Press Release

HarborOne Bancorp, Inc. Announces 2018 First Quarter Earnings

Company Release - 4/19/2018 8:59 AM ET

BROCKTON, Mass.--(BUSINESS WIRE)-- HarborOne Bancorp, Inc. (the “Company”) (NASDAQ: HONE), the holding company for HarborOne Bank (the “Bank”), announced net income of $2.3 million, or $0.07 per basic and diluted share, for the first quarter of 2018, compared to $1.6 million, or $0.05 per basic and diluted share, for the prior quarter and net income of $2.7 million, or $0.09 per basic and diluted share, for the same quarter last year.

Selected highlights for the first quarter of 2018 include:

  • Net interest margin increased to 3.26% from 3.07% for the prior quarter and 2.99% for the first quarter of 2017.
  • Announcement of an agreement to acquire Coastway Bancorp, Inc. (“Coastway”) in an all cash transaction valued at approximately $125.6 million.
  • Total commercial loans (including commercial construction) grew by 6% in the first quarter.
  • Total deposits grew by 6% in the first quarter and amounted to $2.13 billion at March 31, 2018.

Additionally, effective April 3, 2018, the Bank’s wholly owned subsidiary, Merrimack Mortgage Company, LLC, became HarborOne Mortgage, LLC (“HarborOne Mortgage”). HarborOne Mortgage consolidates the Bank’s residential mortgage lending division with the legacy Merrimack Mortgage Company, LLC.

The increase in net income from the prior quarter primarily reflects a $692,000 increase in net interest income, a $2.1 million decrease in noninterest expense and a $726,000 decrease in income tax provision partially offset by a $2.8 million decrease in noninterest income.

The Coastway transaction is expected to close in the second half of 2018 and is subject to customary closing conditions, including the approval of the stockholders of Coastway and required regulatory approvals.

James W. Blake, President and CEO stated, “We are excited as we start 2018, looking forward to welcoming the Coastway customers, employees and communities to HarborOne. We anticipate another robust year, despite a challenging residential mortgage market, with a continued focus on organic balance sheet growth and building commercial loan relationships.”

Net Interest Income
The Company’s net interest and dividend income was $20.1 million for the quarter ended March 31, 2018, up $692,000, or 3.6%, from $19.4 million for the quarter ended December 31, 2017 and up $2.7 million, or 15.4%, from $17.4 million for the quarter ended March 31, 2017. The tax-equivalent interest rate spread and net interest margin were 3.07% and 3.26%, respectively, for the quarter ended March 31, 2018 compared to 2.90% and 3.07%, respectively, for the quarter ended December 31, 2017 and 2.83% and 2.99%, respectively, for the quarter ended March 31, 2017.

The increase in net interest income from the previous quarter reflects an $876,000, or 3.7%, increase in total interest and dividend income and an increase of $184,000, or 4.2% in total interest expense. The increase in interest and dividend income is primarily due to commercial loan growth that provided an increase in average outstanding loans of $57.7 million partially offset by decreases in the average balances of residential real estate and consumer loans. The yield on loans was 4.13% for the quarter ended March 31, 2018 and 3.94% for the quarter ended December 31, 2017. The increase in interest expense is due to an increase in average interest-bearing deposits of $14.4 million with a 10 basis point increase in the cost of those funds offset by a decrease in average FHLB advances of $26.7 million and a 7 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 $2.25 billion from $2.11 billion and an increase in the yield on loans to 4.13% from 3.78%, again primarily driven by commercial loan growth as well as higher rates on variable rate loans. Total interest and dividend income increased $3.5 million, or 16.5%, and total interest expense increased $843,000, or 22.7%, over the prior year quarter as a result of rising interest rates.

