Press Release

HarborOne Bancorp, Inc. Announces Third Quarter 2016 Earnings

Company Release - 10/21/2016 8:55 AM ET

BROCKTON, Mass.--(BUSINESS WIRE)-- HarborOne Bancorp, Inc. (the “Company”) (NASDAQ: HONE), the holding company for HarborOne Bank (the “Bank”), announced third quarter earnings for 2016. Net income for the quarter ended September 30, 2016 was $3.6 million or $0.11 per share as compared to $2.2 million for the third quarter of 2015.

Net income for the nine months ended September 30, 2016 was $3.0 million as compared to $4.2 million for the same period last year. The 2016 year to date results include a pre-tax contribution of $4.8 million to fund the HarborOne Foundation (the “Foundation”). Excluding this contribution expense, net income would have been $5.9 million. Merrimack Mortgage Company, LLC (“Merrimack”), the Banks’ mortgage company subsidiary, was acquired on July 1, 2015.

James Blake, President and CEO stated, “Our third quarter results reflect our ability to effectively deploy new capital and execute our business strategy since our successful minority stock offering, completed at the end of June. Commercial real estate loans are up 20% from the second quarter and 70% from year end as we focus on prudent commercial loan growth. We continue to assess other growth and innovation opportunities to provide our customers with a dynamic banking experience.”

Net Interest Income
The Company’s net interest income was $15.9 million for the quarter ended September 30, 2016, up $1.3 million, or 8.5%, from $14.7 million for the quarter ended June 30, 2016 and up $2.0 million, or 14.5%, from $13.9 million for the quarter ended September 30, 2015. The interest rate spread and net interest margin on a tax-equivalent basis were 2.78% and 2.93%, respectively, for the quarter ended September 30, 2016 compared to 2.68% and 2.81%, respectively, for the quarter ended June 30, 2016 and 2.56% and 2.67%, respectively, for the quarter ended September 30, 2015. The increases in spread and margin were due primarily to commercial real estate loan growth and lower funding costs.

Total interest and dividend income was $19.2 million for the quarter ended September 30, 2016, up $1.1 million, or 5.8%, from the quarter ended June 30, 2016 and up $1.5 million, or 8.3%, from the quarter ended September 30, 2015, primarily due to growth in the Company’s average loan balances to $1.983 billion and increases in the yield on loans to 3.61% from 3.53% for the 2015 quarter. Total interest expense decreased to $3.3 million for the quarter ended September 30, 2016, down $194,000, or 5.6%, from the quarter ended June 30, 2016 and down $543,000, or 14.3%, from the quarter ended September 30, 2015, primarily due to a decrease in average Federal Home Loan Bank (“FHLB”) borrowings to $232.6 million from $239.2 million for the second quarter of 2016 and $313.5 million from the third quarter of 2015. The Company’s yield on interest-earning assets on a tax-equivalent basis increased to 3.53% for the quarter ended September 30, 2016 from 3.47% for the quarter ended June 30, 2016 and 3.39% for the quarter ended September 30, 2015, while the cost of funds was 0.75% for the quarter ended September 30, 2016 compared to 0.79% for the quarter ended June 30, 2016 and 0.83% for the quarter ended September 30, 2015.

Noninterest Income
Noninterest income increased to $20.9 million for the quarter ended September 30, 2016, up $5.0 million, or 31.4%, from the quarter ended June 30, 2016 and up $6.9 million, or 49.6% from the quarter ended September 30, 2015, primarily due to the continued low interest rate environment which has provided robust residential mortgage origination activity in the third quarter of 2016. Mortgage banking income was $16.8 million for the quarter ended September 30, 2016, up $5.2 million, or 44.6%, from $11.6 million for the quarter ended June 30, 2016 and up $6.8 million, or 68.0%, from $10.0 million for the quarter ended September 30, 2015 as a result of increased mortgage loan origination and sales volume. The fair value of mortgage servicing rights increased $351,000 in the third quarter of 2016 compared to decreases of $2.2 million in the second quarter of 2016 and $677,000 in the third quarter of 2015 as interest rates increased slightly at the end of the 2016 quarter.

