HarborOne Bancorp, Inc. Announces 2024 First Quarter Results

Rhea-AI Summary

HarborOne Bancorp, Inc. reported net income of $7.3 million, or $0.17 per diluted share, for the first quarter of 2024, compared to a net loss of $7.1 million for the preceding quarter. Strong asset quality was highlighted, with nonperforming loans decreasing to 0.25%. Noninterest income increased by 20.6%, while noninterest expenses decreased by 26.5%. The company returned $9.2 million to shareholders through dividends and stock buybacks.

Positive

• HarborOne Bancorp, Inc. reported net income of $7.3 million for the first quarter of 2024, a significant improvement from the preceding quarter's net loss.
• Nonperforming loans decreased to 0.25% of total loans, showcasing strong asset quality.
• Noninterest income saw a substantial increase of 20.6% on a linked-quarter basis.
• Noninterest expenses decreased by 26.5%, excluding a one-time goodwill impairment charge.
• The company returned $9.2 million to shareholders through dividends and stock buybacks.

Negative

• The unrealized loss on securities available for sale increased to $66.9 million as of March 31, 2024.
• The company's tangible-common-equity-to-tangible-assets ratio decreased to 8.92% at March 31, 2024, compared to previous quarters.
• Net charge-offs totaled $125,000 for the quarter ended March 31, 2024.

Insights

Financial Analyst

HarborOne Bancorp's report reflecting a rebound from a net loss to a net income of $7.3 million signals a vital turnaround in profitability, likely attributed to strategic cost management and a favorable shift in the yield on interest-earning assets outpacing the cost of interest-bearing liabilities. Notably, the company's asset quality has demonstrated resilience with nonperforming loans dropping to 0.25%, showcasing effective risk management practices in a volatile interest rate landscape.

The repurchase of over half a million shares, compounded by a 6.7% uptick in quarterly dividends, is a clear shareholder value enhancement strategy. It reflects a level of confidence by management in the institution's financial stability. Investors should note, however, that such share buyback programs may influence earnings per share metrics and thus require careful consideration of underlying performance.

Market Research Analyst

From a market perspective, HarborOne's increase in noninterest income, particularly the 20.6% linked-quarter rise, signifies an effective diversification of revenue streams. The growth in loan portfolios, albeit modest, combined with disciplined deposit market pricing, underscores the bank's adaptability in a competitive sector.

The bank's response to the challenging mortgage market, evidenced by proactive hedging strategies to mitigate potential valuation losses, indicates a forward-thinking approach to asset management. The 23.6% year-over-year rise in noninterest income suggests the bank's potential in managing cyclical industry headwinds.

Risk Management Analyst

HarborOne's proactive monitoring of the commercial real estate loan portfolio amidst speculation of deteriorating values due to increased vacancies and interest rates is a testament to robust risk management practices. Investors should consider this attentiveness to asset quality as an essential element in evaluating the bank's long-term resilience.

The decrease in nonperforming assets to $12.2 million and the maintenance of a stable allowance for credit losses ratio peek into the bank's cautious approach in an uncertain economic environment. The specific attention paid to potentially vulnerable sub-sectors like metro office space, non-anchored retail and business-oriented hotels suggests that the bank is preemptively identifying and addressing potential areas of credit weakness.

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 $0.17 per diluted share, for the first quarter of 2024, compared to a net loss of $7.1 million, or $0.17 per diluted share for the preceding quarter, and net income of $7.3 million, or $0.16 per diluted share for the same period last year. Excluding the HarborOne Mortgage, LLC (“HarborOne Mortgage”) goodwill impairment charge of $10.8 million recorded in the fourth quarter of 2023, included in noninterest expense, net income and diluted earnings per share for the quarter ended December 31, 2023 were $3.7 million and $0.09, respectively.⁽¹⁾

Selected Financial Highlights:

• Strong asset quality; nonperforming loans as a percentage of total loans were 0.25% compared to 0.37% last quarter.
• Increased noninterest income 20.6% on a linked-quarter basis.
• Reduced noninterest expense 2.2% on a linked-quarter basis, excluding the goodwill impairment recorded in 2023.
• Loan growth of $26.4 million, or 2.2% annualized.
• Continued share repurchase program, repurchasing 558,900 shares at an average cost of $10.40 per share, totaling $5.8 million.
• Returned $3.4 million of capital to shareholders via dividends and increased quarterly dividend by 6.7%.

“In this uncertain interest rate environment, our team remains laser focused on expense management and moderate commercial loan growth that brings operational deposits to the Bank,” said Joseph F. Casey, President and CEO. “This quarter was the first quarter since the second quarter of 2022 where the yield on interest-earning assets increased more than the cost of interest-bearing liabilities. I am pleased with our improved earnings this quarter and with our ability to return $9.2 million to shareholders through the cash dividend, which increased 6.7%, and through the continuation of our stock buybacks.”

