Press Release

HarborOne Bancorp, Inc. Announces 2017 Third Quarter Earnings

Company Release - 10/19/2017 8:47 AM ET

BROCKTON, Mass.--(BUSINESS WIRE)--

HarborOne Bancorp, Inc. (the “Company”) (NASDAQ: HONE), the holding company for HarborOne Bank (the “Bank”), announced third quarter 2017 net income of $2.8 million, or $0.09 per share, as compared to $3.2 million, or $0.10 per share, for the prior quarter and net income of $3.6 million, or $0.11 per share, for the same quarter last year.

The Company reported net income of $8.8 million, or $0.28 per share, for the nine months ended September 30, 2017 compared to net income of $3.0 million for the same period in 2016. The Company’s year-to-date results for 2016 included a one-time contribution of $4.8 million to The HarborOne Foundation; excluding this non-recurring expense, net income would have been $5.9 million.

James W. Blake, President and CEO stated, “We continue to capitalize on our commercial loan growth strategy. Despite a very competitive market, we increased our commercial real estate loans 26% and commercial loans 11% since year end which continues to improve our year-to-date margins.”

Net Interest Income
The Company’s net interest and dividend income was $19.3 million for the quarter ended September 30, 2017, up $1.1 million, or 5.8%, from $18.2 million for the quarter ended June 30, 2017 and up $3.4 million, or 21.2%, from $15.9 million for the quarter ended September 30, 2016. The interest rate spread and net interest margin on a tax-equivalent basis were 2.91% and 3.07%, respectively, for the quarter ended September 30, 2017 compared to 2.87% and 3.03%, respectively, for the quarter ended June 30, 2017 and 2.78% and 2.93%, respectively, for the quarter ended September 30, 2016.

The increase in net interest income from the previous quarter reflects a $1.5 million, or 6.9%, increase in total interest and dividend income and an increase of $448,000, or 12.1% in total interest expense. The increase in interest and dividend income is primarily due to a $680,000 prepayment penalty and commercial loan growth that provided an increase in average outstanding loans of $61.0 million. The yield on loans increased to 3.95% for the quarter ended September 30, 2017 from 3.82% for the quarter ended June 30, 2017. The increase in interest expense is due to an increase in average interest-bearing deposits of $40.4 million with a 4 basis point increase in the cost of those funds and an increase in average FHLB advances of $33.0 million offset by a 6 basis point decrease in total cost of borrowed funds.

The increase in net interest income over the prior year quarter is primarily due to growth in the Company’s average loan balances to $2.19 billion from $1.98 billion and an increase in the yield on loans to 3.95% from 3.61%, again primarily driven by commercial loan growth as well as higher rates on variable rate loans and the prepayment penalty. Total interest and dividend income increased $4.3 million, or 22.2%, and total interest expense increased $885,000, or 27.1%.

Noninterest Income
Noninterest income increased to $14.6 million for the quarter ended September 30, 2017, up $328,000, or 2.3%, from the quarter ended June 30, 2017. The increase is primarily due to changes in the mortgage servicing rights fair value adjustments, which largely reflect fluctuations in the 10-year Constant Maturity Treasury rate and residential real estate mortgage loan rates. Changes in the mortgage servicing rights fair value adjustments amounted to a $488,000 decrease in the third quarter of 2017 compared to a $1.1 million decrease in the second quarter of 2017 and a $351,000 increase in the third quarter of 2016. Noninterest income decreased $6.2 million, or 29.9%, as compared to the quarter ended September 30, 2016, primarily driven by a decrease of $6.3 million, or 37.2%, in mortgage banking income. Compared to the same quarter prior year, mortgage originations by Merrimack Mortgage Company, LLC decreased 29.7% in 2017 primarily as a result of higher residential mortgage interest rates and reduced refinance volume in 2017.

