HarborOne Bancorp, Inc. Announces 2023 Third Quarter Earnings

Rhea-AI Summary

HarborOne Bancorp, Inc. announces net income of $8.4 million for Q3 2023, compared to $7.5 million for Q2 2023 and $13.8 million for Q3 2022. Deposit growth of $160.5 million, reduced noninterest expense by 7.5%, and loan growth of $24.7 million. Commenced sixth share repurchase program. Net interest income decreased, noninterest income decreased by $1.1 million, and noninterest expenses were flat. Nonperforming assets decreased to $18.8 million. Total assets remained flat at $5.66 billion. Loans increased by $24.7 million and total deposits increased to $4.41 billion.

Positive

• Net income increased by 12% compared to the previous quarter and decreased by 39% compared to the same period last year. Deposit growth of 4.0% on a linked-quarter basis. Reduced noninterest expense by 7.5% compared to the prior year third quarter. Loan growth of 0.5% on a linked-quarter basis. Commenced sixth share repurchase program. Nonperforming assets decreased by 7% compared to the previous quarter. Total assets remained flat at $5.66 billion. Loans increased by 0.5% to $4.72 billion. Total deposits increased by 2.8% to $4.41 billion.

Negative

• Net interest income decreased compared to the previous quarter and the same period last year. Noninterest income decreased by 8.4% compared to the previous quarter. Noninterest expenses remained flat compared to the previous quarter. Unrealized losses on securities available for sale increased to $81.3 million. Nonperforming assets decreased by 18.6% compared to the same period last 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 $8.4 million, or $0.20 per diluted share, for the third quarter of 2023, compared to net income of $7.5 million, or $0.17 per diluted share, for the preceding quarter and net income of $13.8 million, or $0.30 per diluted share, for the same period last year.

Selected Financial Highlights:

• Deposit growth, excluding brokered deposits, of $160.5 million, or 4.0%, on a linked-quarter basis.
• Reduced noninterest expense 7.5% as compared to the prior year third quarter.
• Loan growth of $24.7 million, or 0.5%, on a linked-quarter basis.
• Commenced sixth share repurchase program.

“As many of our competitors struggled with deposit contraction, we grew the average balance of customer deposits at a 14.7% annualized pace in Q3. This strong deposit growth allowed the pay-down of over $167 million in wholesale funds during the quarter,” said Joseph F. Casey, President and CEO. “Additionally, we expect to redeem $35 million in subordinated debt on December 1, 2023, which carries a current annualized expense rate of 8.45%. And we continue to return shareholder value, commencing a sixth stock buyback plan in Q3, purchasing $6.4 million of HarborOne shares at an average cost of $9.81 per share.”

Net Interest Income

The Company’s net interest and dividend income was $31.1 million for the quarter ended September 30, 2023, compared to $32.1 million for the quarter ended June 30, 2023, and $39.3 million for the quarter ended September 30, 2022. The tax equivalent interest rate spread and net interest margin were 1.70% and 2.34%, respectively, for the quarter ended September 30, 2023, compared to 1.89% and 2.45%, respectively, for the quarter ended June 30, 2023, and 3.30% and 3.47%, respectively, for the quarter ended September 30, 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 a higher cost of funding, partially offset by increased loan balances and yields, with liability repricing outpacing assets. While the yield on interest-earning assets increased 11 basis points from the preceding quarter, the cost of interest-bearing liabilities increased 30 basis points, in a competitive deposit pricing market.

The $8.3 million decrease in net interest and dividend income from the prior year quarter reflects an increase of $26.9 million, or 514.2%, in total interest expense, partially offset by an increase of $18.6 million, or 41.8%, in total interest and dividend income. The changes reflect rate and volume changes in both interest-bearing assets and liabilities. The cost of interest-bearing liabilities increased 241 basis points, while the average balance increased $880.8 million, and the yield on interest-earning assets increased 81 basis points, while the average balance increased $808.0 million.

Noninterest Income

Total noninterest income decreased $1.1 million, or 8.4%, to $11.6 million for the quarter ended September 30, 2023, from $12.7 million for the quarter ended June 30, 2023. Persistent low inventory of for-sale residential real estate and rising mortgage interest rates continued to impact the results of HarborOne Mortgage, LLC (“HarborOne Mortgage”) with gain on loan sales of $2.7 million from mortgage loan closings of $157.6 million for the quarter ended September 30, 2023, compared to $3.3 million in gain on sales from mortgage loan closings of $172.2 million in the preceding quarter.

The increase in the fair value of mortgage servicing rights (“MSR”) for the three months ended September 30, 2023 was $770,000, as compared to an increase of $915,000 in the fair value of MSR for the three months ended June 30, 2023. The valuation was positively impacted by key benchmark mortgage rates, which were partially offset by the impact of MSR price caps used in the valuation model. The impact on the MSR of principal payments on the underlying mortgages was $645,000 and $479,000 for the quarters ended September 30, 2023 and June 30, 2023, respectively.

Total noninterest income decreased $2.6 million, or 18.6%, compared to the quarter ended September 30, 2022, primarily due to a $3.0 million, or 36.9%, decrease in mortgage banking income. The prior year quarter also reflected a $1.8 million increase in the fair value of MSR. The impact of rising interest rates on the fair value of MSR diminishes as the valuations reach multiple caps.