Net Interest Income

The Company’s net interest and dividend income was $30.6 million for the quarter ended March 31, 2024, compared to $29.7 million for the quarter ended December 31, 2023, and $34.4 million for the quarter ended March 31, 2023. The tax equivalent interest rate spread and net interest margin were 1.62% and 2.25%, respectively, for the quarter ended March 31, 2024, compared to 1.56% and 2.23%, respectively, for the quarter ended December 31, 2023, and 2.28% and 2.78%, respectively, for the quarter ended March 31, 2023. The fourth quarter results included interest expense of $620,000 for the remaining unamortized issuance cost on the Company’s $35 million subordinated notes redeemed in the fourth quarter of 2023.

On a linked-quarter basis, the increase in the margin, spread and net interest and dividend income reflects average interest-earning assets increasing $172.8 million and the yield on interest-earning assets increasing 10 basis points while average interest-bearing liabilities increased $207.6 million and the cost of these liabilities increased 4 basis points. The cost of interest-bearing deposits, excluding brokered, decreased 2 basis points, driven by disciplined pricing in a competitive deposit market.

The $3.8 million decrease in net interest and dividend income from the prior year quarter reflects an increase of $14.8 million, or 68.6%, in total interest expense, partially offset by an increase of $11.0 million, or 19.6%, in total interest and dividend income. The cost of interest-bearing liabilities increased 106 basis points, while the average balance increased $521.3 million, and the yield on interest-earning assets increased 40 basis points, while the average balance increased $451.9 million.

Noninterest Income

Total noninterest income improved $1.8 million, or 20.6%, to $10.7 million for the quarter ended March 31, 2024, from $8.9 million for the quarter ended December 31, 2023. The change was primarily driven by an increase in the mortgage servicing rights (“MSR”) valuation for the three months ended March 31, 2024 of $628,000, compared to a decrease of $3.1 million in the MSR valuation for the three months ended December 31, 2023. The MSR valuation was positively impacted by key benchmark interest rates used in the valuation model, which increased from the prior quarter. The impact on the MSR valuation of principal payments on the underlying mortgages was $353,000 and $487,000 for the quarters ended, March 31, 2024 and December 31, 2023, respectively. During the first quarter of 2024, HarborOne Mortgage executed a hedge to partially mitigate potential MSR valuation losses in a declining rate environment. As a result, the MSR valuation gain was partially offset by a $221,000 hedging loss in the quarter.

Persistent low inventory of for-sale residential real estate and elevated mortgage interest rates continued to impact the results of HarborOne Mortgage, with gain on loan sales of $2.0 million from mortgage loan closings of $102.1 million for the quarter ended March 31, 2024, compared to $2.2 million from mortgage loan closings of $124.2 million on a linked-quarter basis. Slightly higher gain-on-sale margins partially offset seasonally lower production volume. Mortgage loan closings for the quarter ended March 31, 2023 were $125.6 million with a gain on loan sales of $2.2 million.

Total noninterest income for the quarter ended December 31, 2023 included a $305,000 gain on sale of a former bank branch, and $582,000 recognized on a Bank-owned life insurance (“BOLI”) surrender and exchange strategy. BOLI income was offset by a $464,000 corresponding tax impact included in the provision for income taxes and a modified endowment contract charge included in noninterest expense. The quarter ended March 31, 2024 had no such income.

Total noninterest income increased $2.1 million, or 23.6%, compared to the quarter ended March 31, 2023, primarily due to a $1.6 million, or 58.0%, increase in mortgage banking income. The prior year quarter reflected a $1.3 million decrease in the MSR valuation.

Noninterest Expense

Total noninterest expense decreased $11.5 million, or 26.5%, to $31.8 million for the quarter ended March 31, 2024, from $43.2 million for the quarter ended December 31, 2023. Excluding the one-time $10.8 million goodwill impairment charge from the fourth quarter results, noninterest expenses decreased $704,000 on a linked-quarter basis. Compensation and benefits expenses decreased $1.6 million as the fourth quarter of 2023 included catch-up accrual adjustments for incentives and certain benefits. The fourth quarter of 2023 also included $118,000 in severance expense for a reduction in force at HarborOne Mortgage. Loan expense increased $688,000, as the fourth quarter of 2023 included a $629,000 reversal of repurchase reserve at HarborOne Mortgage based on updated assumptions used to determine the estimate.

Total noninterest expense increased $241,000, or 0.8%, compared to the prior year quarter of $31.5 million. Deposit insurance expense increased $654,000 partially offset by a $365,000 decrease in marketing expense.

Asset Quality and Allowance for Credit Losses

Total nonperforming assets were $12.2 million at March 31, 2024, compared to $17.6 million at December 31, 2023 and $12.3 million at March 31, 2023. Nonperforming assets as a percentage of total assets were 0.21% at March 31, 2024, 0.31% at December 31, 2023, and 0.22% at March 31, 2023. During the first quarter of 2024, a single credit included in the metro office space loan segment with a carrying value of $5.7 million, considered nonperforming in the prior quarter, was paid with a partial recovery of $99,000.