Noninterest Income
Noninterest income decreased to $11.3 million for the quarter ended March 31, 2018, down $2.8 million, or 19.8%, from the quarter ended December 31, 2017. The decrease is primarily due to a decrease in mortgage banking income of $1.8 million as mortgage originations decreased 39.4% from the prior quarter. Changes in the mortgage servicing rights fair value amounted to a $1.0 million increase in the first quarter of 2018 compared to a $74,000 decrease in the fourth quarter of 2017. Also, other income decreased $760,000 as the prior quarter income included a $1.2 million reversal of contingent consideration for the HarborOne Mortgage earn out that was settled in full in the fourth quarter of 2017.

Noninterest income decreased $105,000, or 0.9%, as compared to the quarter ended March 31, 2017. The change in mortgage servicing rights fair value was an increase of $1.5 million, offset by a $1.6 million decrease in other mortgage banking income during the prior year quarter. Compared to the same quarter prior year, mortgage originations by HarborOne Mortgage decreased 13.9% in 2018 primarily as a result of higher residential mortgage interest rates, low housing inventories and reduced refinancing volume.

Noninterest Expense
Noninterest expenses were $27.6 million for the quarter ended March 31, 2018, a decrease of $2.1 million, or 7.1%, from the quarter ended December 31, 2017 due to decreases in compensation and benefits of $1.3 million, $490,000 in loan expense and $538,000 in other expenses. The decrease in compensation and benefits and loan expenses reflects the decrease in loan production volumes. The decrease in other expenses primarily reflects a fourth quarter expense accrual of $925,000 to freeze the director postretirement benefit plan that was partially offset by additional expenses in the first quarter related to the acquisition of Coastway.

Noninterest expenses increased $3.2 million, or 13.1%, from the quarter ended March 31, 2017. The increase was primarily due to increases in compensation and benefits of $1.4 million, marketing of $517,000, and other expenses of $962,000. The compensation and benefits and other expense increase reflects expenses related to the management and Board equity plans that were established in August 2017. The first quarter of 2018 includes $974,000 in compensation and benefits related to the management’s equity plan expense and $392,000 in other expenses related to the Board’s equity plan. There were no such expenses in the first quarter of 2017. Also contributing to the increase in other expenses was $486,000 in expenses related to the Coastway acquisition.

Income Tax Provision
The effective tax rate was 26.5% for the quarter ended March 31, 2018, 49.2% for the quarter ended December 31, 2017 and 35.1% for the quarter ended March 31, 2017. The enactment of the Tax Cuts and Jobs Act of 2017 resulted in significant changes to the U.S. tax code, including a reduction in the top corporate income tax rate from 35% to 21% effective January 1, 2018. As a result of the reduction in tax rate, the Company revalued its net deferred tax asset and recorded a one-time additional $243,000 tax provision in the fourth quarter of 2017 and reduced the effective tax rate in 2018.

Asset Quality
The Company recorded a provision for loan losses of $808,000 for the quarter ended March 31, 2018, $760,000 for the quarter ended December 31, 2017 and $265,000 for the quarter ended March 31, 2017. The provisions in these quarters were primarily due to 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 $18.9 million, or 0.84%, of total loans at March 31, 2018, compared to $18.5 million, or 0.84%, of total loans, at December 31, 2017 and $16.9 million, or 0.82%, of total loans at March 31, 2017. Net charge-offs totaled $434,000 for the quarter ended March 31, 2018, or 0.08%, of average loans outstanding on an annualized basis, compared to $204,000, or 0.04%, for the quarter ended December 31, 2017 and $349,000, or 0.07%, for the quarter ended March 31, 2017.

Nonperforming assets were $17.2 million at March 31, 2018 compared to $18.6 million at December 31, 2017 and $23.5 million at March 31, 2017. Nonperforming assets as a percentage of total assets were 0.63% at March 31, 2018, 0.69% at December 31, 2017 and 0.91% at March 31, 2017. 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 $50.7 million, or 1.9%, to $2.74 billion at March 31, 2018 from $2.68 billion at December 31, 2017. Net loans increased $37.8 million, or 1.7%, to $2.21 billion at March 31, 2018 from $2.18 billion at December 31, 2017. The net increase in loans for the three months ended March 31, 2018 was primarily due to increases of $31.7 million in commercial real estate loans, $16.3 million in construction loans and $1.5 million in commercial and industrial loans partially offset by a decrease of $4.6 million in residential real estate loans and $6.2 million in consumer loans. Loans held for sale decreased $25.3 million, or 42.6%, to $34.1 million at March 31, 2018 from $59.5 million at December 31, 2017 due to the decrease in residential mortgage originations.