Noninterest Expense

Total noninterest expenses were at $31.9 million for the quarter ended September 30, 2023, as compared to $31.7 million for the quarter ended June 30, 2023. Compensation and benefits increased $479,000, primarily reflecting increased incentive accruals partially offset by decreased salary and payroll tax expense. Occupancy and equipment expense decreased $203,000, reflecting recent cost saving measures. HarborOne Mortgage continues to enact cost saving measures and executed a reduction in force in the third quarter with an annual cost savings of $564,000.

Total noninterest expenses decreased $2.6 million, or 7.5%, from the quarter ended September 30, 2022. Compensation and benefits decreased $2.3 million, primarily reflecting decreased mortgage origination commission and incentive accruals, and occupancy and equipment expense decreased $399,000. These decreases were partially offset by a $647,000 increase in deposit insurance expense.

Asset Quality and Allowance for Credit Losses

Total nonperforming assets were $18.8 million at September 30, 2023, compared to $20.2 million at June 30, 2023 and $23.4 million at September 30, 2022. Nonperforming assets as a percentage of total assets were 0.33% at September 30, 2023, 0.36% at June 30, 2023, and 0.47% at September 30, 2022.

The Company recorded a reversal of provision for credit losses of $113,000 for the quarter ended September 30, 2023, reflecting a $586,000 reversal of provision for unfunded commitments, partially offset by a $474,000 provision for loan credit losses, primarily for loan growth. Net recoveries totaled $18,000 and $799,000 for the quarters ended September 30, 2023 and 2022, respectively. Net charge-offs totaled $2.7 million, or 0.23% of average loans outstanding on an annualized basis, for the quarter ended June 30, 2023.

The allowance for credit losses (“ACL”) on loans was $48.3 million, or 1.02% of total loans, at September 30, 2023, compared to $47.8 million, or 1.02% of total loans, at June 30, 2023 and $44.6 million, or 1.06% of total loans, at September 30, 2022. The ACL on unfunded commitments, included in other liabilities on the unaudited Consolidated Balance Sheets, amounted to $4.2 million at September 30, 2023 as compared to $4.8 million at June 30, 2023 and $5.5 million at September 30, 2022.

Management continues to closely monitor the loan portfolio for signs of deterioration in light of speculation that commercial real estate values may deteriorate as the market adjusts to higher vacancies and interest rates. The commercial real estate portfolio is centered in New England, with approximately 75% of the portfolio secured by property located in Massachusetts and Rhode Island. Approximately 60% of the commercial real estate loans are fixed-rate loans with, in the opinion of management, limited near-term maturity risk.

Management also continues to monitor 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 September 30, 2023, business-oriented hotels loans included 13 loans with a total outstanding balance of $114.4 million, non-anchored retail space loans included 30 loans with a total outstanding balance of $40.4 million, and metro office space loans included two loans with a total outstanding balance of $12.0 million. As of September 30, 2023, there was one metro office space loan with a carrying value of $7.0 million that was rated doubtful and on nonaccrual and one business-oriented hotel credit with a carrying value of $1.7 million that was rated substandard and on nonaccrual. The other loans in these groups were performing in accordance with their terms.

Balance Sheet

Total assets were flat, at $5.66 billion as of September 30, 2023 and June 30, 2023, as an increase of $24.7 million in total loans was offset by decreases in investments and Federal Home Loan Bank (“FHLB”) stock.

Available-for-sale securities were $271.1 million and $292.0 million at September 30, 2023 and June 30, 2023, respectively. The unrealized loss on securities available for sale increased to $81.3 million as of September 30, 2023, as compared to $66.5 million of unrealized losses as of June 30, 2023. Securities held to maturity were $19.8 million, or 0.3%, of total assets, with a fair value of $18.7 million.

Loans increased $24.7 million, or 0.5%, to $4.72 billion at September 30, 2023, from $4.70 billion at June 30, 2023. The increase in loans for the three months ended September 30, 2023 was primarily due to increases in commercial real estate loans of $63.2 million and residential real estate loans of $5.2 million, partially offset by decreases in commercial construction loans of $37.7 million, commercial and industrial loans of $2.9 million, and consumer loans of $3.2 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 $4.41 billion at September 30, 2023 and $4.29 billion at June 30, 2023. Compared to the prior quarter, non-certificate accounts increased $44.2 million and term certificate accounts increased $116.3 million, as competitive rate specials attracted deposits during the quarter. Brokered deposits decreased $38.1 million. As of September 30, 2023, FDIC-insured deposits were approximately 66% of total deposits, including Bank subsidiary deposits. Including Depositors Insurance Fund (“DIF”), excess insurance coverage that remains available until February 24, 2024, insured deposits are approximately 85% of total deposits, including Bank subsidiary deposits. Although the Bank exited the DIF as of February 24, 2023, insurance remains in place for funds on deposit as of that date for one year or until maturity for term certificates.

FHLB borrowings decreased $129.1 million to $475.5 million at September 30, 2023 from $604.6 million at June 30, 2023. As of September 30, 2023, the Bank had $1.28 billion in available borrowing capacity across multiple relationships. Additionally, on October 19, 2023, the Company notified holders of its subordinated debt that the Company had exercised its option to redeem the debt effective December 1, 2023. The current interest rate on the $35.0 million outstanding subordinated notes is 8.45%.