The Company recorded a $168,000 negative provision for credit losses for the quarter ended March 31, 2024. The provision for loan credit losses was $338,000, offset by a negative provision of $506,000 for unfunded commitments. The provision for credit losses for the quarter ended December 31, 2023 was $644,000, a result of a provision for loan credit losses of $970,000 partially offset by a $326,000 negative provision for unfunded commitments. The Company recorded a provision for credit losses of $1.9 million for the quarter ended March 31, 2023, a result of a provision for loan credit losses of $1.7 million and a $119,000 provision for unfunded commitments. Net charge-offs totaled $125,000, or 0.01%, of average loans outstanding on an annualized basis, for the quarter ended March 31, 2024. Net charge-offs totaled $1.3 million, or 0.11%, of average loans outstanding on an annualized basis, for the quarter ended December 31, 2023, and net recoveries totaled $11,000 for the quarter ended March 31, 2023. Loan credit loss provisioning primarily reflects replenishment of the allowance for credit losses (“ACL”) on loans due to charge-offs and loan growth.

The ACL on loans was $48.2 million, or 1.01% of total loans, at March 31, 2024, compared to $48.0 million, or 1.01% of total loans, at December 31, 2023 and $47.0 million, or 1.02% of total loans, at March 31, 2023. The ACL on unfunded commitments, included in other liabilities on the unaudited Consolidated Balance Sheets, amounted to $3.4 million at March 31, 2024, compared to $3.9 million at December 31, 2023 and $5.0 million at March 31, 2023.

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. As of March 31, 2024 commercial loans rated “watch” amounted to $67.9 million, compared to $30.6 million at December 31, 2023. Loans are rated “watch” at the point when there are signs of potential weakness. Approximately 41% of the increase is due to one credit included in the office category. Management performs comprehensive reviews and works proactively with creditworthy borrowers facing financial distress and implements prudent workouts and accommodations to improve the Bank’s prospects of contractual repayment.

Three sub-sectors that Management identified as potentially more susceptible to weakness includes business-oriented hotels, non-anchored retail space, and metro office space. As of March 31, 2024, business-oriented hotels loans included 14 loans with a total outstanding balance of $122.0 million, non-anchored retail space loans included 28 loans with a total outstanding balance of $44.6 million, and metro office space loans included one loan with a total outstanding balance of $5.1 million. There is one business-oriented hotel credit with a carrying value of $1.8 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 increased $194.3 million, or 3.4%, to $5.86 billion at March 31, 2024, from $5.67 billion at December 31, 2023. The linked-quarter increase primarily reflects an increase in cash and cash equivalents.

Available-for-sale securities were $291.0 million and $290.2 million at March 31, 2024 and December 31, 2023, respectively. The unrealized loss on securities available for sale increased to $66.9 million as of March 31, 2024, as compared to $62.0 million of unrealized losses as of December 31, 2023. Securities held to maturity were flat at $19.7 million, or 0.3% of total assets, at March 31, 2024.

Loans increased $26.4 million, or 0.6%, to $4.78 billion at March 31, 2024, from $4.75 billion at December 31, 2023. The linked-quarter increase was primarily due to increases in commercial construction loans of $26.4 million, commercial real estate loans of $12.0 million, and commercial and industrial loans of $4.8 million, partially offset by decreases in residential mortgage loans of $14.0 million and consumer loans of $2.7 million.

Total deposits were $4.39 billion at March 31, 2024 and December 31, 2023. Compared to the prior quarter, non-certificate accounts decreased $43.5 million and term certificate accounts decreased $11.1 million, as a competitive rate environment continued to pressure deposit growth. Brokered deposits increased $61.3 million. As of March 31, 2024, FDIC-insured deposits were approximately 73% of total deposits, including Bank subsidiary deposits.

FHLB borrowings increased $10.9 million to $579.4 million at March 31, 2024 from $568.5 million at December 31, 2023. The Bank borrowed $175.0 million under the Bank Term Funding Program during the first quarter of 2024. As of March 31, 2024, the Bank had $921.1 million in available borrowing capacity across multiple relationships.

Total stockholders’ equity was $577.7 million at March 31, 2024, compared to $583.8 million at December 31, 2023. Stockholders’ equity decreased 1.0% when compared to the prior quarter, as net income was offset by share repurchases and an increase in unrealized loss on available-for-sale securities. As of March 31, 2024, the Company’s sixth share repurchase program, commenced in the third quarter of 2023, is ongoing with 1,781,950 shares repurchased since commencement, at an average price of $10.15, including $0.10 per share of excise tax. The tangible-common-equity-to-tangible-assets ratio⁽²⁾ was 8.92% at March 31, 2024, 9.33% at December 31, 2023, and 9.60% at March 31, 2023. At March 31, 2024, the Company and the Bank had strong capital positions, exceeding all regulatory capital requirements, and are considered well-capitalized.

⁽¹⁾ These non-GAAP measures are net loss less goodwill impairment and net loss less goodwill impairment to weighted average shares outstanding on a diluted basis.
⁽²⁾ This non-GAAP ratio is total stockholders’ equity less goodwill and intangible assets to total assets less goodwill and intangible assets.

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.