Noninterest Expense
Noninterest expenses were $29.6 million for the quarter ended September 30, 2016, a decrease of $1.6 million, or 5.0%, from the quarter ended June 30, 2016 and an increase of $5.5 million, or 22.8%, from the quarter ended September 30, 2015. The 2016 decrease reflects the one-time expense of $4.8 million incurred in the second quarter of 2016 in connection with the establishment of the Foundation. Various expense elements offset the decrease. Compensation and benefits expense was $18.9 million for the quarter ended September 30, 2016 up $2.5 million, or 15.2%, from $16.4 million for the quarter ended June 30, 2016 and up $4.0 million, or 27.1%, for the quarter ended September 30, 2015. These increases primarily reflect increased commission expense consistent with the mortgage origination volume and employee stock option plan (“ESOP”) expense related to the establishment of the ESOP as part of the stock offering. Loan expense was $3.3 million for the quarter ended September 30, 2016 up $1.2 million, or 55.8%, from $2.1 million for the quarter ended June 30, 2016 and up $1.5 million, or 82.1%, from $1.8 million for the quarter ended September 30, 2015, both increases are due to the increased mortgage loan origination volume. Additionally in the second quarter of 2016 and the third quarter of 2015 the Bank prepaid borrowings resulting in $400,000 and $355,000, respectively, in Federal Home Loan Bank (‘FHLB”) prepayment penalties while no FHLB borrowings were prepaid in the third quarter of 2016.

Asset Quality
The Company’s provision for loan losses increased to $1.7 million for the quarter ended September 30, 2016 from $801,000 for the quarter ended June 30, 2016 and $325,000 for the quarter ended September 30, 2015, primarily due to commercial loan growth. The increase between the 2016 quarters also reflects increased net charge-offs for the quarter ended September 30, 2016 and the establishment of a $360,000 specific reserve for a substandard commercial loan. The increases in the provision for loan losses were also based on management’s assessment of loan portfolio growth and composition changes, historical charge-off trends, and ongoing evaluation of credit quality and current economic conditions. The allowance for loan losses was $15.8 million or 0.82% of total loans at September 30, 2016, compared to $14.4 million or 0.79% of total loans at June 30, 2016 and $14.0 million or 0.80% of total loans at September 30, 2015. Net charge-offs totaled $317,000 for the quarter ended September 30, 2016, or 0.07% of average loans outstanding on an annualized basis compared to $58,000 and 0.01% for the quarter ended June 30, 2016 and $440,000 and 0.10% for the quarter ended September 30, 2015.

Nonperforming assets were $26.0 million at September 30, 2016 compared to $27.8 million at June 30, 2016 and $32.8 million at September 30, 2015. Nonperforming assets as a percentage of total assets were 1.11% at September 30, 2016, 1.23% at June 30, 2016 and 1.50% at September 30, 2015. The reductions reflect the Company’s continued efforts to minimize nonperforming assets through diligent collection efforts and prudent workout arrangements.

Balance Sheet
Total assets increased $80.4 million, or 3.5%, to $2.347 billion at September 30, 2016 from $2.267 billion at June 30, 2016. Net loans increased $84.0 million, or 4.6%, to $1.905 billion at September 30, 2016 from $1.821 billion at June 30, 2016. The net increase in loans for the three months ended September 30, 2016 was primarily due to increases of $73.6 million in commercial real estate loans, $9.0 million in construction loans, $6.4 million in commercial and industrial loans and $1.2 in residential real estate loans, partially offset by decreases of $4.3 million in consumer loans. Mortgage loans held for sale increased $14.4 million, or 14.4%, to $114.1 million at September 30, 2016 from $99.7 million at June 30, 2016 spurred by the continued low interest rate environment and seasonal home purchase activity. Cash and cash equivalents decreased $10.9 million, or 36.1%, to $19.3 million at September 30, 2016 from $30.1 million at June 30, 2016 with the funds primarily deployed to commercial real estate loan growth.