Total stockholders’ equity was $584.6 million at September 30, 2023, compared to $595.5 million at June 30, 2023 and $611.4 million at September 30, 2022. Stockholders’ equity decreased 1.8% when compared to the prior quarter, as earnings were offset by share repurchases. The Company commenced a sixth share repurchase program during the third quarter of 2023, repurchasing 652,523 shares at an average price of $9.93, including $0.10 per share of excise tax, during the three months ended September 30, 2023. The tangible-common-equity-to-tangible-assets ratio⁽¹⁾ was 9.17% at September 30, 2023, 9.38% at June 30, 2023, and 10.97% at September 30, 2022. At September 30, 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 30 full-service banking centers located in Massachusetts and Rhode Island, and commercial lending offices in Boston, Massachusetts and Providence, Rhode Island. HarborOne Bank also provides a range of educational resources through “HarborOne U,” with free digital content, webinars, and recordings for small business and personal financial education. HarborOne Mortgage, LLC, a subsidiary of HarborOne Bank, provides mortgage lending services throughout New England and other states.

⁽¹⁾ This non-GAAP ratio is total stockholders equity less goodwill and intangible assets to total assets less goodwill and intangible assets.

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)
		September 30,			June 30,			March 31,			December 31,			September 30,
(in thousands)		2023			2023			2023			2022			2022
Assets
Cash and due from banks		$	38,573		$	43,525		$	38,989		$	39,712		$	39,910
Short-term investments			208,211			209,326			210,765			58,305			46,044
Total cash and cash equivalents			246,784			252,851			249,754			98,017			85,954
Securities available for sale, at fair value			271,078			292,012			303,059			301,149			304,852
Securities held to maturity, at amortized cost			19,795			19,839			19,838			19,949			15,000
Federal Home Loan Bank stock, at cost			23,378			27,123			23,589			20,071			15,973
Asset held for sale			966			966			—			—			—
Loans held for sale, at fair value			17,796			20,949			13,956			18,544			18,805
Loans:
Commercial real estate			2,349,886			2,286,688			2,286,727			2,250,344			2,041,905
Commercial construction			191,224			228,902			212,689			199,311			185,062
Commercial and industrial			450,547			453,422			423,036			424,275			397,112
Total commercial loans			2,991,657			2,969,012			2,922,452			2,873,930			2,624,079
Residential real estate			1,706,950			1,701,766			1,667,934			1,634,319			1,520,809
Consumer			24,247			27,425			32,246			41,421			52,466
Loans			4,722,854			4,698,203			4,622,632			4,549,670			4,197,354
Less: Allowance for credit losses on loans			(48,312)			(47,821)			(46,994)			(45,236)			(44,621)
Net loans			4,674,542			4,650,382			4,575,638			4,504,434			4,152,733
Mortgage servicing rights, at fair value			49,201			48,176			47,080			48,138			49,861
Goodwill			69,802			69,802			69,802			69,802			69,802
Other intangible assets			1,704			1,893			2,082			2,272			2,461
Other assets			289,341			275,261			268,060			277,169			272,202
Total assets		$	5,664,387		$	5,659,254		$	5,572,858		$	5,359,545		$	4,987,643
Liabilities and Stockholders' Equity
Deposits:
Demand deposit accounts		$	708,847		$	717,572		$	726,548		$	762,576		$	795,945
NOW accounts			289,141			286,956			287,376			297,692			308,191
Regular savings and club accounts			1,324,635			1,390,906			1,455,318			1,468,172			1,289,825
Money market deposit accounts			951,128			834,120			796,008			861,704			889,517
Term certificate accounts			859,266			742,931			653,553			497,975			484,936
Brokered deposits			276,941			315,003			322,927			301,380			114,696
Total deposits			4,409,958			4,287,488			4,241,730			4,189,499			3,883,110
FHLB borrowings			475,470			604,568			590,665			400,675			345,684
Subordinated debt			34,380			34,348			34,317			34,285			34,254
Other liabilities and accrued expenses			159,945			137,318			106,352			118,110			113,225
Total liabilities			5,079,753			5,063,722			4,973,064			4,742,569			4,376,273
Common stock			597			597			597			596			593
Additional paid-in capital			485,144			484,544			483,831			483,031			480,617
Unearned compensation - ESOP			(26,245)			(26,704)			(27,164)			(27,623)			(28,083)
Retained earnings			369,930			364,709			360,454			356,438			350,049
Treasury stock			(187,803)			(181,324)			(175,514)			(148,384)			(143,125)
Accumulated other comprehensive loss			(56,989)			(46,290)			(42,410)			(47,082)			(48,681)
Total stockholders' equity			584,634			595,532			599,794			616,976			611,370
Total liabilities and stockholders' equity		$	5,664,387		$	5,659,254		$	5,572,858		$	5,359,545		$	4,987,643