Noninterest Expense
Noninterest expenses were $28.4 million for the quarter ended September 30, 2017, an increase of $1.6 million, or 5.8%, from the quarter ended June 30, 2017. The increase was primarily due to the increase in compensation and benefits of $1.0 million or 6.2%, in equity awards expense relating to awards given in the current quarter that will be expensed over three years, and an increase in commissions consistent with the increase in mortgage originations from the second to third quarter of 2017. Noninterest expenses decreased $1.2 million, or 4.0%, from the quarter ended September 30, 2016 primarily due to a decrease in mortgage loan originations which contributed to a decrease in compensation and benefits of $1.5 million and a decrease of $1.4 million in loan expense. The decreases were offset by increases in occupancy expense of $493,000, marketing expense of $544,000 and professional fees expense of $417,000.

Asset Quality
The Company recorded a provision for loan losses of $921,000 for the quarter ended September 30, 2017, $470,000 for the quarter ended June 30, 2017 and $1.7 million for the quarter ended September 30, 2016. The provisions for the third quarter of 2017 were due to commercial loan growth and an additional specific reserve of $375,000 on a substandard commercial loan. Second quarter provisions were a result of commercial loan growth. The provisions for the third quarter 2016 reflected commercial loan growth as well as an increase in net charge-offs in the quarter ended and the establishment of a $360,000 specific reserve for a substandard commercial loan. In the first quarter of 2017, the Company adjusted general reserve allocations for commercial real estate and commercial loans based on updated peer data. The updated peer data resulted in lower general reserve rates on these loan types; however, this decrease was partially offset by commercial loan growth. Changes in the provision for loan losses are 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 $17.9 million, or 0.84%, of total loans at September 30, 2017, compared to $17.2 million, or 0.82%, of total loans, at June 30, 2017 and $15.8 million, or 0.82%, of total loans at September 30, 2016. Net charge-offs totaled $169,000 for the quarter ended September 30, 2017, or 0.03%, of average loans outstanding on an annualized basis, compared to $173,000, or 0.03%, for the quarter ended June 30, 2017 and $317,000, or 0.07%, for the quarter ended September 30, 2016.

Nonperforming assets were $20.6 million at September 30, 2017 compared to $22.5 million at June 30, 2017 and $26.0 million at September 30, 2016. Nonperforming assets as a percentage of total assets were 0.78% at September 30, 2017, 0.86% at June 30, 2017 and 1.11% at September 30, 2016. The steady decline reflects the Company’s continued efforts to minimize nonperforming assets through diligent collection efforts, prudent workout arrangements and strong underwriting.

Balance Sheet
Total assets increased $27.4 million, or 1.0%, to $2.66 billion at September 30, 2017 from $2.63 billion at June 30, 2017. Net loans increased $25.1 million, or 1.2%, to $2.10 billion at September 30, 2017 from $2.08 billion at June 30, 2017. The net increase in loans for the three months ended September 30, 2017 was primarily due to increases of $30.7 million in commercial real estate loans and $9.8 million in construction loans partially offset by a decrease of $1.7 million in residential real estate loans, $2.6 million in commercial and industrial loans, and $9.7 million in consumer loans. Loans held for sale increased $4.4 million, or 4.7%, to $96.2 million at September 30, 2017 from $91.9 million at June 30, 2017 due to the seasonal increase in residential mortgage originations.

Total deposits increased $9.8 million, or 0.5%, to $2.00 billion at September 30, 2017 from $1.99 billion at June 30, 2017. Compared to the prior quarter non-certificate accounts increased $31.0 million, brokered deposits decreased $19.7 million and term certificate accounts decreased $1.6 million. The increase in non-certificate accounts was primarily due to an increase in money market accounts. Borrowings were $276.4 million at September 30, 2017 and $265.1 million at June 30, 2017.