Total deposits increased $113.5 million, or 5.6%, to $2.13 billion at March 31, 2018 from $2.01 billion at December 31, 2017. Compared to the prior quarter, non-certificate accounts increased $27.5 million, term certificate accounts increased $89.3 million and brokered deposits decreased $3.3 million. The increase in certificate accounts was in part due to certificate promotions during the quarter. Borrowings were $226.4 million at March 31, 2018 and $290.4 million at December 31, 2017.

Total stockholders’ equity was $344.9 million at March 31, 2018 compared to $343.5 million at December 31, 2017 and $332.7 million at March 31, 2017. The tangible common equity to tangible assets ratio was 12.17% at March 31, 2018, 12.35% at December 31, 2017 and 12.50% at March 31, 2017. At March 31, 2018, 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. HarborOne Mortgage, 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, the Company and Coastway’s ability to achieve the synergies and value creation contemplated by the proposed acquisition; the Company and Coastway’s ability to successfully integrate operations in the proposed acquisition; the effect of the announcement of the proposed acquisition on the ability of Coastway to maintain relationships with its key partners, customers and employees, and on its operating business generally; 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)

 
March 31, December 31, September 30, June 30, March 31,
(Dollars in thousands) 2018 2017 2017 2017 2017
 
Assets
 
Cash and due from banks $ 15,205 $ 16,348 $ 15,393 $ 17,492 $ 18,621
Short-term investments   92,105     64,443     79,412     84,105     83,778  
Total cash and cash equivalents 107,310 80,791 94,805 101,597 102,399
 
Securities available for sale, at fair value 182,173 170,853 166,122 160,795 165,348
Securities held to maturity, at amortized cost 46,095 46,869 47,752 45,660 46,531
Federal Home Loan Bank stock, at cost 13,538 15,532 16,356 16,356 17,863
Loans held for sale, at fair value 34,129 59,460 96,201 91,849 51,932
Loans:
Residential real estate 762,361 766,917 769,418 771,121 765,368
Commercial real estate 687,121 655,419 623,054 592,325 557,174
Construction   144,949     128,643     76,668     66,908     69,134  
Total mortgage loans on real estate 1,594,431 1,550,979 1,469,140 1,430,354 1,391,676
Commercial 111,013 109,523 111,627 114,234 111,849
Consumer   521,634     527,820     533,707     543,394     551,603  
Loans 2,227,078 2,188,322 2,114,474 2,087,982 2,055,128
Less: Allowance for loan losses (18,863 ) (18,489 ) (17,933 ) (17,181 ) (16,884 )
Net deferred loan costs   6,075     6,645     8,035     8,682     9,041  
Net loans 2,214,290 2,176,478 2,104,576 2,079,483 2,047,285
Mortgage servicing rights, at fair value 22,696 21,092 20,376 20,313 20,839
Goodwill and other intangible assets 13,675 13,497 13,519 13,541 13,563
Other assets   101,671     100,348     99,752     102,476     100,384  
Total assets $ 2,735,577   $ 2,684,920   $ 2,659,459   $ 2,632,070   $ 2,566,144  
 
