 24 offices in Maine, Massachusetts, New Jersey, 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 and concerns about 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; 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, 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)
		March 31,				December 31,				September 30,				June 30,				March 31,
(in thousands)		2023				2022				2022				2022				2022
Assets
Cash and due from banks		$	38,989			$	39,712			$	39,910			$	35,843			$	41,862
Short-term investments			210,765				58,305				46,044				48,495				97,870
Total cash and cash equivalents			249,754				98,017				85,954				84,338				139,732
Securities available for sale, at fair value			303,059				301,149				304,852				334,398				361,529
Securities held to maturity, at amortized cost			19,838				19,949				15,000				10,000				—
Federal Home Loan Bank stock, at cost			23,589				20,071				15,973				5,625				5,931
Asset held for sale			—				—				—				—				678
Loans held for sale, at fair value			13,956				18,544				18,805				31,679				25,690
Loans:
Commercial real estate			2,286,727				2,250,344				2,041,905				1,847,619				1,816,484
Commercial construction			212,689				199,311				185,062				158,762				154,059
Commercial and industrial			423,036				424,275				397,112				407,182				410,787
Total commercial loans			2,922,452				2,873,930				2,624,079				2,413,563				2,381,330
Residential real estate			1,667,934				1,634,319				1,520,809				1,423,074				1,252,920
Consumer			32,246				41,421				52,466				75,312				103,100
Loans			4,622,632				4,549,670				4,197,354				3,911,949				3,737,350
Less: Allowance for credit losses on loans			(46,994	)			(45,236	)			(44,621	)			(43,560	)			(41,765	)
Net loans			4,575,638				4,504,434				4,152,733				3,868,389				3,695,585
Mortgage servicing rights, at fair value			47,080				48,138				49,861				47,130				45,043
Goodwill			69,802				69,802				69,802				69,802				69,802
Other intangible assets			2,082				2,272				2,461				2,695				2,930
Other assets			268,060				277,169				272,202				249,988				244,405
Total assets		$	5,572,858			$	5,359,545			$	4,987,643			$	4,704,044			$	4,591,325
Liabilities and Stockholders' Equity
Deposits:
Demand deposit accounts		$	726,548			$	762,576			$	795,945			$	775,154			$	771,172
NOW accounts			287,376				297,692				308,191				316,839				310,090
Regular savings and club accounts			1,455,318				1,468,172				1,289,825				1,282,913				1,218,656
Money market deposit accounts			796,008				861,704				889,517				885,673				864,316
Term certificate accounts			653,553				497,975				484,936				487,354				497,746
Brokered deposits			322,927				301,380				114,696				100,000				100,000
Total deposits			4,241,730				4,189,499				3,883,110				3,847,933				3,761,980
Short-term borrowed funds			425,000				385,000				330,000				90,000				—
Long-term borrowed funds			165,665				15,675				15,684				15,693				55,702
Subordinated debt			34,317				34,285				34,254				34,222				34,191
Other liabilities and accrued expenses			106,352				118,110				113,225				91,718				90,387
Total liabilities			4,973,064				4,742,569				4,376,273				4,079,566				3,942,260
Common stock			597				596				593				593				591
Additional paid-in capital			483,831				483,031				480,617				479,519				477,302
Unearned compensation - ESOP			(27,164	)			(27,623	)			(28,083	)			(28,542	)			(29,002	)
Retained earnings			360,454				356,438				350,049				339,471				332,734
Treasury stock			(175,514	)			(148,384	)			(143,125	)			(132,296	)			(113,513	)
Accumulated other comprehensive loss			(42,410	)			(47,082	)			(48,681	)			(34,267	)			(19,047	)
Total stockholders' equity			599,794				616,976				611,370				624,478				649,065
Total liabilities and stockholders' equity		$	5,572,858			$	5,359,545			$	4,987,643			$	4,704,044			$	4,591,325