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 interest rates; changes in customer behavior; ongoing turbulence in the capital and debt markets and the impact of such conditions on the Company’s business activities; 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 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 income statement results excluding the goodwill impairment charge, total adjusted noninterest expense excluding the goodwill impairment charge, diluted earnings per share excluding the goodwill impairment charge, Return on average assets (ROAA), excluding the goodwill impairment charge, Return on average equity (ROAE), excluding goodwill impairment charge, the efficiency ratio, efficiency ratio excluding the goodwill impairment charge, 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)		2024				2023				2023				2023				2023
Assets
Cash and due from banks		$	36,340			$	38,876			$	38,573			$	43,525			$	38,989
Short-term investments			357,101				188,474				208,211				209,326				210,765
Total cash and cash equivalents			393,441				227,350				246,784				252,851				249,754
Securities available for sale, at fair value			291,008				290,151				271,078				292,012				303,059
Securities held to maturity, at amortized cost			19,724				19,796				19,795				19,839				19,838
Federal Home Loan Bank stock, at cost			26,565				27,098				23,378				27,123				23,589
Asset held for sale			348				348				966				966				—
Loans held for sale, at fair value			16,434				19,686				17,796				20,949				13,956
Loans:
Commercial real estate			2,355,672				2,343,675				2,349,886				2,286,688				2,286,727
Commercial construction			234,811				208,443				191,224				228,902				212,689
Commercial and industrial			471,215				466,443				450,547				453,422				423,036
Total commercial loans			3,061,698				3,018,561				2,991,657				2,969,012				2,922,452
Residential real estate			1,695,686				1,709,714				1,706,950				1,701,766				1,667,934
Consumer			19,301				22,036				24,247				27,425				32,246
Loans			4,776,685				4,750,311				4,722,854				4,698,203				4,622,632
Less: Allowance for credit losses on loans			(48,185	)			(47,972	)			(48,312	)			(47,821	)			(46,994	)
Net loans			4,728,500				4,702,339				4,674,542				4,650,382				4,575,638
Mortgage servicing rights, at fair value			46,597				46,111				49,201				48,176				47,080
Goodwill			59,042				59,042				69,802				69,802				69,802
Other intangible assets			1,326				1,515				1,704				1,893				2,082
Other assets			279,237				274,460				289,341				275,261				268,060
Total assets		$	5,862,222			$	5,667,896			$	5,664,387			$	5,659,254			$	5,572,858
Liabilities and Stockholders' Equity
Deposits:
Demand deposit accounts		$	677,152			$	659,973			$	708,847			$	717,572			$	726,548
NOW accounts			305,071				305,825				289,141				286,956				287,376
Regular savings and club accounts			1,110,404				1,265,315				1,324,635				1,390,906				1,455,318
Money market deposit accounts			1,061,145				966,201				951,128				834,120				796,008
Term certificate accounts			852,326				863,457				859,266				742,931				653,553
Brokered deposits			387,926				326,638				276,941				315,003				322,927
Total deposits			4,394,024				4,387,409				4,409,958				4,287,488				4,241,730
Borrowings			754,380				568,462				475,470				604,568				590,665
Subordinated debt			—				—				34,380				34,348				34,317
Other liabilities and accrued expenses			136,135				128,266				159,945				137,318				106,352
Total liabilities			5,284,539				5,084,137				5,079,753				5,063,722				4,973,064
Common stock			598				598				597				597				597
Additional paid-in capital			487,277				486,502				485,144				484,544				483,831
Unearned compensation - ESOP			(25,326	)			(25,785	)			(26,245	)			(26,704	)			(27,164	)
Retained earnings			363,591				359,656				369,930				364,709				360,454
Treasury stock			(199,853	)			(193,590	)			(187,803	)			(181,324	)			(175,514	)
Accumulated other comprehensive loss			(48,604	)			(43,622	)			(56,989	)			(46,290	)			(42,410	)
Total stockholders' equity			577,683				583,759				584,634				595,532				599,794
Total liabilities and stockholders' equity		$	5,862,222			$	5,667,896			$	5,664,387			$	5,659,254			$	5,572,858

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)		2024				2023				2023				2023			2023
Interest and dividend income:
Interest and fees on loans		$	59,937			$	59,499			$	58,124			$	55,504		$	52,771
Interest on loans held for sale			243				369				370				326			286
Interest on securities			2,065				2,001				2,003				2,035			2,079
Other interest and dividend income			4,659				2,516				2,667				2,935			803
Total interest and dividend income			66,904				64,385				63,164				60,800			55,939
Interest expense:
Interest on deposits			26,899				27,310				25,039				20,062			15,913
Interest on borrowings			9,423				6,260				6,439				8,114			5,105
Interest on subordinated debentures			—				1,122				606				524			523
Total interest expense			36,322				34,692				32,084				28,700			21,541
Net interest and dividend income			30,582				29,693				31,080				32,100			34,398
Provision (benefit) for credit losses			(168	)			644				(113	)			3,283			1,866
Net interest and dividend income, after provision for credit losses			30,750				29,049				31,193				28,817			32,532
Noninterest income:
Mortgage banking income:
Gain on sale of mortgage loans			2,013				2,176				2,704				3,300			2,224
Changes in mortgage servicing rights fair value			54				(3,553	)			125				436			(1,692	)
Other			2,276				2,301				2,270				2,312			2,216
Total mortgage banking income			4,343				924				5,099				6,048			2,748
Deposit account fees			4,983				5,178				5,133				5,012			4,733
Income on retirement plan annuities			145				147				146				128			119
Bank-owned life insurance income			746				1,207				531				511			500
Other income			524				1,448				689				963			590
Total noninterest income			10,741				8,904				11,598				12,662			8,690
Noninterest expenses:
Compensation and benefits			17,636				19,199				18,699				18,220			17,799
Occupancy and equipment			4,781				4,670				4,430				4,633			5,040
Data processing			2,479				2,474				2,548				2,403			2,346
Loan (income) expense			371				(317	)			385				417			313
Marketing			816				811				794				925			1,181
Professional fees			1,457				1,690				1,374				1,114			1,501
Deposit insurance			1,164				795				1,004				1,176			510
Goodwill impairment			—				10,760				—				—			—
Other expenses			3,046				3,132				2,638				2,837			2,819
Total noninterest expenses			31,750				43,214				31,872				31,725			31,509
Income (loss) before income taxes			9,741				(5,261	)			10,919				9,754			9,713
Income tax provision			2,441				1,850				2,507				2,275			2,416
Net income (loss)		$	7,300			$	(7,111	)		$	8,412			$	7,479		$	7,297
Earnings (losses) per common share:
Basic		$	0.17			$	(0.17	)		$	0.20			$	0.17		$	0.16
Diluted		$	0.17			$	(0.17	)		$	0.20			$	0.17		$	0.16
Weighted average shares outstanding:
Basic			41,912,421				42,111,872				42,876,893				43,063,507			44,857,224
Diluted			42,127,037				42,299,858				42,983,477				43,133,455			45,284,240