Total deposits increased $24.7 million, or 1.4%, to $1.735 billion at September 30, 2016 from $1.710 billion at June 30, 2016 primarily due to the establishment of brokered deposits in the third quarter. Brokered deposits increased $20.2 million and term certificate accounts increased $8.8 million offset by a decrease in non-certificate accounts of $4.3 million. Borrowings increased $50.0 million, or 25.6%, to $245.1 million at September 30, 2016 from $195.1 million at June 30, 2016, due to an increase in FHLB short-term borrowings.

Total stockholders’ equity was $327.9 million at September 30, 2016 compared to $324.3 million at June 30, 2016 and $190.2 million at September 30, 2015. The increase from 2015 reflects the Company’s mutual to stock conversion that was completed on June 29, 2016. As part of the conversion, the Company established an ESOP which acquired 8% of the shares issued in the conversion, including shares contributed to the Foundation. The $11.6 million related to the ESOP is shown as a reduction to stockholders’ equity on the consolidated balance sheet. The tangible common equity to tangible assets ratio decreased to 13.47% at September 30, 2016 from 13.79% at June 30, 2016. At September 30, 2016, the Company and the Bank exceed all regulatory capital requirements.

About HarborOne Bancorp, Inc.
HarborOne Bancorp, Inc. is the holding company for HarborOne Bank the largest co-operative bank in New England. HarborOne Bank serves the financial needs of consumers, businesses, and municipalities throughout Southeastern Massachusetts through a network of 14 full-service branches, two limited service branches, a commercial loan office in Providence, Rhode Island, a residential lending office in Westford, Massachusetts, and 13 free-standing ATMs. The Bank also provides a range of educational services through “HarborOne U,” with classes on small business, financial literacy and personal enrichment at two campuses located adjacent to our Brockton and Mansfield locations. Merrimack Mortgage Company, LLC, a subsidiary of HarborOne Bank, is a full-service mortgage lender with 34 offices in Massachusetts, New Hampshire and Maine, and also does business in seven additional states.

Forward Looking Statements
Certain statements herein constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. 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, adverse conditions in the capital and debt markets and the impact of such conditions on the Company’s business activities; changes in interest rates; competitive pressures from other financial institutions; the effects of general economic conditions on a national basis or 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 the value of securities in the Company’s investment portfolio; changes in loan default and charge-off rates; fluctuations in real estate values; the adequacy of loan loss reserves; decreases in deposit levels necessitating increased borrowing to fund loans and investments; changes in government 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 Company’s Registration Statement on Form S-1 and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission (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 Bancorp, Inc.’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 measurements and ratios based on tangible stockholders’ equity and tangible assets, 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,
(Dollars in thousands, except per share amounts) 2016 2016 2016 2015 2015
 
Assets
 
Cash and due from banks $ 15,706 $ 18,773 $ 15,268 $ 18,153 $ 14,384
Short-term investments   3,549   11,365   98,991   22,499   1,552
Total cash and cash equivalents 19,255 30,138 114,259 40,652 15,936
 
Securities available for sale, at fair value 115,397 121,957 120,905 128,541 134,709
Securities held to maturity, at amortized cost 49,213 50,504 62,461 63,579 64,818
Federal Home Loan Bank stock, at cost 15,255 13,078 17,480 18,735 19,635
Mortgage loans held for sale, at fair value 114,054 99,697 67,592 63,797 79,734
Loans:
Residential real estate 774,404 773,169 777,034 810,343 840,259
Commercial real estate 450,945 377,386 300,880 265,482 243,085
Construction   40,438   31,414   41,227   35,830   33,524
Total mortgage loans on real estate 1,265,787 1,181,969 1,119,141 1,111,655 1,116,868
Commercial 88,718 82,333 78,666 70,472 66,477
Consumer   555,874   560,144   544,078   548,944   544,131
Loans 1,910,379 1,824,446 1,741,885 1,731,071 1,727,476
Less: Allowance for loan losses (15,832) (14,439) (13,696) (13,700) (14,003)
Net deferred loan costs   10,336   10,893   11,357   12,017   12,415
Net Loans 1,904,883 1,820,900 1,739,546 1,729,388 1,725,888
Mortgage servicing rights, at fair value 15,534 12,688 12,330 12,958 10,748
Goodwill and other intangible assets 13,607 13,630 13,651 13,674 11,345
Other assets   99,935   104,166   96,544   91,818   122,673
Total assets $ 2,347,133 $ 2,266,758 $ 2,244,768 $ 2,163,142 $ 2,185,486
 