Total stockholders’ equity was $340.6 million at September 30, 2017 compared to $336.6 million at June 30, 2017 and $327.9 million at September 30, 2016. The tangible common equity to tangible assets ratio was 12.36% at September 30, 2017, 12.34% at June 30, 2017 and 13.47% at September 30, 2016. At September 30, 2017, 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 33 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; operational risks including, but not limited to, cybersecurity, fraud and natural disasters; 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 Annual Report on Form 10-K 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 the tax equivalent basis for yields, 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,
(Dollars in thousands) 2017 2017 2017 2016 2016
 
Assets
 
Cash and due from banks $ 15,393 $ 17,492 $ 18,621 $ 16,464 $ 15,706
Short-term investments   79,412     84,105     83,778     33,751     3,549  
Total cash and cash equivalents 94,805 101,597 102,399 50,215 19,255
 
Securities available for sale, at fair value 166,122 160,795 165,348 136,469 115,397
Securities held to maturity, at amortized cost 47,752 45,660 46,531 47,877 49,213
Federal Home Loan Bank stock, at cost 16,356 16,356 17,863 15,749 15,255
Loans held for sale, at fair value 96,201 91,849 51,932 86,443 114,054
Loans:
Residential real estate 769,418 771,121 765,368 770,935 774,404
Commercial real estate 623,054 592,325 557,174 495,801 450,945
Construction   76,668     66,908     69,134     58,443     40,438  
Total mortgage loans on real estate 1,469,140 1,430,354 1,391,676 1,325,179 1,265,787
Commercial 111,627 114,234 111,849 100,501 88,718
Consumer   533,707     543,394     551,603     563,104     555,874  
Loans 2,114,474 2,087,982 2,055,128 1,988,784 1,910,379
Less: Allowance for loan losses (17,933 ) (17,181 ) (16,884 ) (16,968 ) (15,832 )
Net deferred loan costs   8,035     8,682     9,041     9,931     10,336  
Net loans 2,104,576 2,079,483 2,047,285 1,981,747 1,904,883
Mortgage servicing rights, at fair value 20,376 20,313 20,839 20,333 15,534
Goodwill and other intangible assets 13,519 13,541 13,563 13,585 13,607
Other assets   99,752     102,476     100,384     95,892     99,935  
Total assets $ 2,659,459   $ 2,632,070   $ 2,566,144   $ 2,448,310   $ 2,347,133  
 
Liabilities and Stockholders' Equity
 
Deposits:
NOW and demand deposit accounts $ 395,728 $ 395,150 $ 392,012 $ 365,869 $ 358,628
Regular savings and club accounts 404,465 398,883 338,338 316,947 317,198
Money market deposit accounts 666,613 641,776 646,123 595,211 596,377
Brokered deposits 73,127 92,803 77,774 54,045 20,236
Term certificate accounts   463,612     465,179     470,490     472,681     442,472  
Total deposits 2,003,545 1,993,791 1,924,737 1,804,753 1,734,911
Short-term borrowed funds 10,000 30,000 75,000 80,000 50,000
Long-term borrowed funds 266,366 235,117 200,118 195,119 195,120
Other liabilities and accrued expenses   38,947     36,527     33,554     39,054     39,188  
Total liabilities   2,318,858     2,295,435     2,233,409     2,118,926     2,019,219  
 
Common stock 327 321 321 321 321
Additional paid-in capital 145,525 144,705 144,555 144,420 144,175
Unearned compensation - ESOP (10,833 ) (10,982 ) (11,130 ) (11,278 ) (11,575 )
Retained earnings 205,997 203,159 199,946 197,211 194,275
Accumulated other comprehensive income (loss)   (415 )   (568 )   (957 )   (1,290 )   718  
Total stockholders' equity   340,601     336,635     332,735     329,384     327,914  
 
Total liabilities and stockholders' equity $ 2,659,459   $ 2,632,070   $ 2,566,144   $ 2,448,310   $ 2,347,133  
 
                             

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, except per share amounts) 2017 2017 2017 2016 2016
 
Interest and dividend income:
Interest and fees on loans $ 20,990 $ 19,640 $ 19,135 $ 18,092 $ 17,144
Interest on loans held for sale 796 620 546 788 866
Interest on securities 1,334 1,332 1,216 1,002 988
Other interest and dividend income   294     320     252     167   164
Total interest and dividend income   23,414     21,912     21,149     20,049   19,162
 