HarborOne Bancorp, Inc.
Average Balances and Yield Trend
(Unaudited)
		Quarters Ended
		March 31, 2024								December 31, 2023								March 31, 2023
		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)		$	372,787		$	2,065		2.23	%	$	370,683		$	2,001		2.14	%	$	387,303		$	2,079		2.18	%
Other interest-earning assets			356,470			4,659		5.26			205,929			2,516		4.85			63,426			803		5.13
Loans held for sale			14,260			243		6.85			20,010			369		7.32			18,108			286		6.41
Loans
Commercial loans (2)(3)			3,040,835			41,653		5.51			3,005,840			41,263		5.45			2,901,464			36,837		5.15
Residential real estate loans (3)(4)			1,700,694			18,175		4.30			1,707,978			18,103		4.21			1,647,109			15,616		3.85
Consumer loans (3)			20,539			358		7.01			22,324			384		6.82			36,310			519		5.80
Total loans			4,762,068			60,186		5.08			4,736,142			59,750		5.01			4,584,883			52,972		4.69
Total interest-earning assets			5,505,585			67,153		4.91			5,332,764			64,636		4.81			5,053,720			56,140		4.51
Noninterest-earning assets			299,153								313,729								313,309
Total assets		$	5,804,738							$	5,646,493							$	5,367,029
Interest-bearing liabilities:
Savings accounts		$	1,186,201			5,523		1.87		$	1,307,774			6,875		2.09		$	1,459,392			5,445		1.51
NOW accounts			289,902			75		0.10			290,147			122		0.17			275,801			36		0.05
Money market accounts			994,353			9,313		3.77			963,223			9,288		3.83			824,694			5,238		2.58
Certificates of deposit			855,070			8,554		4.02			859,274			8,329		3.85			552,636			2,685		1.97
Brokered deposits			356,459			3,434		3.87			288,449			2,696		3.71			330,426			2,509		3.08
Total interest-bearing deposits			3,681,985			26,899		2.94			3,708,867			27,310		2.92			3,442,949			15,913		1.87
Borrowings			764,623			9,423		4.96			507,520			6,260		4.89			448,096			5,105		4.62
Subordinated debentures			—			—		-			22,614			1,122		19.68			34,298			523		6.18
Total borrowings			764,623			9,423		4.96			530,134			7,382		5.52			482,394			5,628		4.73
Total interest-bearing liabilities			4,446,608			36,322		3.29			4,239,001			34,692		3.25			3,925,343			21,541		2.23
Noninterest-bearing liabilities:
Noninterest-bearing deposits			654,436								683,548								721,536
Other noninterest-bearing liabilities			119,289								137,239								101,820
Total liabilities			5,220,333								5,059,788								4,748,699
Total stockholders' equity			584,405								586,705								618,330
Total liabilities and stockholders' equity		$	5,804,738							$	5,646,493							$	5,367,029
Tax equivalent net interest income						30,831								29,944								34,599
Tax equivalent interest rate spread (5)								1.62	%							1.56	%							2.28	%
Less: tax equivalent adjustment						249								251								201
Net interest income as reported					$	30,582							$	29,693							$	34,398
Net interest-earning assets (6)		$	1,058,977							$	1,093,763							$	1,128,377
Net interest margin (7)								2.23	%							2.21	%							2.76	%
Tax equivalent effect								0.02								0.02								0.02
Net interest margin on a fully tax equivalent basis								2.25	%							2.23	%							2.78	%
Ratio of interest-earning assets to interest-bearing liabilities			123.82	%							125.80	%							128.75	%
Supplemental information:
Total deposits, including demand deposits		$	4,336,421		$	26,899				$	4,392,415		$	27,310				$	4,164,485		$	15,913
Cost of total deposits								2.49	%							2.47	%							1.55	%
Total funding liabilities, including demand deposits		$	5,101,044		$	36,322				$	4,922,549		$	34,692				$	4,646,879		$	21,541
Cost of total funding liabilities								2.86	%							2.80	%							1.88	%
(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.