Liabilities and Stockholders' Equity
 
Deposits:
NOW and demand deposit accounts $ 358,628 $ 339,379 $ 331,709 $ 320,717 $ 291,337
Regular savings and club accounts 317,198 316,195 312,362 295,533 286,004
Money market deposit accounts 596,377 620,974 651,503 612,370 613,804
Brokered deposits 20,236
Term certificate accounts   442,472   433,685   456,136   462,592   475,755
Total deposits 1,734,911 1,710,234 1,751,711 1,691,212 1,666,900
Short-term borrowed funds 50,000 21,800
Long-term borrowed funds 195,120 195,096 269,597 249,598 279,599
Other liabilities and accrued expenses   39,188   37,137   31,578   31,644   26,997
Total liabilities   2,019,219   1,942,467   2,052,887   1,972,454   1,995,296
 
Common Stock 321 321
Additional paid-in capital 144,175 144,107
Unearned compensation - ESOP (11,575) (11,872)
Retained earnings 194,275 190,723 191,404 191,280 189,737
Accumulated other comprehensive income (loss)   718   1,011   477   (592)   453
Total stockholders' equity   327,914   324,290   191,881   190,688   190,190
 
Total liabilities and stockholders' equity $ 2,347,133 $ 2,266,758 $ 2,244,768 $ 2,163,142 $ 2,185,486
 
 
HarborOne Bancorp, Inc.
Consolidated Statements of Net Income - Trend
(Unaudited)
                             
Quarters Ended
September 30, June 30, March 31, December 31, September 30,
(Dollars in thousands) 2016 2016 2016 2015 2015
 
Interest and dividend income:
Interest and fees on loans $ 17,144 $ 16,293 $ 15,643 $ 15,460 $ 15,553
Interest on loans held for sale 866 581 460 615 740
Interest on securities 988 1,023 1,099 1,179 1,230
Other interest and dividend income   164   209   237   186   167
Total interest and dividend income   19,162   18,106   17,439   17,440   17,690
 
Interest expense:
Interest on deposits 2,092 2,165 2,170 2,201 2,220
Interest on borrowed funds   1,168   1,289   1,383   1,350   1,583
Total interest expense   3,260   3,454   3,553   3,551   3,803
 
Net interest and dividend income 15,902 14,652 13,886 13,889 13,887
 
Provision for loan losses   1,710   801   205   15   325
 
Net interest income, after provision for loan losses   14,192   13,851   13,681   13,874   13,562
 
Noninterest income:
Mortgage banking income:
Changes in mortgage servicing rights fair value 351 (2,163) (2,288) 536 (677)
Other   16,430   13,770   9,321   8,643   10,664
Total mortgage banking income 16,781 11,607 7,033 9,179 9,987
 
Deposit account fees 3,010 2,928 2,747 2,934 2,886
Income on retirement plan annuities 111 108 106 108 106
Gain on sale of consumer loans 29 50 136
Gain on sale and call of securities, net 41 242 1
Bank-owned life insurance income 275 274 276 264 295
Other income   692   901   608   485   542
Total noninterest income   20,869   15,888   11,062   12,970   13,953
 