Interest expense:
Interest on deposits 2,812 2,567 2,432 2,283 2,092
Interest on borrowed funds   1,333     1,130     1,285     1,211   1,168
Total interest expense   4,145     3,697     3,717     3,494   3,260
 
Net interest and dividend income 19,269 18,215 17,432 16,555 15,902
 
Provision for loan losses   921     470     265     1,456   1,710
 
Net interest income, after provision for loan losses   18,348     17,745     17,167     15,099   14,192
 
Noninterest income:
Mortgage banking income:
Changes in mortgage servicing rights fair value (488 ) (1,052 ) (442 ) 2,970 351
Other   11,071     11,200     7,846     12,404   16,513
Total mortgage banking income 10,583 10,148 7,404 15,374 16,864
 
Deposit account fees 3,172 3,071 2,845 2,979 3,010
Income on retirement plan annuities 114 113 110 111 111
Gain on sale of consumer loans 78
Bank-owned life insurance income 260 261 257 263 275
Other income   498     706     760     557   609
Total noninterest income   14,627     14,299     11,454     19,284   20,869
 
Noninterest expenses:
Compensation and benefits 17,325 16,319 14,924 18,521 18,812
Occupancy and equipment 2,951 2,724 2,986 2,516 2,458
Data processing 1,547 1,528 1,522 1,557 1,450
Loan expense 1,884 1,882 1,363 2,710 3,316
Marketing 1,136 1,041 482 835 592
Professional fees 1,126 1,080 930 822 709
Deposit insurance 397 446 462 208 437
Other expenses   2,072     1,858     1,736     2,194   1,835
Total noninterest expenses   28,438     26,878     24,405     29,363   29,609
 
Income before income taxes 4,537 5,166 4,216 5,020 5,452
 
Income tax provision   1,699     1,953     1,481     2,084   1,900
 
Net income $ 2,838   $ 3,213   $ 2,735   $ 2,936 $ 3,552
 
Earnings per common share:
Basic $ 0.09 $ 0.10 $ 0.09 $ 0.09 $ 0.11
Diluted $ 0.09 $ 0.10 $ 0.09 $ 0.09 $ 0.11
Weighted average shares outstanding:
Basic 31,303,281 31,013,002 30,998,163 30,973,588 30,943,808
Diluted 31,303,281 31,013,002 30,998,163 30,973,588 30,943,808
 
                       

HarborOne Bancorp, Inc.

Consolidated Statements of Net Income

(Unaudited)

 
Nine Months Ended September 30,
(Dollars in thousands, except per share amounts) 2017 2016 $ Change % Change
 
Interest and dividend income:
Interest and fees on loans $ 59,765 $ 49,080 $ 10,685 21.8 %
Interest on loans held for sale 1,962 1,907 55 2.9
Interest on securities 3,882 3,110 772 24.8
Other interest and dividend income   866     610     256   42.0
Total interest and dividend income   66,475     54,707     11,768   21.5
 
Interest expense:
Interest on deposits 7,811 6,427 1,384 21.5
Interest on borrowed funds   3,748     3,840     (92 ) (2.4 )
Total interest expense   11,559     10,267     1,292   12.6
 
Net interest and dividend income 54,916 44,440 10,476 23.6
 
Provision for loan losses   1,656     2,716     (1,060 ) (39.0 )
 
Net interest income, after provision for loan losses   53,260     41,724     11,536   27.6
 
Noninterest income:
Mortgage banking income:
Changes in mortgage servicing rights fair value (1,982 ) (4,100 ) 2,118 51.7
Other   30,117     39,725     (9,608 ) (24.2 )
Total mortgage banking income 28,135 35,625 (7,490 ) (21.0 )
 
Deposit account fees 9,088 8,685 403 4.6
Income on retirement plan annuities 337 325 12 3.7
Gain on sale of consumer loans 78 79 (1 ) (1.3 )
Gain on sale and call of securities, net 283 (283 ) (100.0 )
Bank-owned life insurance income 778 825 (47 ) (5.7 )
Other income   1,964     1,997     (33 ) (1.7 )
Total noninterest income   40,380     47,819     (7,439 ) (15.6 )
 