		Average Balances - Trend - Quarters Ended
			March 31,			December 31,			September 30,			June 30,			March 31
			2024			2023			2023			2023			2023
		(in thousands)
Interest-earning assets:
Investment securities (1)		$	372,787		$	370,683		$	375,779		$	381,762		$	387,303
Other interest-earning assets			356,470			205,929			207,234			238,891			63,426
Loans held for sale			14,260			20,010			20,919			19,614			18,108
Loans
Commercial loans (2)(3)			3,040,835			3,005,840			2,980,817			2,938,292			2,901,464
Residential real estate loans (3)(4)			1,700,694			1,707,978			1,700,383			1,682,860			1,647,109
Consumer loans (3)			20,539			22,324			25,126			29,025			36,310
Total loans			4,762,068			4,736,142			4,706,326			4,650,177			4,584,883
Total interest-earning assets			5,505,585			5,332,764			5,310,258			5,290,444			5,053,720
Noninterest-earning assets			299,153			313,729			314,030			305,132			313,309
Total assets		$	5,804,738		$	5,646,493		$	5,624,288		$	5,595,576		$	5,367,029
Interest-bearing liabilities:
Savings accounts		$	1,186,201		$	1,307,774		$	1,360,728		$	1,421,622		$	1,459,392
NOW accounts			289,902			290,147			274,329			280,501			275,801
Money market accounts			994,353			963,223			910,694			802,373			824,694
Certificates of deposit			855,070			859,274			818,182			708,087			552,636
Brokered deposits			356,459			288,449			287,428			281,614			330,426
Total interest-bearing deposits			3,681,985			3,708,867			3,651,361			3,494,197			3,442,949
Borrowings			764,623			507,520			508,001			666,345			448,096
Subordinated debentures			—			22,614			34,364			34,331			34,298
Total borrowings			764,623			530,134			542,365			700,676			482,394
Total interest-bearing liabilities			4,446,608			4,239,001			4,193,726			4,194,873			3,925,343
Noninterest-bearing liabilities:
Noninterest-bearing deposits			654,436			683,548			705,009			712,081			721,536
Other noninterest-bearing liabilities			119,289			137,239			126,742			88,363			101,820
Total liabilities			5,220,333			5,059,788			5,025,477			4,995,317			4,748,699
Total stockholders' equity			584,405			586,705			598,811			600,259			618,330
Total liabilities and stockholders' equity		$	5,804,738		$	5,646,493		$	5,624,288		$	5,595,576		$	5,367,029
		Annualized Yield Trend - Quarters Ended
			March 31,			December 31,			September 30,			June 30,			March 31,
			2024			2023			2023			2023			2023
Interest-earning assets:
Investment securities (1)			2.23	%		2.14	%		2.11	%		2.14	%		2.18	%
Other interest-earning assets			5.26	%		4.85	%		5.11	%		4.93	%		5.13	%
Loans held for sale			6.85	%		7.32	%		7.02	%		6.67	%		6.41	%
Commercial loans (2)(3)			5.51	%		5.45	%		5.38	%		5.30	%		5.15	%
Residential real estate loans (3)(4)			4.30	%		4.21	%		4.09	%		3.92	%		3.85	%
Consumer loans (3)			7.01	%		6.82	%		6.51	%		5.79	%		5.80	%
Total loans			5.08	%		5.01	%		4.92	%		4.81	%		4.69	%
Total interest-earning assets			4.91	%		4.81	%		4.74	%		4.63	%		4.51	%
Interest-bearing liabilities:
Savings accounts			1.87	%		2.09	%		1.98	%		1.74	%		1.51	%
NOW accounts			0.10	%		0.17	%		0.11	%		0.08	%		0.05	%
Money market accounts			3.77	%		3.83	%		3.64	%		3.13	%		2.58	%
Certificates of deposit			4.02	%		3.85	%		3.50	%		2.99	%		1.97	%
Brokered deposits			3.87	%		3.71	%		3.60	%		3.29	%		3.08	%
Total interest-bearing deposits			2.94	%		2.92	%		2.72	%		2.30	%		1.87	%
Borrowings			4.96	%		4.89	%		5.03	%		4.88	%		4.62	%
Subordinated debentures			-	%		19.68	%		7.00	%		6.12	%		6.18	%
Total borrowings			4.96	%		5.52	%		5.15	%		4.94	%		4.73	%
Total interest-bearing liabilities			3.29	%		3.25	%		3.04	%		2.74	%		2.23	%
(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
		March 31,			December 31,			September 30,			June 30,			March 31,
Performance Ratios (annualized):		2024			2023			2023			2023			2023
(dollars in thousands)
Net income (loss)		$	7,300		$	(7,111)		$	8,411		$	7,450		$	7,297
Less: Goodwill impairment charge			—			10,760			—			—			—
Net income, excluding goodwill impairment charge(1)		$	7,300		$	3,649		$	8,411		$	7,450		$	7,297
Average Assets		$	5,804,738		$	5,646,493		$	5,624,288		$	5,595,576		$	5,367,029
Average Equity		$	584,405		$	586,705		$	598,811		$	600,258		$	618,330
Return on average assets (ROAA)			0.50	%		(0.50)	%		0.60	%		0.54	%		0.54	%
Return on average assets (ROAA), excluding goodwill impairment charge(2)			0.50	%		0.26	%		0.60	%		0.54	%		0.54	%
Return on average equity (ROAE)			5.00	%		(4.85)	%		5.62	%		4.98	%		4.72	%
Return on average equity (ROAE), excluding goodwill impairment charge(3)			5.00	%		2.49	%		5.62	%		4.98	%		4.72	%
Total noninterest expense		$	31,750		$	43,214		$	31,872		$	31,725		$	31,509
Less: Amortization of other intangible assets			189			189			189			189			189
Total adjusted noninterest expense			31,561			43,025			31,683			31,536			31,320
Less: Goodwill impairment charge			—			10,760			—			—			—
Total adjusted noninterest expense, excluding goodwill impairment(4)		$	31,561		$	32,265		$	31,683		$	31,536		$	31,320
Net interest and dividend income		$	30,582		$	29,693		$	31,080		$	32,100		$	34,398
Total noninterest income			10,741			8,904			11,598			12,662			8,690
Total revenue		$	41,323		$	38,597		$	42,678		$	44,762		$	43,088
Efficiency ratio (5)			76.38	%		111.47	%		74.24	%		70.45	%		72.69	%
Efficiency ratio, excluding goodwill impairment charge(6)			76.38	%		83.59	%		74.24	%		70.45	%		72.69	%
(1) This non-GAAP measure represents net income, excluding goodwill impairment charge
(2) This non-GAAP measure represents net income, excluding goodwill impairment charge to average assets
(3) This non-GAAP measure represents net income, excluding goodwill impairment charge to average equity
(4) This non-GAAP measure represents adjusted noninterest expense, excluding goodwill impairment charge
(5) This non-GAAP measure represents adjusted noninterest expense divided by total revenue
(6) This non-GAAP measure represents adjusted noninterest expense, excluding goodwill impairment divided by total revenue