HarborOne Bancorp, Inc. Consolidated Statements of Net Income - Trend (Unaudited)
		Quarters Ended
		March 31,				December 31,				September 30,			June 30,			March 31,
(in thousands, except share data)		2023				2022				2022			2022			2022
Interest and dividend income:
Interest and fees on loans		$	52,771			$	49,177			$	42,065		$	37,522		$	33,576
Interest on loans held for sale			286				334				377			331			264
Interest on securities			2,079				2,045				1,971			1,873			1,701
Other interest and dividend income			803				359				143			131			61
Total interest and dividend income			55,939				51,915				44,556			39,857			35,602
Interest expense:
Interest on deposits			15,913				8,499				3,491			2,019			1,621
Interest on FHLB borrowings			5,105				3,703				1,209			119			188
Interest on subordinated debentures			523				524				524			524			523
Total interest expense			21,541				12,726				5,224			2,662			2,332
Net interest and dividend income			34,398				39,189				39,332			37,195			33,270
Provision for credit losses			1,866				2,108				668			2,546			338
Net interest and dividend income, after provision for credit losses			32,532				37,081				38,664			34,649			32,932
Noninterest income:
Mortgage banking income:
Gain on sale of mortgage loans			2,224				2,301				3,809			4,538			5,322
Changes in mortgage servicing rights fair value			(1,692	)			(2,631	)			1,816			862			5,285
Other			2,216				2,325				2,453			2,612			2,558
Total mortgage banking income			2,748				1,995				8,078			8,012			13,165
Deposit account fees			4,733				5,031				4,870			4,892			4,472
Income on retirement plan annuities			119				118				119			112			107
Bank-owned life insurance income			500				501				503			494			483
Other income			590				2,255				675			593			834
Total noninterest income			8,690				9,900				14,245			14,103			19,061
Noninterest expenses:
Compensation and benefits			17,799				20,104				20,991			21,455			20,723
Occupancy and equipment			5,040				4,935				4,829			4,575			5,428
Data processing			2,346				2,359				2,311			2,259			2,241
Loan expense			313				169				355			385			478
Marketing			1,181				862				850			986			1,218
Professional fees			1,501				1,446				1,457			1,680			1,539
Deposit insurance			510				385				357			354			349
Other expenses			2,819				4,384				3,323			3,260			2,859
Total noninterest expenses			31,509				34,644				34,473			34,954			34,835
Income before income taxes			9,713				12,337				18,436			13,798			17,158
Income tax provision			2,416				2,760				4,678			3,811			4,891
Net income		$	7,297			$	9,577			$	13,758		$	9,987		$	12,267
Earnings per common share:
Basic		$	0.16			$	0.21			$	0.30		$	0.21		$	0.26
Diluted		$	0.16			$	0.21			$	0.30		$	0.21		$	0.25
Weighted average shares outstanding:
Basic			44,857,224				45,321,491				45,830,737			46,980,830			47,836,410
Diluted			45,284,240				45,861,658				46,420,527			47,536,033			48,690,420