Noninterest expenses:
Compensation and benefits 48,568 50,552 (1,984 ) (3.9 )
Occupancy and equipment 8,661 7,705 956 12.4
Data processing 4,597 4,310 287 6.7
Loan expense 5,129 7,036 (1,907 ) (27.1 )
Marketing 2,659 1,764 895 50.7
Professional fees 3,136 1,888 1,248 66.1
Deposit insurance 1,305 1,258 47 3.7
Prepayment penalties on Federal Home Loan Bank 400 (400 ) (100.0 )
Charitable foundation contributions 4,820 (4,820 ) (100.0 )
Other expenses   5,666     5,602     64   1.1
Total noninterest expenses   79,721     85,335     (5,614 ) (6.6 )
 
Income before income taxes 13,919 4,208 9,711 230.8
 
Income tax provision   5,133     1,213     3,920   323.2
 
Net income $ 8,786   $ 2,995   $ 5,791   193.4 %
 
Earnings per common share:
Basic $ 0.28 N/A N/A
Diluted $ 0.28 N/A N/A
Weighted average shares outstanding:
Basic 31,109,104 N/A N/A
Diluted 31,109,104 N/A N/A
                                           

HarborOne Bancorp, Inc.

Average Balances / Yields

(Unaudited)

 
Quarters Ended
September 30, 2017 June 30, 2017 September 30, 2016
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) $ 2,190,303 $ 21,786 3.95 % $ 2,129,280 $ 20,260 3.82 % $ 1,983,249 $ 18,010 3.61 %
Investment securities (2) 206,761 1,409 2.70 209,691 1,408 2.69 166,816 1,065 2.54
Other interest-earning assets   102,589   294 1.14   81,370   320 1.58   18,030   164 3.62
Total interest-earning assets 2,499,653   23,489 3.73 2,420,341   21,988 3.64 2,168,095   19,239 3.53
Noninterest-earning assets   128,966   129,281   130,498
Total assets $ 2,628,619 $ 2,549,622 $ 2,298,593
Interest-bearing liabilities:
Savings accounts $ 402,470 195 0.19 $ 351,948 151 0.17 $ 319,202 139 0.17
NOW accounts 125,636 20 0.06 128,794 20 0.06 120,704 19 0.06
Money market accounts 646,873 970 0.59 654,127 821 0.50 612,761 685 0.44
Certificates of deposit 463,077 1,382 1.18 469,249 1,369 1.17 434,519 1,246 1.14
Brokered deposit   82,976   245 1.17   76,555   206 1.08   549   3 2.17
Total interest-bearing deposits 1,721,032 2,812 0.65 1,680,673 2,567 0.61 1,487,735 2,092 0.56
FHLB advances   287,858   1,333 1.84   254,832   1,130 1.78   232,587   1,168 2.00
Total interest-bearing liabilities 2,008,890   4,145 0.82 1,935,505   3,697 0.77 1,720,322   3,260 0.75
Noninterest-bearing liabilities:
Noninterest-bearing deposits 251,579 250,654 217,930
Other noninterest-bearing liabilities   30,815   29,432   32,888
Total liabilities 2,291,284 2,215,591 1,971,140
Total equity   337,335   334,031   327,453
Total liabilities and equity $ 2,628,619 $ 2,549,622 $ 2,298,593
Tax equivalent net interest income 19,344 18,291 15,979
Tax equivalent interest rate spread (3) 2.91 % 2.87 % 2.78 %
Less: tax equivalent adjustment   75   76   77
Net interest income as reported $ 19,269 $ 18,215 $ 15,902
Net interest-earning assets (4) $ 490,763 $ 484,836 $ 447,773
Net interest margin (5) 3.06 % 3.02 % 2.92 %
Tax equivalent effect 0.01 0.01 0.01
Net interest margin on a fully tax equivalent basis 3.07 % 3.03 % 2.93 %
Average interest-earning assets to average interest-bearing liabilities 124.43 % 125.05 % 126.03 %