Noninterest expenses:
Compensation and benefits 18,902 16,407 15,518 15,332 14,875
Occupancy and equipment 2,458 2,463 2,784 2,315 2,280
Data processing expenses 1,450 1,446 1,414 1,362 1,328
Loan expense 3,316 2,128 1,592 1,502 1,821
Marketing 592 607 565 575 544
Professional fees 709 602 577 653 633
Deposit insurance 437 418 403 430 438
Prepayment penalties on Federal Home Loan Bank 400 280 355
Charitable foundation contributions 4,820
Other expenses   1,745   1,878   1,704   1,992   1,832
Total noninterest expenses   29,609   31,169   24,557   24,441   24,106
 
Income (loss) before income taxes 5,452 (1,430) 186 2,403 3,409
 
Income tax provision (benefit)   1,900   (749)   62   860   1,165
 
Net income (loss) $ 3,552 $ (681) $ 124 $ 1,543 $ 2,244
 
Earnings per common share:
Basic and diluted $ 0.11 N/A N/A N/A N/A
 
Weighted average shares outstanding:
Basic and diluted 30,943,808 N/A N/A N/A N/A
 
 
HarborOne Bancorp, Inc.
Consolidated Statements of Net Income
(Unaudited)
                       
For the Nine Months Ended September 30,
(Dollars in thousands) 2016 2015 $ Change % Change
 
Interest and dividend income:
Interest and fees on loans $ 49,080 $ 44,528 $ 4,552 10.2 %
Interest on loans held for sale 1,907 810 1,097 135.4 %
Interest on securities 3,110 3,623 (513) (14.2) %
Other interest and dividend income   610   399   211 52.9 %
Total interest and dividend income   54,707   49,360   5,347 10.8 %
 
Interest expense:
Interest on deposits 6,427 6,499 (72) (1.1) %
Interest on borrowed funds   3,840   4,525   (685) (15.1) %
Total interest expense   10,267   11,024   (757) (6.9) %
 
Net interest and dividend income 44,440 38,336 6,104 15.9 %
 
Provision for loan losses   2,716   1,242   1,474 118.7 %
 
Net interest income, after provision for loan losses   41,724   37,094   4,630 12.5 %
 
Noninterest income:
Mortgage banking income:
Changes in mortgage servicing rights fair value (4,100) (1,016) (3,084) (303.5) %
Other   39,521   11,929   27,592 231.3 %
Total mortgage banking income 35,421 10,913 24,508 224.6 %
 
Deposit account fees 8,685 8,260 425 5.1 %
Income on retirement plan annuities 325 487 (162) (33.3) %
Gain on sale of consumer loans 79 136 (57) (41.9) %
Gain on sale and call of securities, net 283 295 (12) (4.1) %
Bank-owned life insurance income 825 892 (67) (7.5) %
Other income   2,201   1,420   781 55.0 %
Total noninterest income   47,819   22,403   25,416 113.4 %
 
Noninterest expenses:
Compensation and benefits 50,827 30,414 20,413 67.1 %
Occupancy and equipment 7,705 6,931 774 11.2 %
Data processing expenses 4,310 4,030 280 6.9 %
Loan expense 7,036 2,404 4,632 192.7 %
Marketing 1,764 1,349 415 30.8 %
Professional fees 1,888 1,528 360 23.6 %
Deposit insurance 1,258 1,286 (28) (2.2) %
Prepayment penalties on Federal Home Loan Bank 400 700 (300) (42.9) %
Charitable foundation contributions 4,820 4,820 - %
Other expenses   5,327   4,931   396 8.0 %
Total noninterest expenses   85,335   53,573   31,762 59.3 %
 
Income before income taxes 4,208 5,924 (1,716) (29.0) %
 
Income tax provision   1,213   1,699   (486) (28.6) %
 
Net income $ 2,995 $ 4,225 $ (1,230) (29.1) %
 
Earnings per common share:
Basic and diluted N/A N/A N/A
 
Weighted average shares outstanding:
Basic and diluted N/A N/A N/A
 
 
HarborOne Bancorp, Inc.
Average Balances / Yields
(Unaudited)
                                           