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)		2023			2023			2023			2022			2022
Interest and dividend income:
Interest and fees on loans		$	58,124		$	55,504		$	52,771		$	49,177		$	42,065
Interest on loans held for sale			370			326			286			334			377
Interest on securities			2,003			2,035			2,079			2,045			1,971
Other interest and dividend income			2,667			2,935			803			359			143
Total interest and dividend income			63,164			60,800			55,939			51,915			44,556
Interest expense:
Interest on deposits			25,039			20,062			15,913			8,499			3,491
Interest on FHLB and FRB borrowings			6,439			8,114			5,105			3,703			1,209
Interest on subordinated debentures			606			524			523			524			524
Total interest expense			32,084			28,700			21,541			12,726			5,224
Net interest and dividend income			31,080			32,100			34,398			39,189			39,332
Provision (benefit) for credit losses			(113)			3,283			1,866			2,108			668
Net interest and dividend income, after provision for credit losses			31,193			28,817			32,532			37,081			38,664
Noninterest income:
Mortgage banking income:
Gain on sale of mortgage loans			2,704			3,300			2,224			2,301			3,809
Changes in mortgage servicing rights fair value			125			436			(1,692)			(2,631)			1,816
Other			2,270			2,312			2,216			2,325			2,453
Total mortgage banking income			5,099			6,048			2,748			1,995			8,078
Deposit account fees			5,133			5,012			4,733			5,031			4,870
Income on retirement plan annuities			146			128			119			118			119
Bank-owned life insurance income			531			511			500			501			503
Other income			689			963			590			2,255			675
Total noninterest income			11,598			12,662			8,690			9,900			14,245
Noninterest expenses:
Compensation and benefits			18,699			18,220			17,799			20,104			20,991
Occupancy and equipment			4,430			4,633			5,040			4,935			4,829
Data processing			2,548			2,403			2,346			2,359			2,311
Loan expense			385			417			313			169			355
Marketing			794			925			1,181			862			850
Professional fees			1,374			1,114			1,501			1,446			1,457
Deposit insurance			1,004			1,176			510			385			357
Other expenses			2,638			2,837			2,819			4,384			3,323
Total noninterest expenses			31,872			31,725			31,509			34,644			34,473
Income before income taxes			10,919			9,754			9,713			12,337			18,436
Income tax provision			2,507			2,275			2,416			2,760			4,678
Net income		$	8,412		$	7,479		$	7,297		$	9,577		$	13,758
Earnings per common share:
Basic		$	0.20		$	0.17		$	0.16		$	0.21		$	0.30
Diluted		$	0.20		$	0.17		$	0.16		$	0.21		$	0.30
Weighted average shares outstanding:
Basic			42,876,893			43,063,507			44,857,224			45,321,491			45,830,737
Diluted			42,983,477			43,133,455			45,284,240			45,861,658			46,420,527

HarborOne Bancorp, Inc. Consolidated Statements of Net Income - Trend (Unaudited)
		For the Nine Months Ended September 30,
(dollars in thousands, except share data)		2023			2022			$ Change			% Change
Interest and dividend income:
Interest and fees on loans		$	166,399		$	113,163		$	53,236		47.0	%
Interest on loans held for sale			982			972			10		1.0
Interest on securities			6,117			5,545			572		10.3
Other interest and dividend income			6,405			335			6,070		1811.9
Total interest and dividend income			179,903			120,015			59,888		49.9
Interest expense:
Interest on deposits			61,014			7,131			53,883		755.6
Interest on FHLB and FRB borrowings			19,658			1,516			18,142		1196.7
Interest on subordinated debentures			1,653			1,571			82		5.2
Total interest expense			82,325			10,218			72,107		705.7
Net interest and dividend income			97,578			109,797			(12,219)		(11.1)
Provision for credit losses			5,036			3,552			1,484		41.8
Net interest and dividend income, after provision for credit losses			92,542			106,245			(13,703)		(12.9)
Noninterest income:
Mortgage banking income:
Gain on sale of mortgage loans			8,228			13,669			(5,441)		(39.8)
Changes in mortgage servicing rights fair value			(1,131)			7,963			(9,094)		(114.2)
Other			6,798			7,623			(825)		(10.8)
Total mortgage banking income			13,895			29,255			(15,360)		(52.5)
Deposit account fees			14,878			14,234			644		4.5
Income on retirement plan annuities			393			338			55		16.3
Bank-owned life insurance income			1,542			1,480			62		4.2
Other income			2,242			2,102			140		6.7
Total noninterest income			32,950			47,409			(14,459)		(30.5)
Noninterest expenses:
Compensation and benefits			54,718			63,169			(8,451)		(13.4)
Occupancy and equipment			14,103			14,832			(729)		(4.9)
Data processing			7,297			6,811			486		7.1
Loan expense			1,115			1,218			(103)		(8.5)
Marketing			2,900			3,054			(154)		(5.0)
Professional fees			3,989			4,676			(687)		(14.7)
Deposit insurance			2,690			1,060			1,630		153.8
Other expenses			8,294			9,442			(1,148)		(12.2)
Total noninterest expenses			95,106			104,262			(9,156)		(8.8)
Income before income taxes			30,386			49,392			(19,006)		(38.5)
Income tax provision			7,198			13,380			(6,182)		(46.2)
Net income		$	23,188		$	36,012		$	(12,824)		(35.6)	%
Earnings per common share:
Basic		$	0.53		$	0.77
Diluted		$	0.53		$	0.76
Weighted average shares outstanding:
Basic			43,591,954			46,875,312
Diluted			43,793,137			47,541,647