(1) Includes loans held for sale, nonaccruing loan balances and interest received on such loans.
(2) Includes securities available for sale and securities held to maturity. 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 2.56%, 2.55%, and 2.36%, 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, 2017 September 30, 2016
Average Average
Outstanding Yield/ Outstanding Yield/
Balance Interest Cost (6) Balance Interest Cost (6)
(Dollars in thousands)
Interest-earning assets:
Loans (1) $ 2,144,071 $ 61,727 3.85 % $ 1,889,578 $ 50,987 3.60 %
Investment securities (2) 204,693 4,109 2.68 174,692 3,344 2.56
Other interest-earning assets   79,354   866 1.46   48,977   610 1.65
Total interest-earning assets 2,428,118   66,702 3.67 2,113,247   54,941 3.47
Noninterest-earning assets   132,054   127,996
Total assets $ 2,560,172 $ 2,241,243
Interest-bearing liabilities:
Savings accounts $ 360,660 497 0.18 $ 312,672 407 0.17
NOW accounts 125,902 59 0.06 119,495 56 0.06
Money market accounts 642,764 2,544 0.53 628,669 2,112 0.45
Certificates of deposit 467,342 4,101 1.17 446,624 3,849 1.15
Brokered deposit   75,140   610 1.08   184   3 2.18
Total interest-bearing deposits 1,671,808 7,811 0.62 1,507,644 6,427 0.57
FHLB advances   278,181   3,748 1.80   245,693   3,840 2.09
Total interest-bearing liabilities 1,949,989   11,559 0.79 1,753,337   10,267 0.78
Noninterest-bearing liabilities:
Noninterest-bearing deposits 246,512 218,960
Other noninterest-bearing liabilities   29,750   29,451
Total liabilities 2,226,251 2,001,748
Total equity   333,921   239,495
Total liabilities and equity $ 2,560,172 $ 2,241,243
Tax equivalent net interest income 55,143 44,674
Tax equivalent interest rate spread (3) 2.88 % 2.69 %
Less: tax equivalent adjustment   227   234
Net interest income as reported $ 54,916 $ 44,440
Net interest-earning assets (4) $ 478,129 $ 359,910
Net interest margin (5) 3.02 % 2.81 %
Tax equivalent effect 0.02 0.01
Net interest margin on a fully tax equivalent basis 3.04 % 2.82 %
Average interest-earning assets to average interest-bearing liabilities 124.52 % 120.53 %

(1) Includes loans held for sale, nonaccruing loan balances and interest received on such loans.
(2) Includes securities available for sale and securities held to maturity. 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 2.54% and 2.38% for the nine months ended September 30, 2017 and 2016, 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, 2017 June 30, 2017 March 31, 2017 December 31, 2016 September 30, 2016
(In thousands)
Interest-earning assets:
Loans (1) $ 2,190,303 $ 2,129,280 $ 2,111,768 $ 2,055,444 $ 1,983,249
Investment securities (2) 206,761 209,691 197,525 168,485 166,816
Other interest-earning assets   102,589   81,370   67,428   38,912   18,030
Total interest-earning assets 2,499,653 2,420,341 2,376,721 2,262,841 2,168,095
Noninterest-earning assets   128,966   129,281   124,148   126,899   130,498
Total assets $ 2,628,619 $ 2,549,622 $ 2,500,869 $ 2,389,740 $ 2,298,593
Interest-bearing liabilities:
Savings accounts $ 402,470 $ 351,948 $ 326,731 $ 319,166 $ 319,202
NOW accounts 125,636 128,794 123,340 124,134 120,704
Money market accounts 646,873 654,127 627,073 602,263 612,761
Certificates of deposit 463,077 469,249 469,774 458,491 434,519
Brokered deposit   82,976   76,555   65,698   39,689   549
Total interest-bearing deposits 1,721,032 1,680,673 1,612,616 1,543,743 1,487,735
FHLB advances   287,858   254,832   291,896   257,568   232,587
Total interest-bearing liabilities 2,008,890 1,935,505 1,904,512 1,801,311 1,720,322
Noninterest-bearing liabilities:
Noninterest-bearing deposits 251,579 250,654 237,056 227,918 217,930
Other noninterest-bearing liabilities   30,815   29,432   28,981   31,055   32,888
Total liabilities 2,291,284 2,215,591 2,170,549 2,060,284 1,971,140
Total equity   337,335   334,031   330,320   329,456   327,453
Total liabilities and equity $ 2,628,619 $ 2,549,622 $ 2,500,869 $ 2,389,740 $ 2,298,593
 