Liabilities and Stockholders' Equity
 
Deposits:
NOW and demand deposit accounts $ 419,776 $ 395,153 $ 395,728 $ 395,150 $ 392,012
Regular savings and club accounts 378,818 356,300 404,465 398,883 338,338
Money market deposit accounts 701,360 721,021 666,613 641,776 646,123
Brokered deposits 70,176 73,490 73,127 92,803 77,774
Term certificate accounts   557,082     467,774     463,612     465,179     470,490  
Total deposits 2,127,212 2,013,738 2,003,545 1,993,791 1,924,737
Short-term borrowed funds 44,000 10,000 30,000 75,000
Long-term borrowed funds 226,364 246,365 266,366 235,117 200,118
Other liabilities and accrued expenses   37,144     37,333     38,947     36,527     33,554  
Total liabilities   2,390,720     2,341,436     2,318,858     2,295,435     2,233,409  
 
Common stock 327 327 327 321 321
Additional paid-in capital 148,559 147,060 145,525 144,705 144,555
Unearned compensation - ESOP (10,536 ) (10,685 ) (10,833 ) (10,982 ) (11,130 )
Retained earnings 209,946 207,590 205,997 203,159 199,946
Treasury stock (742 ) (280 )
Accumulated other comprehensive loss   (2,697 )   (528 )   (415 )   (568 )   (957 )
Total stockholders' equity   344,857     343,484     340,601     336,635     332,735  
 
Total liabilities and stockholders' equity $ 2,735,577   $ 2,684,920   $ 2,659,459   $ 2,632,070   $ 2,566,144  
 
                             

HarborOne Bancorp, Inc.

Consolidated Statements of Net Income - Trend

(Unaudited)

 
Quarters Ended
March 31, December 31, September 30, June 30, March 31,
(Dollars in thousands, except per share amounts) 2018

2017

2017 2017 2017
 
Interest and dividend income:
Interest and fees on loans $ 22,504 $ 21,349 $ 20,990 $ 19,640 $ 19,135
Interest on loans held for sale 411 777 796 620 546
Interest on securities 1,496 1,389 1,334 1,332 1,216
Other interest and dividend income   274   294     294     320     252  
Total interest and dividend income   24,685   23,809     23,414     21,912     21,149  
 
Interest expense:
Interest on deposits 3,523 3,151 2,812 2,567 2,432
Interest on borrowed funds   1,038   1,226     1,333     1,130     1,285  
Total interest expense   4,561   4,377     4,145     3,697     3,717  
 
Net interest and dividend income 20,124 19,432 19,269 18,215 17,432
 
Provision for loan losses   808   760     921     470     265  
 
Net interest income, after provision for loan losses   19,316   18,672     18,348     17,745     17,167  
 
Noninterest income:
Mortgage banking income:
Changes in mortgage servicing rights fair value 1,022 (74 ) (488 ) (1,052 ) (442 )
Other   6,261   9,134     11,071     11,200     7,846  
Total mortgage banking income 7,283 9,060 10,583 10,148 7,404
 
Deposit account fees 2,967 3,223 3,172 3,071 2,845
Income on retirement plan annuities 113 118 114 113 110
Gain on sale of consumer loans 78
Bank-owned life insurance income 239 246 260 261 257
Other income   747   1,507     498     706     760  
Total noninterest income   11,349   14,154     14,627     14,299     11,454  
 
Noninterest expenses:
Compensation and benefits 16,352 17,655 17,325 16,319 14,924
Occupancy and equipment 3,275 3,047 2,954 2,726 2,988
Data processing 1,553 1,560 1,547 1,528 1,522
Loan expense 1,262 1,752 1,884 1,882 1,363
Marketing 999 936 1,136 1,041 482
Professional fees 968 1,097 1,126 1,080 930
Deposit insurance 494 412 397 446 462
Other expenses   2,696   3,234     2,069     1,856     1,734  
Total noninterest expenses   27,599   29,693     28,438     26,878     24,405  
 
Income before income taxes 3,066 3,133 4,537 5,166 4,216
 
Income tax provision   814   1,540     1,699     1,953     1,481  
 
Net income $ 2,252 $ 1,593   $ 2,838   $ 3,213   $ 2,735  
 
Earnings per common share:
Basic $ 0.07 $ 0.05 $ 0.09 $ 0.10 $ 0.09
Diluted $ 0.07 $ 0.05 $ 0.09 $ 0.10 $ 0.09
Weighted average shares outstanding:
Basic 31,569,811 31,582,069 31,303,281 31,013,002 30,998,163
Diluted 31,569,811 31,582,069 31,303,281 31,013,002 30,998,163
 
                       

HarborOne Bancorp, Inc.