		At or for the Quarters Ended
		March 31,			December 31,			September 30,			June 30,			March 31,
Asset Quality		2024			2023			2023			2023			2023
(dollars in thousands)
Total nonperforming assets		$	12,160		$	17,582		$	18,795		$	20,234		$	12,300
Nonperforming assets to total assets			0.21	%		0.31	%		0.33	%		0.36	%		0.22	%
Allowance for credit losses on loans to total loans			1.01	%		1.01	%		1.02	%		1.02	%		1.02	%
Net charge-offs (recoveries)		$	125		$	1,311		$	(18)		$	2,671		$	(11)
Annualized net charge-offs (recoveries)/average loans			0.01	%		0.11	%		—	%		0.23	%		—	%
Allowance for credit losses on loans to nonperforming loans			396.27	%		273.92	%		257.21	%		236.62	%		383.50	%

HarborOne Bancorp, Inc.
Selected Financial Highlights
(Unaudited)
		Quarters Ended
		March 31,			December 31,			September 30,			June 30,			March 31,
Capital and Share Related		2024			2023			2023			2023			2023
(dollars in thousands, except share data)
Common stock outstanding			45,055,006			45,401,224			45,915,364			46,575,478			47,063,087
Book value per share		$	12.82		$	12.86		$	12.73		$	12.79		$	12.74
Tangible common equity:
Total stockholders' equity		$	577,683		$	583,759		$	584,634		$	595,532		$	599,794
Less: Goodwill			59,042			59,042			69,802			69,802			69,802
Less: Other intangible assets (1)			1,326			1,515			1,704			1,893			2,082
Tangible common equity		$	517,315		$	523,202		$	513,128		$	523,837		$	527,910
Tangible book value per share (2)		$	11.48		$	11.52		$	11.18		$	11.25		$	11.22
Tangible assets:
Total assets		$	5,862,222		$	5,667,896		$	5,664,387		$	5,659,254		$	5,572,858
Less: Goodwill			59,042			59,042			69,802			69,802			69,802
Less: Other intangible assets			1,326			1,515			1,704			1,893			2,082
Tangible assets		$	5,801,854		$	5,607,339		$	5,592,881		$	5,587,559		$	5,500,974
Tangible common equity / tangible assets (3)			8.92	%		9.33	%		9.17	%		9.38	%		9.60	%
(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
Statements of Net Income for HarborOne Bank Segment:		March 31, 2024			December 31, 2023			September 30, 2023			June 30, 2023			March 31, 2023
		(Dollars in thousands)
Net interest and dividend income		$	30,485		$	30,637		$	31,468		$	32,490		$	34,562
Provision (benefit) for credit losses			(168	)		644			(113	)		3,283			1,866
Net interest and dividend income, after provision for credit losses			30,653			29,993			31,581			29,207			32,696
Mortgage banking income:
Intersegment loss			(236	)		(159	)		(198	)		(358	)		(348	)
Changes in mortgage servicing rights fair value			(32	)		(257	)		18			29			(136	)
Other			180			185			188			195			201
Total mortgage banking (loss) income			(88	)		(231	)		8			(134	)		(283	)
Other noninterest income:
Deposit account fees			4,983			5,178			5,132			5,013			4,733
Income on retirement plan annuities			145			147			146			128			119
Bank-owned life insurance income			746			1,207			531			511			500
Other income			517			1,405			694			962			590
Total noninterest income			6,303			7,706			6,511			6,480			5,659
Noninterest expenses:
Compensation and benefits			15,307			16,535			15,238			15,067			14,764
Occupancy and equipment			4,150			4,038			3,828			3,910			4,295
Data processing			2,470			2,462			2,527			2,355			2,305
Loan expense			71			153			128			96			87
Marketing			783			751			709			787			1,063
Professional fees			1,056			1,404			914			699			996
Deposit insurance			1,164			794			1,004			1,176			510
Other expenses			2,406			2,476			1,924			2,103			2,170
Total noninterest expenses			27,407			28,613			26,272			26,193			26,190
Less: Amortization of other intangible assets			189			189			190			189			189
Total adjusted noninterest expense			27,218			28,424			26,082			26,004			26,001
Income before income taxes			9,549			9,086			11,820			9,494			12,165
Provision for income taxes			2,386			2,535			2,716			2,193			3,115
Net income		$	7,163		$	6,551		$	9,104		$	7,301		$	9,050
Efficiency ratio (1) - QTD			73.99	%		74.13	%		68.67	%		66.73	%		64.65	%
Efficiency ratio (1) - YTD			73.99	%		68.49	%		66.64	%		65.67	%		64.65	%
(1) This non-GAAP measure represents adjusted noninterest expense divided by total revenue