HarborOne Bancorp, Inc. Average Balances / Yields (Unaudited)
		Quarters Ended
		March 31, 2023									December 31, 2022									March 31, 2022
		Average									Average									Average
		Outstanding						Yield/			Outstanding						Yield/			Outstanding						Yield/
		Balance			Interest			Cost (7)			Balance			Interest			Cost (7)			Balance			Interest			Cost (7)
		(dollars in thousands)
Interest-earning assets:
Investment securities (1)		$	387,303		$	2,079		2.18	%		$	388,247		$	2,045		2.09	%		$	393,364		$	1,701		1.75	%
Other interest-earning assets			63,426			803		5.13				42,640			359		3.34				150,569			61		0.16
Loans held for sale			18,108			286		6.41				22,350			334		5.93				29,842			264		3.59
Loans
Commercial loans (2)(3)			2,901,464			36,837		5.15				2,770,667			34,351		4.92				2,291,343			22,095		3.91
Residential real estate loans (3)			1,647,109			15,616		3.85				1,566,389			14,352		3.64				1,220,703			10,142		3.37
Consumer loans (3)			36,310			519		5.80				45,629			632		5.50				118,242			1,339		4.59
Total loans			4,584,883			52,972		4.69				4,382,685			49,335		4.47				3,630,288			33,576		3.75
Total interest-earning assets			5,053,720			56,140		4.51				4,835,922			52,073		4.27				4,204,063			35,602		3.43
Noninterest-earning assets			313,309									311,372									326,811
Total assets		$	5,367,029								$	5,147,294								$	4,530,874
Interest-bearing liabilities:
Savings accounts		$	1,459,392			5,445		1.51			$	1,408,493			3,591		1.01			$	1,165,683			366		0.13
NOW accounts			275,801			36		0.05				291,890			40		0.05				301,279			36		0.05
Money market accounts			824,694			5,238		2.58				878,609			3,312		1.50				858,792			303		0.14
Certificates of deposit			552,636			2,685		1.97				487,121			1,062		0.86				522,211			729		0.57
Brokered deposits			330,426			2,509		3.08				148,460			494		1.32				100,000			187		0.76
Total interest-bearing deposits			3,442,949			15,913		1.87				3,214,573			8,499		1.05				2,947,965			1,621		0.22
FHLB advances			448,096			5,105		4.62				392,508			3,703		3.74				55,706			188		1.37
Subordinated debentures			34,298			523		6.18				34,268			524		6.07				34,173			523		6.21
Total borrowings			482,394			5,628		4.73				426,776			4,227		3.93				89,879			711		3.21
Total interest-bearing liabilities			3,925,343			21,541		2.23				3,641,349			12,726		1.39				3,037,844			2,332		0.31
Noninterest-bearing liabilities:
Noninterest-bearing deposits			721,536									788,572									738,578
Other noninterest-bearing liabilities			101,820									101,621									86,763
Total liabilities			4,748,699									4,531,542									3,863,185
Total stockholders' equity			618,330									615,752									667,689
Total liabilities and stockholders' equity		$	5,367,029								$	5,147,294								$	4,530,874
Tax equivalent net interest income						34,599									39,347									33,270
Tax equivalent interest rate spread (4)								2.28	%								2.88	%								3.12	%
Less: tax equivalent adjustment						201									158									—
Net interest income as reported					$	34,398								$	39,189								$	33,270
Net interest-earning assets (5)		$	1,128,377								$	1,194,573								$	1,166,219
Net interest margin (6)								2.76	%								3.22	%								3.21	%
Tax equivalent effect								0.02									0.01									—
Net interest margin on a fully tax equivalent basis								2.78	%								3.23	%								3.21	%
Ratio of interest-earning assets to interest-bearing liabilities			128.75	%								132.81	%								138.39	%
Supplemental information:
Total deposits, including demand deposits		$	4,164,485		$	15,913					$	4,003,145		$	8,499					$	3,686,543		$	1,621
Cost of total deposits								1.55	%								0.84	%								0.18	%
Total funding liabilities, including demand deposits		$	4,646,879		$	21,541					$	4,429,921		$	12,726					$	3,776,422		$	2,332
Cost of total funding liabilities								1.88	%								1.14	%								0.25	%
(1) Includes securities available for sale and securities held to maturity.
(2) Includes industrial revenue bonds for the quarters ended March 31, 2023 and December 31, 2022. Interest income from tax exempt loans is computed on a taxable equivalent basis using a rate of 21% for the quarters presented. The yield on commercial loans before tax equivalent adjustment at March 31, 2023 and December 31, 2022 was 5.12% and 4.90%, respectively.
(3) Includes nonaccruing loan balances and interest received on such loans.
(4) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(5) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
(6) Net interest margin represents net interest income divided by average total interest-earning assets.
(7) Annualized.