Quarters Ended
September 30, 2016 June 30, 2016 September 30, 2015
Average Average Average
Outstanding Yield/ Outstanding Yield/ Outstanding Yield/
Balance Interest Cost (6) Balance Interest Cost (6) Balance Interest Cost (6)
(Dollars in thousands)
Interest-earning assets:
Loans (1) $ 1,983,249 $ 18,010 3.61 % $ 1,881,488 $ 16,874 3.61 % $ 1,831,438 $ 16,293 3.53 %
Investment securities (2) 181,112 1,223 2.69 191,162 1,267 2.67 231,705 1,466 2.51
Other interest-earning assets   3,734   6 0.61   33,826   43 0.51   15,050   10 0.25
Total interest-earning assets 2,168,095   19,239 3.53 2,106,476   18,184 3.47 2,078,193 17,769 3.39
Noninterest-earning assets   130,498   131,104   113,506
Total assets $ 2,298,593 $ 2,237,580 $ 2,191,699
Interest-bearing liabilities:
Savings accounts $ 319,202 139 0.17 $ 317,180 137 0.17 $ 288,707 $ 125 0.17
NOW accounts 120,704 19 0.06 120,702 19 0.06 111,581 17 0.06
Money market accounts 612,761 685 0.44 642,758 724 0.45 608,440 675 0.44
Certificates of deposit 434,519 1,246 1.14 446,848 1,285 1.16 486,132 1,403 1.15
Brokered deposit   549   3 2.17        
Total interest-bearing deposits 1,487,735 2,092 0.56 1,527,488 2,165 0.57 1,494,860 2,220 0.59
FHLB advances   232,587   1,168 2.00   239,245   1,289 2.17   313,470   1,583 2.00
Total interest-bearing liabilities 1,720,322   3,260 0.75 1,766,733   3,454 0.79 1,808,330 3,803 0.83
Noninterest-bearing liabilities:
Noninterest-bearing deposits 217,930 244,651 172,097
Other noninterest-bearing liabilities   32,888   28,887   21,606
Total liabilities 1,971,140 2,040,271 2,002,033
Total equity   327,453   197,309   189,666
Total liabilities and equity $ 2,298,593 $ 2,237,580 $ 2,191,699    
Tax equivalent net interest income 15,979 14,730 13,966
Tax equivalent interest rate spread (3) 2.78 % 2.68 % 2.56 %
Less: tax equivalent adjustment   77   78   79
Net interest income as reported $ 15,902 $ 14,652 $ 13,887
Net interest-earning assets (4) $ 447,773 $ 339,743 $ 269,863
Net interest margin (5) 2.92 % 2.80 % 2.65 %
Tax equivalent effect 0.01 0.01 0.02
Net interest margin on a fully tax equivalent basis 2.93 % 2.81 % 2.67 %
Average interest-earning assets to average interest-bearing liabilities 126.03 % 119.23 % 114.92 %
 

 

(1) Includes loans held for sale, nonaccruing loan balances and interest received on such loans.
(2) Includes securities available for sale, securities held to maturity and FHLB stock. Interest income from tax exempt securities is computed on a taxable equivalent basis using a tax rate of 35% for all periods presented. The yield on investments before tax equivalent adjustments for the quarters presented were 2.52%, 2.50%, and 2.37%, respectively.
(3) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest bearing liabilities.
(4) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
(5) Net interest margin represents net interest income divided by average total interest-earning assets.
(6) Annualized

 
HarborOne Bancorp, Inc.
Average Balances / Yields
(Unaudited)
                             