Consolidated Statements of Net Income

(Unaudited)

 
Three Months Ended March 31,
(Dollars in thousands, except per share amounts) 2018 2017 $ Change % Change
 
Interest and dividend income:
Interest and fees on loans $ 22,504 $ 19,135 $ 3,369 17.6 %
Interest on loans held for sale 411 546 (135 ) (24.7 )
Interest on securities 1,496 1,216 280 23.0
Other interest and dividend income   274   252     22   8.7
Total interest and dividend income   24,685   21,149     3,536   16.7
 
Interest expense:
Interest on deposits 3,523 2,432 1,091 44.9
Interest on borrowed funds   1,038   1,285     (247 ) (19.2 )
Total interest expense   4,561   3,717     844   22.7
 
Net interest and dividend income 20,124 17,432 2,692 15.4
 
Provision for loan losses   808   265     543   204.9
 
Net interest income, after provision for loan losses   19,316   17,167     2,149   12.5
 
Noninterest income:
Mortgage banking income:
Changes in mortgage servicing rights fair value 1,022 (442 ) 1,464 331.2
Other   6,261   7,846     (1,585 ) (20.2 )
Total mortgage banking income 7,283 7,404 (121 ) (1.6 )
 
Deposit account fees 2,967 2,845 122 4.3
Income on retirement plan annuities 113 110 3 2.7
Gain on sale of consumer loans 78 (78 ) (100.0 )
Bank-owned life insurance income 239 257 (18 ) (7.0 )
Other income   747   760     (13 ) (1.7 )
Total noninterest income   11,349   11,454     (105 ) (0.9 )
 
Noninterest expenses:
Compensation and benefits 16,352 14,924 1,428 9.6
Occupancy and equipment 3,275 2,988 287 9.6
Data processing 1,553 1,522 31 2.0
Loan expense 1,262 1,363 (101 ) (7.4 )
Marketing 999 482 517 107.3
Professional fees 968 930 38 4.1
Deposit insurance 494 462 32 6.9
Other expenses   2,696   1,734     962   55.5
Total noninterest expenses   27,599   24,405     3,194   13.1
 
Income before income taxes 3,066 4,216 (1,150 ) (27.3 )
 
Income tax provision   814   1,481     (667 ) (45.0 )
 
Net income $ 2,252 $ 2,735   $ (483 ) (17.7 ) %
 
Earnings per common share:
Basic $ 0.07 0.09 (0.02 ) (22.2 ) %
Diluted $ 0.07 0.09 (0.02 ) (22.2 )
Weighted average shares outstanding:
Basic 31,569,811 30,998,163 571,648 1.8 %
Diluted 31,569,811 30,998,163 571,648 1.8
 
                                           

HarborOne Bancorp, Inc.

Average Balances / Yields

(Unaudited)