HarborOne Bancorp, Inc. Average Balances / Yields (Unaudited)
		Quarters Ended
		September 30, 2023								June 30, 2023								September 30, 2022
		Average								Average								Average
		Outstanding						Yield/		Outstanding						Yield/		Outstanding						Yield/
		Balance			Interest			Cost (8)		Balance			Interest			Cost (8)		Balance			Interest			Cost (8)
		(dollars in thousands)
Interest-earning assets:
Investment securities (1)		$	375,779		$	2,003		2.11	%	$	381,762		$	2,035		2.14	%	$	390,577		$	1,971		2.00	%
Other interest-earning assets			207,234			2,667		5.11			238,891			2,935		4.93			27,723			143		2.05
Loans held for sale			20,919			370		7.02			19,614			326		6.67			28,046			377		5.33
Loans
Commercial loans (2)(3)			2,980,817			40,438		5.38			2,938,292			38,842		5.30			2,522,359			28,298		4.45
Residential real estate loans (3)(4)			1,700,383			17,525		4.09			1,682,860			16,456		3.92			1,470,305			12,972		3.50
Consumer loans (3)			25,126			412		6.51			29,025			419		5.79			63,220			795		4.99
Total loans			4,706,326			58,375		4.92			4,650,177			55,717		4.81			4,055,884			42,065		4.11
Total interest-earning assets			5,310,258			63,415		4.74			5,290,444			61,013		4.63			4,502,230			44,556		3.93
Noninterest-earning assets			314,030								305,132								308,734
Total assets		$	5,624,288							$	5,595,576							$	4,810,964
Interest-bearing liabilities:
Savings accounts		$	1,360,728			6,787		1.98		$	1,421,622			6,165		1.74		$	1,293,598			1,211		0.37
NOW accounts			274,329			75		0.11			280,501			59		0.08			305,777			42		0.05
Money market accounts			910,694			8,355		3.64			802,373			6,256		3.13			893,452			1,382		0.61
Certificates of deposit			818,182			7,212		3.50			708,087			5,273		2.99			486,923			787		0.64
Brokered deposits			287,428			2,610		3.60			281,614			2,309		3.29			102,875			69		0.27
Total interest-bearing deposits			3,651,361			25,039		2.72			3,494,197			20,062		2.30			3,082,625			3,491		0.45
FHLB and FRB borrowings			508,001			6,439		5.03			666,345			8,114		4.88			196,036			1,209		2.45
Subordinated debentures			34,364			606		7.00			34,331			524		6.12			34,237			524		6.07
Total borrowings			542,365			7,045		5.15			700,676			8,638		4.94			230,273			1,733		2.99
Total interest-bearing liabilities			4,193,726			32,084		3.04			4,194,873			28,700		2.74			3,312,898			5,224		0.63
Noninterest-bearing liabilities:
Noninterest-bearing deposits			705,009								712,081								789,214
Other noninterest-bearing liabilities			126,742								88,363								80,304
Total liabilities			5,025,477								4,995,317								4,182,416
Total stockholders' equity			598,811								600,259								628,548
Total liabilities and stockholders' equity		$	5,624,288							$	5,595,576							$	4,810,964
Tax equivalent net interest income						31,331								32,313								39,332
Tax equivalent interest rate spread (5)								1.70	%							1.89	%							3.30	%
Less: tax equivalent adjustment						251								213								—
Net interest income as reported					$	31,080							$	32,100							$	39,332
Net interest-earning assets (6)		$	1,116,532							$	1,095,571							$	1,189,332
Net interest margin (7)								2.32	%							2.43	%							3.47	%
Tax equivalent effect								0.02								0.02								—
Net interest margin on a fully tax equivalent basis								2.34	%							2.45	%							3.47	%
Ratio of interest-earning assets to interest-bearing liabilities			126.62	%							126.12	%							135.90	%
Supplemental information:
Total deposits, including demand deposits		$	4,356,370		$	25,039				$	4,206,278		$	20,062				$	3,871,839		$	3,491
Cost of total deposits								2.28	%							1.91	%							0.36	%
Total funding liabilities, including demand deposits		$	4,898,735		$	32,084				$	4,906,954		$	28,700				$	4,102,112		$	5,224
Cost of total funding liabilities								2.60	%							2.35	%							0.51	%
(1) Includes securities available for sale and securities held to maturity.
(2) Tax-exempt income on industrial revenue bonds is included in commercial loans on a tax-equivalent basis.
(3) Includes nonaccruing loan balances and interest received on such loans.
(4) Includes the basis adjustments of certain loans included in fair value hedging relationships.
(5) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(6) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
(7) Net interest margin represents net interest income divided by average total interest-earning assets.
(8) Annualized.