Annualized Yield Trend - Quarters Ended
September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016 September 30, 2016
Interest-earning assets:
Loans (1) 3.95 % 3.82 % 3.78 % 3.65 % 3.61 %
Investment securities (2) 2.70 % 2.69 % 2.65 % 2.55 % 2.54 %
Other interest-earning assets 1.14 % 1.58 % 1.52 % 1.71 % 3.62 %
Total interest-earning assets 3.73 % 3.64 % 3.62 % 3.54 % 3.53 %
 
Interest-bearing liabilities:
Savings accounts 0.19 % 0.17 % 0.19 % 0.18 % 0.17 %
NOW accounts 0.06 % 0.06 % 0.06 % 0.06 % 0.06 %
Money market accounts 0.59 % 0.50 % 0.49 % 0.46 % 0.44 %
Certificates of deposit 1.18 % 1.17 % 1.17 % 1.16 % 1.14 %
Brokered deposit 1.17 % 1.08 % 0.98 % 0.92 % 2.17 %
Total interest-bearing deposits 0.65 % 0.61 % 0.61 % 0.59 % 0.56 %
FHLB advances 1.84 % 1.78 % 1.79 % 1.87 % 2.00 %
Total interest-bearing liabilities 0.82 % 0.77 % 0.79 % 0.77 % 0.75 %

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

                               

HarborOne Bancorp, Inc.

Selected Financial Highlights

(Unaudited)

 
Quarters Ended
September 30, June 30, March 31, December 31, September 30,
Performance Ratios (annualized): 2017 2017 2017 2016

 

2016
 
Return (loss) on average assets (ROAA) 0.43 % 0.50 % 0.44 % 0.49 % 0.62 %
 
Return (loss) on average equity (ROAE) 3.37 % 3.85 % 3.31 % 3.56 % 4.34 %
 
Efficiency ratio (1) 83.83 % 82.60 % 84.41 % 81.87 % 80.46 %

(1) This non-GAAP measure represents noninterest expense divided by the sum of net interest income and noninterest income

                     
At or for the Quarters Ended
September 30, June 30, March 31, December 31, September 30,
Asset Quality 2017 2017 2017 2016 2016
(Dollars in thousands)
 
Total nonperforming assets $ 20,627 $ 22,522 $ 23,471 $ 22,946 $ 25,992
 
Nonperforming assets to total assets 0.78 % 0.86 % 0.91 % 0.94 % 1.11 %
 
Allowance for loan losses to total loans 0.84 % 0.82 % 0.82 % 0.85 % 0.82 %
 
Net charge offs $ 169 $ 173 $ 349 $ 320 $ 317
 
Annualized net charge offs/average loans 0.03 % 0.03 % 0.07 % 0.06 % 0.07 %
 
Allowance for loan losses to nonperforming loans 91.47 % 80.04 % 78.17 % 80.12 % 65.92 %
                     
September 30, June 30, March 31, December 31, September 30,
Capital and Share Related 2017 2017 2017 2016 2016
 
Common stock outstanding 32,662,295 32,120,880 32,120,880 32,120,880 32,120,880
 
Book value per share $ 10.43 $ 10.48 $ 10.36 $ 10.25 $ 10.21
 
Tangible book value per share (1) $ 10.01 $ 10.06 $ 9.94 $ 9.83 $ 9.79
 
Tangible common equity / tangible assets (2) 12.36 % 12.34 % 12.50 % 12.97 % 13.47 %

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

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

Source: HarborOne Bancorp, Inc.