 
Quarters Ended
March 31, 2018 December 31, 2017 March 31, 2017
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) $ 2,248,119 $ 22,915 4.13 % $ 2,230,303 $ 22,126 3.94 % $ 2,111,768 $ 19,681 3.78 %
Investment securities (2) 227,362 1,541 2.75 214,127 1,465 2.71 197,525 1,292 2.65
Other interest-earning assets   37,346   274 2.97   73,014   294 1.60   67,428   252 1.52
Total interest-earning assets 2,512,827   24,730 3.99 2,517,444   23,885 3.76 2,376,721   21,225 3.62
Noninterest-earning assets   125,640   127,374   124,148
Total assets $ 2,638,467 $ 2,644,818 $ 2,500,869
Interest-bearing liabilities:
Savings accounts $ 332,414 137 0.17 $ 353,350 159 0.18 $ 326,731 151 0.19
NOW accounts 125,602 20 0.06 126,661 20 0.06 123,340 19 0.06
Money market accounts 716,380 1,383 0.78 716,862 1,287 0.71 627,073 753 0.49
Certificates of deposit 496,839 1,718 1.40 464,139 1,444 1.23 469,774 1,350 1.17
Brokered deposit   78,930   265 1.36   74,783   241 1.28   65,698   159 0.98
Total interest-bearing deposits 1,750,165 3,523 0.82 1,735,795 3,151 0.72 1,612,616 2,432 0.61
FHLB advances   253,359   1,038 1.66   280,092   1,226 1.74   291,896   1,285 1.79
Total interest-bearing liabilities 2,003,524   4,561 0.92 2,015,887   4,377 0.86 1,904,512   3,717 0.79
Noninterest-bearing liabilities:
Noninterest-bearing deposits 260,455 256,522 237,056
Other noninterest-bearing liabilities   31,457   31,459   28,981
Total liabilities 2,295,436 2,303,868 2,170,549
Total equity   343,031   340,950   330,320
Total liabilities and equity $ 2,638,467 $ 2,644,818 $ 2,500,869
Tax equivalent net interest income 20,169 19,508 17,508
Tax equivalent interest rate spread (3) 3.07 % 2.90 % 2.83 %
Less: tax equivalent adjustment   45   76   76
Net interest income as reported $ 20,124 $ 19,432 $ 17,432
Net interest-earning assets (4) $ 509,303 $ 501,557 $ 472,209
Net interest margin (5) 3.25 % 3.06 % 2.97 %
Tax equivalent effect 0.01 0.01 0.02
Net interest margin on a fully tax equivalent basis 3.26 % 3.07 % 2.99 %
Average interest-earning assets to average interest-bearing liabilities 125.42 % 124.88 % 124.79 %
 
Supplemental information:
Total deposits, including demand deposits $ 2,010,620 $ 3,523 $ 1,992,317 $ 3,151 $ 1,849,672 $ 2,432
Cost of total deposits 0.71 % 0.63 % 0.53 %
Total funding liabilities, including demand deposits $ 2,263,979 $ 4,561 $ 2,272,409 $ 4,377 $ 2,141,568 $ 3,717
Cost of total funding liabilities 0.82 % 0.76 % 0.70 %

(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 21% for the period ended March 31, 2018 and 35% for the periods ended December 31, 2017 and March 31, 2017. The yield on investments before tax equivalent adjustments for the quarters presented were 2.67%, 2.57%, and 2.50%, 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
March 31, 2018 December 31, 2017 September 30, 2017 June 30, 2017 March 31, 2017
(In thousands)
Interest-earning assets:
Loans (1) $ 2,248,119 $ 2,230,303 $ 2,190,303 $ 2,129,280 $ 2,111,768
Investment securities (2) 227,362 214,127 206,761 209,691 197,525
Other interest-earning assets   37,346   73,014   102,589   81,370   67,428
Total interest-earning assets 2,512,827 2,517,444 2,499,653 2,420,341 2,376,721
Noninterest-earning assets   125,640   127,374   128,966   129,281   124,148
Total assets $ 2,638,467 $ 2,644,818 $ 2,628,619 $ 2,549,622 $ 2,500,869
Interest-bearing liabilities:
Savings accounts $ 332,414 $ 353,350 $ 402,470 $ 351,948 $ 326,731
NOW accounts 125,602 126,661 125,636 128,794 123,340
Money market accounts 716,380 716,862 646,873 654,127 627,073
Certificates of deposit 496,839 464,139 463,077 469,249 469,774
Brokered deposit   78,930   74,783   82,976   76,555   65,698
Total interest-bearing deposits 1,750,165 1,735,795 1,721,032 1,680,673 1,612,616
FHLB advances   253,359   280,092   287,858   254,832   291,896
Total interest-bearing liabilities 2,003,524 2,015,887 2,008,890 1,935,505 1,904,512
Noninterest-bearing liabilities:
Noninterest-bearing deposits 260,455 256,522 251,579 250,654 237,056
Other noninterest-bearing liabilities   31,457   31,459   30,815   29,432   28,981
Total liabilities 2,295,436 2,303,868 2,291,284 2,215,591 2,170,549
Total equity   343,031   340,950   337,335   334,031   330,320
Total liabilities and equity $ 2,638,467 $ 2,644,818 $ 2,628,619 $ 2,549,622 $ 2,500,869
 