HarborOne Bancorp, Inc. Average Balances / Yields (Unaudited)
		For the Nine Months Ended
		September 30, 2023								September 30, 2022
		Average								Average
		Outstanding						Yield/		Outstanding						Yield/
		Balance			Interest			Cost (8)		Balance			Interest			Cost (8)
		(dollars in thousands)
Interest-earning assets:
Investment securities (1)		$	381,572		$	6,117		2.14	%	$	391,786		$	5,545		1.89	%
Other interest-earning assets			170,377			6,405		5.03			80,540			335		0.56
Loans held for sale			19,557			982		6.71			29,114			972		4.46
Loans
Commercial loans (2)(3)			2,940,483			116,116		5.28			2,400,290			75,688		4.22
Residential real estate loans (3)(4)			1,676,979			49,598		3.95			1,341,508			34,296		3.42
Consumer loans (3)			30,112			1,350		5.99			89,934			3,179		4.73
Total loans			4,647,574			167,064		4.81			3,831,732			113,163		3.95
Total interest-earning assets			5,219,080			180,568		4.63			4,333,172			120,015		3.70
Noninterest-earning assets			310,826								315,781
Total assets		$	5,529,906							$	4,648,953
Interest-bearing liabilities:
Savings accounts		$	1,413,553			18,397		1.74		$	1,242,533			2,203		0.24
NOW accounts			276,872			170		0.08			306,115			116		0.05
Money market accounts			846,235			19,849		3.14			879,310			2,320		0.35
Certificates of deposit			693,941			15,170		2.92			497,744			2,186		0.59
Brokered deposits			299,665			7,428		3.31			100,969			306		0.41
Total interest-bearing deposits			3,530,266			61,014		2.31			3,026,671			7,131		0.32
FHLB and FRB borrowings			541,034			19,658		4.86			96,015			1,516		2.11
Subordinated debentures			34,331			1,653		6.44			34,206			1,571		6.14
Total borrowings			575,365			21,311		4.95			130,221			3,087		3.17
Total interest-bearing liabilities			4,105,631			82,325		2.68			3,156,892			10,218		0.43
Noninterest-bearing liabilities:
Noninterest-bearing deposits			712,815								765,479
Other noninterest-bearing liabilities			105,732								80,727
Total liabilities			4,924,178								4,003,098
Total stockholders' equity			605,728								645,855
Total liabilities and stockholders' equity		$	5,529,906							$	4,648,953
Tax equivalent net interest income						98,243								109,797
Tax equivalent interest rate spread (5)								1.95	%							3.27	%
Less: tax equivalent adjustment						665								—
Net interest income as reported					$	97,578							$	109,797
Net interest-earning assets (6)		$	1,113,449							$	1,176,280
Net interest margin (7)								2.50	%							3.39	%
Tax equivalent effect								0.02								—
Net interest margin on a fully tax equivalent basis								2.52	%							3.39	%
Ratio of interest-earning assets to interest-bearing liabilities			127.12	%							137.26	%
Supplemental information:
Total deposits, including demand deposits		$	4,243,081		$	61,014				$	3,792,150		$	7,131
Cost of total deposits								1.92	%							0.25	%
Total funding liabilities, including demand deposits		$	4,818,446		$	82,325				$	3,922,371		$	10,218
Cost of total funding liabilities								2.28	%							0.35	%
(1) Includes securities available for sale and securities held to maturity.
(2) Tax-exempt income on industrial revenue bonds is included in commercial loans on a tax-equivalent basis.
(3) Includes nonaccruing loan balances and interest received on such loans.
(4) Includes the basis adjustments of certain loans included in fair value hedging relationships.
(5) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(6) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
(7) Net interest margin represents net interest income divided by average total interest-earning assets.
(8) Annualized.

HarborOne Bancorp, Inc. Average Balances and Yield Trend (Unaudited)
		Average Balances - Trend - Quarters Ended
		September 30, 2023			June 30, 2023			March 31, 2023			December 31, 2022			September 30, 2022
		(in thousands)
Interest-earning assets:
Investment securities (1)		$	375,779		$	381,762		$	387,303		$	388,247		$	390,577
Other interest-earning assets			207,234			238,891			63,426			42,640			27,723
Loans held for sale			20,919			19,614			18,108			22,350			28,046
Loans
Commercial loans (2)(3)			2,980,817			2,938,292			2,901,464			2,770,667			2,522,359
Residential real estate loans (3)(4)			1,700,383			1,682,860			1,647,109			1,566,389			1,470,305
Consumer loans (3)			25,126			29,025			36,310			45,629			63,220
Total loans			4,706,326			4,650,177			4,584,883			4,382,685			4,055,884
Total interest-earning assets			5,310,258			5,290,444			5,053,720			4,835,922			4,502,230
Noninterest-earning assets			314,030			305,132			313,309			311,372			308,734
Total assets		$	5,624,288		$	5,595,576		$	5,367,029		$	5,147,294		$	4,810,964
Interest-bearing liabilities:
Savings accounts		$	1,360,728		$	1,421,622		$	1,459,392		$	1,408,493		$	1,293,598
NOW accounts			274,329			280,501			275,801			291,890			305,777
Money market accounts			910,694			802,373			824,694			878,609			893,452
Certificates of deposit			818,182			708,087			552,636			487,121			486,923
Brokered deposits			287,428			281,614			330,426			148,460			102,875
Total interest-bearing deposits			3,651,361			3,494,197			3,442,949			3,214,573			3,082,625
FHLB and FRB borrowings			508,001			666,345			448,096			392,508			196,036
Subordinated debentures			34,364			34,331			34,298			34,268			34,237
Total borrowings			542,365			700,676			482,394			426,776			230,273
Total interest-bearing liabilities			4,193,726			4,194,873			3,925,343			3,641,349			3,312,898
Noninterest-bearing liabilities:
Noninterest-bearing deposits			705,009			712,081			721,536			788,572			789,214
Other noninterest-bearing liabilities			126,742			88,363			101,820			101,621			80,304
Total liabilities			5,025,477			4,995,317			4,748,699			4,531,542			4,182,416
Total stockholders' equity			598,811			600,259			618,330			615,752			628,548
Total liabilities and stockholders' equity		$	5,624,288		$	5,595,576		$	5,367,029		$	5,147,294		$	4,810,964
		Annualized Yield Trend - Quarters Ended
		September 30, 2023			June 30, 2023			March 31, 2023			December 31, 2022			September 30, 2022
Interest-earning assets:
Investment securities (1)			2.11	%		2.14	%		2.18	%		2.09	%		2.00	%
Other interest-earning assets			5.11	%		4.93	%		5.13	%		3.34	%		2.05	%
Loans held for sale			7.02	%		6.67	%		6.41	%		5.93	%		5.33	%
Commercial loans (2)(3)			5.38	%		5.30	%		5.15	%		4.92	%		4.45	%
Residential real estate loans (3)(4)			4.09	%		3.92	%		3.85	%		3.64	%		3.50	%
Consumer loans (3)			6.51	%		5.79	%		5.80	%		5.50	%		4.99	%
Total loans			4.92	%		4.81	%		4.69	%		4.47	%		4.11	%
Total interest-earning assets			4.74	%		4.63	%		4.51	%		4.27	%		3.93	%
Interest-bearing liabilities:
Savings accounts			1.98	%		1.74	%		1.51	%		1.01	%		0.37	%
NOW accounts			0.11	%		0.08	%		0.05	%		0.05	%		0.05	%
Money market accounts			3.64	%		3.13	%		2.58	%		1.50	%		0.61	%
Certificates of deposit			3.50	%		2.99	%		1.97	%		0.86	%		0.64	%
Brokered deposits			3.60	%		3.29	%		3.08	%		1.32	%		0.27	%
Total interest-bearing deposits			2.72	%		2.30	%		1.87	%		1.05	%		0.45	%
FHLB and FRB borrowings			5.03	%		4.88	%		4.62	%		3.74	%		2.45	%
Subordinated debentures			7.00	%		6.12	%		6.18	%		6.07	%		6.07	%
Total borrowings			5.15	%		4.94	%		4.73	%		3.93	%		2.99	%
Total interest-bearing liabilities			3.04	%		2.74	%		2.23	%		1.39	%		0.63	%
(1) Includes securities available for sale and securities held to maturity.
(2) Tax-exempt income on industrial revenue bonds is included in commercial loans on a tax-equivalent basis.
(3) Includes nonaccruing loan balances and interest received on such loans.
(4) Includes the basis adjustments of certain loans included in fair value hedging relationships.