HarborOne Bancorp, Inc.
Segments Key Financial Data
(Unaudited)
		Quarters Ended
Statements of Net Income for HarborOne Mortgage Segment:		March 31, 2024			December 31, 2023			September 30, 2023			June 30, 2023			March 31, 2023
		(Dollars in thousands)
Net interest and dividend income		$	80		$	160		$	199		$	120		$	327
Mortgage banking income:
Gain on sale of mortgage loans			2,013			2,176			2,704			3,300			2,224
Intersegment gain			308			56			249			90			454
Changes in mortgage servicing rights fair value			86			(3,296)			107			407			(1,556)
Other			2,097			2,116			2,082			2,117			2,015
Total mortgage banking income			4,504			1,052			5,142			5,914			3,137
Other noninterest income (loss)			10			2			(4)			—			—
Total noninterest income			4,514			1,054			5,138			5,914			3,137
Noninterest expenses:
Compensation and benefits			2,919			3,217			4,014			3,700			3,575
Occupancy and equipment			604			596			567			688			701
Data processing			9			13			21			48			41
Loan expense			304			(470)			258			321			226
Marketing			33			60			85			138			118
Professional fees			132			120			155			180			257
Goodwill impairment			—			10,760			—			—			—
Other expenses			310			371			390			418			404
Total noninterest expenses			4,311			14,667			5,490			5,493			5,322
Income (loss) before income taxes			283			(13,453)			(153)			541			(1,858)
Income tax (benefit) provision			60			(596)			(15)			232			(565)
Net income (loss)		$	223		$	(12,857)		$	(138)		$	309		$	(1,293)
Efficiency ratio (1) - QTD			93.84	%		1,208.15	%		102.87	%		91.03	%		153.64	%
Efficiency ratio, excluding goodwill impairment (2) - QTD			93.84	%		321.83	%		102.87	%		91.03	%		153.64	%
Efficiency ratio (1) - YTD			93.84	%		192.98	%		109.91	%		113.87	%		153.64	%
Efficiency ratio, excluding goodwill impairment (2) - YTD			93.84	%		125.94	%		109.91	%		113.87	%		153.64	%
(1) This non-GAAP measure represents noninterest expense divided by total revenue
(2) This non-GAAP measure represents noninterest expense, excluding goodwill impairment divided by total revenue

Category: Earnings Release

View source version on businesswire.com: https://www.businesswire.com/news/home/20240424104114/en/

Joseph F. Casey, President and Chief Executive Officer

(508) 895-1312

jcasey@harborone.com

Source: HarborOne Bancorp, Inc.

FAQ

What was HarborOne Bancorp, Inc.'s net income for the first quarter of 2024?

HarborOne Bancorp, Inc. reported a net income of $7.3 million for the first quarter of 2024.

How did the nonperforming loans percentage change for HarborOne Bancorp, Inc.?

Nonperforming loans as a percentage of total loans decreased to 0.25% for HarborOne Bancorp, Inc.

What was the percentage change in noninterest income on a linked-quarter basis for HarborOne Bancorp, Inc.?

Noninterest income increased by 20.6% on a linked-quarter basis for HarborOne Bancorp, Inc.

How much did HarborOne Bancorp, Inc. return to shareholders through dividends and stock buybacks?

HarborOne Bancorp, Inc. returned $9.2 million to shareholders through dividends and stock buybacks.

What was the company's tangible-common-equity-to-tangible-assets ratio at March 31, 2024?

The company's tangible-common-equity-to-tangible-assets ratio was 8.92% at March 31, 2024.