HarborOne Bancorp, Inc. Average Balances and Yield Trend (Unaudited)
		Average Balances - Trend - Quarters Ended
		March 31, 2023				December 31, 2022				September 30, 2022				June 30, 2022				March 31, 2022
		(in thousands)
Interest-earning assets:
Investment securities (1)		$	387,303			$	388,247			$	390,577			$	391,448			$	393,364
Other interest-earning assets			63,426				42,640				27,723				64,678				150,569
Loans held for sale			18,108				22,350				28,046				29,474				29,842
Loans
Commercial loans (2)(3)			2,901,464				2,770,667				2,522,359				2,384,630				2,291,343
Residential real estate loans (3)			1,647,109				1,566,389				1,470,305				1,330,772				1,220,703
Consumer loans (3)			36,310				45,629				63,220				88,943				118,242
Total loans			4,584,883				4,382,685				4,055,884				3,804,345				3,630,288
Total interest-earning assets			5,053,720				4,835,922				4,502,230				4,289,945				4,204,063
Noninterest-earning assets			313,309				311,372				308,734				311,998				326,811
Total assets		$	5,367,029			$	5,147,294			$	4,810,964			$	4,601,943			$	4,530,874
Interest-bearing liabilities:
Savings accounts		$	1,459,392			$	1,408,493			$	1,293,598			$	1,266,912			$	1,165,683
NOW accounts			275,801				291,890				305,777				311,241				301,279
Money market accounts			824,694				878,609				893,452				885,305				858,792
Certificates of deposit			552,636				487,121				486,923				484,484				522,211
Brokered deposits			330,426				148,460				102,875				100,000				100,000
Total interest-bearing deposits			3,442,949				3,214,573				3,082,625				3,047,942				2,947,965
FHLB advances			448,096				392,508				196,036				34,763				55,706
Subordinated debentures			34,298				34,268				34,237				34,207				34,173
Total borrowings			482,394				426,776				230,273				68,970				89,879
Total interest-bearing liabilities			3,925,343				3,641,349				3,312,898				3,116,912				3,037,844
Noninterest-bearing liabilities:
Noninterest-bearing deposits			721,536				788,572				789,214				768,088				738,578
Other noninterest-bearing liabilities			101,820				101,621				80,304				75,186				86,763
Total liabilities			4,748,699				4,531,542				4,182,416				3,960,186				3,863,185
Total stockholders' equity			618,330				615,752				628,548				641,757				667,689
Total liabilities and stockholders' equity		$	5,367,029			$	5,147,294			$	4,810,964			$	4,601,943			$	4,530,874
		Annualized Yield Trend - Quarters Ended
		March 31, 2023				December 31, 2022				September 30, 2022				June 30, 2022				March 31, 2022
Interest-earning assets:
Investment securities (1)			2.18	%			2.09	%			2.00	%			1.92	%			1.75	%
Other interest-earning assets			5.13	%			3.34	%			2.05	%			0.81	%			0.16	%
Loans held for sale			6.41	%			5.93	%			5.33	%			4.51	%			3.59	%
Commercial loans (2)(3)			5.15	%			4.92	%			4.45	%			4.25	%			3.91	%
Residential real estate loans (3)			3.85	%			3.64	%			3.50	%			3.37	%			3.37	%
Consumer loans (3)			5.80	%			5.50	%			4.99	%			4.71	%			4.59	%
Total loans			4.69	%			4.47	%			4.11	%			3.96	%			3.75	%
Total interest-earning assets			4.51	%			4.27	%			3.93	%			3.73	%			3.43	%
Interest-bearing liabilities:
Savings accounts			1.51	%			1.01	%			0.37	%			0.20	%			0.13	%
NOW accounts			0.05	%			0.05	%			0.05	%			0.05	%			0.05	%
Money market accounts			2.58	%			1.50	%			0.61	%			0.30	%			0.14	%
Certificates of deposit			1.97	%			0.86	%			0.64	%			0.55	%			0.57	%
Brokered deposits			3.08	%			1.32	%			0.27	%			0.20	%			0.76	%
Total interest-bearing deposits			1.87	%			1.05	%			0.45	%			0.27	%			0.22	%
FHLB advances			4.62	%			3.74	%			2.45	%			1.36	%			1.37	%
Subordinated debentures			6.18	%			6.07	%			6.07	%			6.14	%			6.21	%
Total borrowings			4.73	%			3.93	%			2.99	%			3.74	%			3.21	%
Total interest-bearing liabilities			2.23	%			1.39	%			0.63	%			0.34	%			0.31	%
(1) Includes securities available for sale and securities held to maturity.
(2) Includes industrial revenue bonds for the quarters ended March 31, 2023 and December 31, 2022. Interest income from tax exempt loans is computed on a taxable equivalent basis using a rate of 21% for the quarters presented. The yield on commercial loans before tax equivalent adjustment at March 31, 2023 and December 31, 2022 was 5.12% and 4.90%, respectively.
(3) Includes nonaccruing loan balances and interest received on such loans.

HarborOne Bancorp, Inc. Selected Financial Highlights (Unaudited)
		Quarters Ended
		March 31,			December 31,			September 30,			June 30,			March 31,
Performance Ratios (annualized):		2023			2022			2022			2022			2022
(dollars in thousands)
Return on average assets (ROAA)			0.54	%		0.74	%		1.14	%		0.87	%		1.08	%
Return on average equity (ROAE)			4.72	%		6.22	%		8.76	%		6.22	%		7.35	%
Total noninterest expense		$	31,509		$	34,644		$	34,473		$	34,954		$	34,835
Less: Amortization of other intangible assets			189			189			235			235			235
Total adjusted noninterest expense		$	31,320		$	34,455		$	34,238		$	34,719		$	34,600
Net interest and dividend income		$	34,398		$	39,189		$	39,332		$	37,195		$	33,270
Total noninterest income			8,690			9,900			14,245			14,103			19,061
Total revenue		$	43,088		$	49,089		$	53,577		$	51,298		$	52,331
Efficiency ratio (1)			72.69	%		70.19	%		63.90	%		67.68	%		66.12	%
(1) This non-GAAP measure represents adjusted noninterest expense divided by total revenue