HarborOne Bancorp, Inc. Selected Financial Highlights (Unaudited)
		Quarters Ended
		September 30,			June 30,			March 31,			December 31,			September 30,
Performance Ratios (annualized):		2023			2023			2023			2022			2022
(dollars in thousands)
Return on average assets (ROAA)			0.60	%		0.54	%		0.54	%		0.74	%		1.14	%
Return on average equity (ROAE)			5.62	%		4.98	%		4.72	%		6.22	%		8.76	%
Total noninterest expense		$	31,872		$	31,725		$	31,509		$	34,644		$	34,473
Less: Amortization of other intangible assets			189			189			189			189			235
Total adjusted noninterest expense		$	31,683		$	31,536		$	31,320		$	34,455		$	34,238
Net interest and dividend income		$	31,080		$	32,100		$	34,398		$	39,189		$	39,332
Total noninterest income			11,598			12,662			8,690			9,900			14,245
Total revenue		$	42,678		$	44,762		$	43,088		$	49,089		$	53,577
Efficiency ratio (1)			74.24	%		70.45	%		72.69	%		70.19	%		63.90	%
(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		2023			2023			2023			2022			2022
(dollars in thousands)
Total nonperforming assets		$	18,795		$	20,234		$	12,300		$	14,840		$	23,367
Nonperforming assets to total assets			0.33	%		0.36	%		0.22	%		0.28	%		0.47	%
Allowance for credit losses on loans to total loans			1.02	%		1.02	%		1.02	%		0.99	%		1.06	%
Net charge-offs (recoveries)		$	(18)		$	2,671		$	(11)		$	2,067		$	(799)
Annualized net charge-offs (recoveries)/average loans			—	%		0.23	%		—	%		0.19	%		(0.08)	%
Allowance for credit losses on loans to nonperforming loans			257.21	%		236.62	%		383.50	%		305.93	%		191.60	%