Annualized Yield Trend - Quarters Ended
March 31, 2018 December 31, 2017 September 30, 2017 June 30, 2017 March 31, 2017
Interest-earning assets:
Loans (1) 4.13 % 3.94 % 3.95 % 3.82 % 3.78 %
Investment securities (2) 2.75 % 2.71 % 2.70 % 2.69 % 2.65 %
Other interest-earning assets 2.97 % 1.60 % 1.14 % 1.58 % 1.52 %
Total interest-earning assets 3.99 % 3.76 % 3.73 % 3.64 % 3.62 %
 
Interest-bearing liabilities:
Savings accounts 0.17 % 0.18 % 0.19 % 0.17 % 0.19 %
NOW accounts 0.06 % 0.06 % 0.06 % 0.06 % 0.06 %
Money market accounts 0.78 % 0.71 % 0.59 % 0.50 % 0.49 %
Certificates of deposit 1.40 % 1.23 % 1.18 % 1.17 % 1.17 %
Brokered deposit 1.36 % 1.28 % 1.17 % 1.08 % 0.98 %
Total interest-bearing deposits 0.82 % 0.72 % 0.65 % 0.61 % 0.61 %
FHLB advances 1.66 % 1.74 % 1.84 % 1.78 % 1.79 %
Total interest-bearing liabilities 0.92 % 0.86 % 0.82 % 0.77 % 0.79 %

(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

March 31,

December 31, September 30, June 30, March 31,
Performance Ratios (annualized): 2018 2017 2017 2017 2017
 
Return on average assets (ROAA) 0.34 % 0.24 % 0.43 % 0.50 % 0.44 %
 
Return on average equity (ROAE) 2.63 % 1.87 % 3.37 % 3.85 % 3.31 %
 
Efficiency ratio (1) 87.62 % 88.34 % 83.83 % 82.60 % 84.41 %

(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
March 31, December 31, September 30, June 30, March 31,
Asset Quality 2018 2017 2017 2017 2017
(Dollars in thousands)
 
Total nonperforming assets $ 17,171 $ 18,617 $ 20,627 $ 22,522 $ 23,471
 
Nonperforming assets to total assets 0.63 % 0.69 % 0.78 % 0.86 % 0.91 %
 
Allowance for loan losses to total loans 0.84 % 0.84 % 0.84 % 0.82 % 0.82 %
 
Net charge offs $ 434 $ 204 $ 169 $ 173 $ 349
 
Annualized net charge offs/average loans 0.08 % 0.04 % 0.03 % 0.03 % 0.07 %
 
Allowance for loan losses to nonperforming loans 115.51 % 103.55 % 91.47 % 80.04 % 78.17 %
                     
March 31, December 31, September 30, June 30, March 31,
Capital and Share Related 2018 2017 2017 2017 2017
 
Common stock outstanding 32,622,695 32,647,395 32,662,295 32,120,880 32,120,880
 
Book value per share $ 10.57 $ 10.52 $ 10.43 $ 10.48 $ 10.36
 
Tangible book value per share (1) $ 10.15 $ 10.11 $ 10.01 $ 10.06 $ 9.94
 
Tangible common equity / tangible assets (2) 12.17 % 12.35 % 12.36 % 12.34 % 12.50 %
 

(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.