Year to Date
September 30, 2016 September 30, 2015
Average Average
Outstanding Yield/ Outstanding Yield/
Balance Interest Cost (6) Balance Interest Cost (6)
(Dollars in thousands)
Interest-earning assets:
Loans (1) $ 1,889,578 $ 50,987 3.60 % $ 1,729,293 $ 45,338 3.51 %
Investment securities (2) 191,371 3,829 2.67 234,605 4,184 2.38
Other interest-earning assets   32,298   125 0.51   39,523   76 0.26
Total interest-earning assets 2,113,247   54,941 3.47 2,003,421   49,598 3.31
Noninterest-earning assets   127,996   107,860
Total assets $ 2,241,243 $ 2,111,281
Interest-bearing liabilities:
Savings accounts $ 312,672 407 0.17 $ 284,747 366 0.17
NOW accounts 119,495 56 0.06 108,226 52 0.06
Money market accounts 628,669 2,112 0.45 538,450 1,719 0.43
Certificates of deposit 446,624 3,849 1.15 498,809 4,362 1.17
Brokered deposit   184   3 2.18    
Total interest-bearing deposits 1,507,644 6,427 0.57 1,430,232 6,499 0.61
FHLB advances   245,693   3,840 2.09   310,007   4,525 1.95
Total interest-bearing liabilities 1,753,337   10,267 0.78 1,740,239   11,024 0.85
Noninterest-bearing liabilities:
Noninterest-bearing deposits 218,960 164,919
Other noninterest-bearing liabilities   29,451   17,889
Total liabilities 2,001,748 1,923,047
Total equity   239,495   188,234
Total liabilities and equity $ 2,241,243 $ 2,111,281
Tax equivalent net interest income 44,674 38,574
Tax equivalent interest rate spread (3) 2.69 % 2.46 %
Less: tax equivalent adjustment   234   238
Net interest income as reported $ 44,440 $ 38,336
Net interest-earning assets (4) $ 359,910 $ 263,182
Net interest margin (5) 2.81 % 2.56 %
Tax equivalent effect 0.01 0.01
Net interest margin on a fully tax equivalent basis 2.82 % 2.57 %
Average interest-earning assets to average interest-bearing liabilities 120.53 % 115.12 %
 

(1) Includes loans held for sale, nonaccruing loan balances and interest received on such loans.
(2) Includes securities available for sale, securities held to maturity and FHLB stock. Interest income from tax exempt securities is computed on a taxable equivalent basis using a tax rate of 35% for all periods presented. The yield on investments before tax equivalent adjustments was 2.51% and 2.25% for the nine months ended September 30, 2016 and 2015, respectively.
(3) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest bearing liabilities.
(4) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
(5) Net interest margin represents net interest income divided by average total interest-earning assets.
(6) Annualized

                     
HarborOne Bancorp, Inc.
Average Balances and Yield Trend
(Unaudited)
 
Average Balances - Trend - Quarters Ended
September 30, 2016 June 30, 2016 March 31, 2016 December 31, 2015 September 30, 2015
(In thousands)
Interest-earning assets:
Loans (1) $ 1,983,249 $ 1,881,488 $ 1,803,000 $ 1,796,749 $ 1,831,438
Investment securities (2) 181,112 191,162 201,950 213,540 231,705
Other interest-earning assets   3,734   33,826   59,649   23,478   15,050
Total interest-earning assets 2,168,095 2,106,476 2,064,599 2,033,767 2,078,193
Noninterest-earning assets   130,498   131,104   122,326   117,676   113,506
Total assets $ 2,298,593 $ 2,237,580 $ 2,186,925 $ 2,151,443 $ 2,191,699
Interest-bearing liabilities:
Savings accounts $ 319,202 $ 317,180 $ 301,557 $ 292,203 $ 288,707
NOW accounts 120,704 120,702 116,866 113,971 111,581
Money market accounts 612,761 642,758 630,664 622,937 608,440
Certificates of deposit 434,519 446,848 458,636 468,762 486,132
Brokered deposit   549        
Total interest-bearing deposits 1,487,735 1,527,488 1,507,723 1,497,873 1,494,860
FHLB advances   232,587   239,245   265,392   254,497   313,470
Total interest-bearing liabilities 1,720,322 1,766,733 1,773,115 1,752,370 1,808,330
Noninterest-bearing liabilities:
Noninterest-bearing deposits 217,930 244,651 191,942 182,813 172,097
Other noninterest-bearing liabilities   32,888   28,887   29,114   23,174   21,606
Total liabilities 1,971,140 2,040,271 1,994,171 1,958,357 2,002,033
Total equity   327,453   197,309   192,754   193,086   189,666
Total liabilities and equity $ 2,298,593 $ 2,237,580 $ 2,186,925 $ 2,151,443 $ 2,191,699
 