HarborOne Bancorp, Inc. Selected Financial Highlights (Unaudited)
		Quarters Ended
		September 30,			June 30,			March 31,			December 31,			September 30,
Capital and Share Related		2023			2023			2023			2022			2022
(dollars in thousands, except share data)
Common stock outstanding			45,915,364			46,575,478			47,063,087			48,961,452			49,202,660
Book value per share		$	12.73		$	12.79		$	12.74		$	12.60		$	12.43
Tangible common equity:
Total stockholders' equity		$	584,634		$	595,532		$	599,794		$	616,976		$	611,370
Less: Goodwill			69,802			69,802			69,802			69,802			69,802
Less: Other intangible assets (1)			1,704			1,893			2,082			2,272			2,461
Tangible common equity		$	513,128		$	523,837		$	527,910		$	544,902		$	539,107
Tangible book value per share (2)		$	11.18		$	11.25		$	11.22		$	11.13		$	10.96
Tangible assets:
Total assets		$	5,664,387		$	5,659,254		$	5,572,858		$	5,359,545		$	4,987,643
Less: Goodwill			69,802			69,802			69,802			69,802			69,802
Less: Other intangible assets			1,704			1,893			2,082			2,272			2,461
Tangible assets		$	5,592,881		$	5,587,559		$	5,500,974		$	5,287,471		$	4,915,380
Tangible common equity / tangible assets (3)			9.17	%		9.38	%		9.60	%		10.31	%		10.97	%
(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 Key Financial Data (Unaudited)
		Quarters Ended
		September 30,			June 30,			March 31,			December 31,			September 30,
Statements of Net Income for HarborOne Bank Segment:		2023			2023			2023			2022			2022
		(Dollars in thousands)
Net interest and dividend income		$	31,468		$	32,490		$	34,562		$	39,258		$	39,373
Provision (benefit) for credit losses			(113)			3,283			1,866			2,108			668
Net interest and dividend income, after provision for credit losses			31,581			29,207			32,696			37,150			38,705
Mortgage banking income:
Intersegment loss			(198)			(358)			(348)			(997)			(904)
Changes in mortgage servicing rights fair value			18			29			(136)			(263)			164
Other			188			195			201			203			218
Total mortgage banking income (loss)			8			(134)			(283)			(1,057)			(522)
Other noninterest income:
Deposit account fees			5,132			5,013			4,733			5,031			4,870
Income on retirement plan annuities			146			128			119			118			119
Bank-owned life insurance income			531			511			500			501			503
Other income			694			962			590			2,129			688
Total noninterest income			6,511			6,480			5,659			6,722			5,658
Noninterest expenses:
Compensation and benefits			15,238			15,067			14,764			16,531			16,455
Occupancy and equipment			3,828			3,910			4,295			4,236			4,096
Data processing			2,527			2,355			2,305			2,285			2,219
Loan expense			128			96			87			55			68
Marketing			709			787			1,063			747			728
Professional fees			914			699			996			1,027			1,258
Deposit insurance			1,004			1,176			510			385			357
Other expenses			1,924			2,103			2,170			3,478			2,526
Total noninterest expenses			26,272			26,193			26,190			28,744			27,707
Less: Amortization of other intangible assets			190			189			189			189			234
Total adjusted noninterest expense			26,082			26,004			26,001			28,555			27,473
Income before income taxes			11,820			9,494			12,165			15,128			16,656
Provision for income taxes			2,716			2,193			3,115			2,817			4,166
Net income		$	9,104		$	7,301		$	9,050		$	12,311		$	12,490
Efficiency ratio (1) - QTD			68.67	%		66.73	%		64.65	%		62.10	%		61.01	%
Efficiency ratio (1) - YTD			66.64	%		65.67	%		64.65	%		64.25	%		65.07	%
(1) This non-GAAP measure represents adjusted noninterest expense divided by total revenue

HarborOne Bancorp, Inc. Segments Key Financial Data (Unaudited)
		Quarters Ended
		September 30,			June 30,			March 31,			December 31,			September 30,
Statements of Net Income for HarborOne Mortgage Segment:		2023			2023			2023			2022			2022
		(Dollars in thousands)
Net interest and dividend income		$	199		$	120		$	327		$	419		$	437
Mortgage banking income:
Gain on sale of mortgage loans			2,704			3,300			2,224			2,301			3,809
Intersegment gain			249			90			454			553			698
Changes in mortgage servicing rights fair value			107			407			(1,556)			(2,368)			1,652
Other			2,082			2,117			2,015			2,122			2,235
Total mortgage banking income			5,142			5,914			3,137			2,608			8,394
Other noninterest income (loss)			(4)			—			—			126			(13)
Total noninterest income			5,138			5,914			3,137			2,734			8,381
Noninterest expenses:
Compensation and benefits			4,014			3,700			3,575			3,825			4,788
Occupancy and equipment			567			688			701			663			691
Data processing			21			48			41			74			92
Loan expense			258			321			226			114			287
Marketing			85			138			118			115			122
Professional fees			155			180			257			115			108
Other expenses			390			418			404			546			522
Total noninterest expenses			5,490			5,493			5,322			5,452			6,610
Income (loss) before income taxes			(153)			541			(1,858)			(2,299)			2,208
Income tax provision (benefit)			(15)			232			(565)			—			687
Net income		$	(138)		$	309		$	(1,293)		$	(2,299)		$	1,521
Efficiency ratio (1) - QTD			102.87	%		91.03	%		153.64	%		172.91	%		74.96	%
Efficiency ratio (1) - YTD			109.91	%		113.87	%		153.64	%		77.92	%		68.42	%
(1) This non-GAAP measure represents noninterest expense divided by total revenue

Category: Earnings Release

View source version on businesswire.com: https://www.businesswire.com/news/home/20231023895296/en/

Joseph F. Casey, President and Chief Executive Officer

(508) 895-1312

jcasey@harborone.com

Source: HarborOne Bancorp, Inc.

FAQ

What is the net income for HarborOne Bancorp in Q3 2023?

The net income for HarborOne Bancorp in Q3 2023 was $8.4 million.

What is the deposit growth for HarborOne Bancorp?

The deposit growth for HarborOne Bancorp was $160.5 million on a linked-quarter basis.

What is the loan growth for HarborOne Bancorp?

The loan growth for HarborOne Bancorp was $24.7 million on a linked-quarter basis.

What is the total assets of HarborOne Bancorp?

The total assets of HarborOne Bancorp remained flat at $5.66 billion.

What is the total deposits of HarborOne Bancorp?

The total deposits of HarborOne Bancorp increased to $4.41 billion.