		At or for the Quarters Ended
		March 31,				December 31,			September 30,				June 30,				March 31,
Asset Quality		2023				2022			2022				2022				2022
(dollars in thousands)
Total nonperforming assets		$	12,300			$	14,840		$	23,367			$	24,441			$	26,109
Nonperforming assets to total assets			0.22		%		0.28	%		0.47		%		0.52		%		0.57	%
Allowance for credit losses on loans to total loans			1.02		%		0.99	%		1.06		%		1.11		%		1.12	%
Net charge-offs (recoveries)		$	(11	)		$	2,067		$	(799	)		$	(504	)		$	2,730
Annualized net charge-offs (recoveries)/average loans			—		%		0.19	%		(0.08	)	%		(0.05	)	%		0.30	%
Allowance for credit losses on loans to nonperforming loans			383.50		%		305.93	%		191.60		%		178.41		%		159.96	%

HarborOne Bancorp, Inc. Selected Financial Highlights (Unaudited)
		Quarters Ended
		March 31,			December 31,			September 30,			June 30,			March 31,
Capital and Share Related		2023			2022			2022			2022			2022
(dollars in thousands, except share data)
Common stock outstanding			47,063,087			48,961,452			49,202,660			49,989,007			51,257,696
Book value per share		$	12.74		$	12.60		$	12.43		$	12.49		$	12.66
Tangible common equity:
Total stockholders' equity		$	599,794		$	616,976		$	611,370		$	624,478		$	649,065
Less: Goodwill			69,802			69,802			69,802			69,802			69,802
Less: Other intangible assets (1)			2,082			2,272			2,461			2,695			2,930
Tangible common equity		$	527,910		$	544,902		$	539,107		$	551,981		$	576,333
Tangible book value per share (2)		$	11.22		$	11.13		$	10.96		$	11.04		$	11.24
Tangible assets:
Total assets		$	5,572,858		$	5,359,545		$	4,987,643		$	4,704,044		$	4,591,325
Less: Goodwill			69,802			69,802			69,802			69,802			69,802
Less: Other intangible assets			2,082			2,272			2,461			2,695			2,930
Tangible assets		$	5,500,974		$	5,287,471		$	4,915,380		$	4,631,547		$	4,518,593
Tangible common equity / tangible assets (3)			9.60	%		10.31	%		10.97	%		11.92	%		12.75	%
(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
		March 31,				December 31,				March 31,			March 31,				December 31,				March 31,
		2023				2022				2022			2023				2022				2022
		(in thousands)
Net interest and dividend income		$	327			$	419			$	350		$	34,562			$	39,258			$	33,424
Provision (benefit) for credit losses			—				—				—			1,866				2,108				338
Net interest and dividend income, after provision for loan losses			327				419				350			32,696				37,150				33,086
Mortgage banking income:
Gain on sale of mortgage loans			2,224				2,301				5,322			—				—				—
Intersegment gain (loss)			454				553				837			(348	)			(997	)			(608	)
Changes in mortgage servicing rights fair value			(1,556	)			(2,368	)			4,695			(136	)			(263	)			590
Other			2,015				2,122				2,325			201				203				233
Total mortgage banking income (loss)			3,137				2,608				13,179			(283	)			(1,057	)			215
Other noninterest income (loss)			—				126				9			5,942				7,779				5,887
Total noninterest income			3,137				2,734				13,188			5,659				6,722				6,102
Noninterest expense			5,322				5,452				7,761			26,190				28,744				26,825
(Loss) income before income taxes			(1,858	)			(2,299	)			5,777			12,165				15,128				12,363
Provision for income taxes			(565	)			—				1,541			3,115				2,817				3,557
Net (loss) income		$	(1,293	)		$	(2,299	)		$	4,236		$	9,050			$	12,311			$	8,806

Category: Earnings

View source version on businesswire.com: https://www.businesswire.com/news/home/20230427005228/en/

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

Source: HarborOne Bancorp, Inc.

FAQ

What were HarborOne Bancorp's earnings for Q1 2023?

HarborOne Bancorp reported a net income of $7.3 million, or $0.16 per diluted share, for Q1 2023.

How did HarborOne's loan and deposit growth perform in Q1 2023?

Loans grew by $73.0 million (1.6%) and deposits increased by $52.2 million (1.2%) in Q1 2023.

What changes were made to HarborOne's dividend in Q1 2023?

The quarterly dividend was increased by 7%, returning $3.3 million to shareholders.

What was the status of HarborOne's credit quality in Q1 2023?

HarborOne maintained strong credit quality with nonperforming loans at 0.27%, down from 0.32% in the previous quarter.