Annualized Yield Trend - Quarters Ended
September 30, 2016 June 30, 2016 March 31, 2016 December 31, 2015 September 30, 2015
Interest-earning assets:
Loans (1) 3.61 % 3.61 % 3.59 % 3.55 % 3.53 %
Investment securities (2) 2.69 % 2.67 % 2.67 % 2.64 % 2.51 %
Other interest-earning assets 0.61 % 0.51 % 0.51 % 0.37 % 0.25 %
Total interest-earning assets 3.53 % 3.47 % 3.41 % 3.42 % 3.39 %
 
Interest-bearing liabilities:
Savings accounts 0.17 % 0.17 % 0.17 % 0.17 % 0.17 %
NOW accounts 0.06 % 0.06 % 0.06 % 0.06 % 0.06 %
Money market accounts 0.44 % 0.45 % 0.45 % 0.44 % 0.44 %
Certificates of deposit 1.14 % 1.16 % 1.16 % 1.15 % 1.15 %
Brokered deposit 2.17 % % % % %
Total interest-bearing deposits 0.56 % 0.57 % 0.58 % 0.58 % 0.59 %
FHLB advances 2.00 % 2.17 % 2.10 % 2.10 % 2.00 %
Total interest-bearing liabilities 0.75 % 0.79 % 0.81 % 0.80 % 0.83 %
 

(1) Includes loans held for sale, nonaccruing loan balances and interest received on such loans.
(2) Includes securities available for sale, securities held to maturity and FHLB stock.

 

HarborOne Bancorp, Inc.

Selected Financial Highlights

(Unaudited)

                                       
Quarters Ended
September 30, June 30, March 31, December 31, September 30,
Performance Ratios (annualized):       2016 2016 2016 2015 2015
 
Return (loss) on average assets (ROAA) 0.62 % (0.12) % 0.02 % 0.29 % 0.41 %
 
Return (loss) on average equity (ROAE) 4.34 % (1.38) % 0.26 % 3.20 % 4.73 %

 

Efficiency ratio 80.46 % 101.99 % 98.34 % 90.91 % 86.34 %
 
                             
At or for the Quarters Ended
September 30, June 30, March 31, December 31, September 30,
Asset Quality       2016 2016 2016 2015 2015
(Dollars in thousands)
 
Total nonperforming assets $ 25,992 $ 27,770 $ 29,661 $ 31,774 $ 32,804
 
Nonperforming assets to total assets 1.11 % 1.23 % 1.32 % 1.47 % 1.50 %
 
Allowance for loan losses to total loans 0.82 % 0.79 % 0.78 % 0.79 % 0.80 %
 
Net charge offs $ 317 $ 58 $ 209 $ 318 $ 440
 
Annualized net charge offs/average loans 0.07 % 0.01 % 0.05 % 0.07 % 0.10 %
 
Allowance for loan losses to nonperforming loans 65.92 % 55.52 % 49.56 % 46.46 % 46.35 %
                                     
Quarters Ended
September 30, June 30, March 31, December 31, September 30,
Capital and Share Related         2016 2016 2016 2015 2015
 
 
Common stock outstanding 32,120,880 32,120,880 N/A N/A N/A
 
Book value per share $ 10.21 $ 10.10 N/A N/A N/A
 
Tangible book value per share (1) $ 9.79 $ 9.67 N/A N/A N/A
 
Tangible common equity / tangible assets (2) 13.47 % 13.79 % 7.99 % 8.24 % 8.23

(1)This non-GAAP ratio is total stockholders' equity less intangible assets divided by common stock outstanding.
(2) This non-GAAP ratio is total stockholders' equity less intangible assets to total assets less intangible assets.

HarborOne Bancorp, Inc.
Joseph F. Casey, 508-895-1312
EVP, COO, CFO

Source: HarborOne Bancorp, Inc.