Press Release

HarborOne Bancorp, Inc. Announces 2018 Second Quarter Earnings

Company Release - 7/20/2018 8:24 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 $3.1 million, or $0.10 per basic and diluted share, for the second quarter of 2018, compared to $2.3 million, or $0.07 per basic and diluted share, for the prior quarter and net income of $3.2 million, or $0.10 per basic and diluted share, for the same quarter last year. For the six months ended June 30, 2018 net income was $5.4 million, or $0.17 per basic and dilute share as compared to $5.9 million, or $0.19 per basic and diluted share, for the same period last year.

Selected highlights for the second quarter of 2018:

  • Total outstanding commercial, commercial real estate and construction loans surpassed $1 billion during the second quarter.
  • Launched a commercial loan office in Boston.
  • Total deposits grew by 4% in the second quarter.

The increase in net income from the prior quarter reflects a $771,000 increase in net interest and dividend income and a $1.2 million increase in noninterest income, partially offset by a $919,000 increase in noninterest expense, a $78,000 increase in provision for loan losses and a $131,000 increase in income tax provision.

The previously announced acquisition of Coastway Bancorp, Inc.(“Coastway”) is anticipated to close in the second half of 2018 subject to customary closing conditions and required regulatory approvals.

James W. Blake, CEO stated, “Despite the contraction in residential mortgage demand, our earnings have been consistently strong. Our investment in the commercial loan growth strategy has provided margin improvement and positions us as a significant commercial lender in New England. ”

Net Interest Income
The Company’s net interest and dividend income was $20.9 million for the quarter ended June 30, 2018, up $771,000, or 3.8%, from $20.1 million for the quarter ended March 31, 2018 and up $2.7 million, or 14.7%, from $18.2 million for the quarter ended June 30, 2017. The tax-equivalent interest rate spread and net interest margin were 3.04% and 3.26%, respectively, for the quarter ended June 30, 2018 compared to 3.07% and 3.26%, respectively, for the quarter ended March 31, 2018 and 2.87% and 3.03%, respectively, for the quarter ended June 30, 2017.

The increase in net interest income from the previous quarter reflects a $1.6 million, or 6.3%, increase in total interest and dividend income offset by an increase of $795,000, or 17.4% 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 $60.0 million partially offset by decreases in the average balances of residential real estate and consumer loans. The yield on loans was 4.25% for the quarter ended June 30, 2018 and 4.13% for the quarter ended March 31, 2018. The increase in interest expense is due to an increase in average interest-bearing deposits of $82.7 million with a 15 basis point increase in the cost of those funds, partially offset by a decrease in average FHLB advances of $35.6 million and a 1 basis point increase in total cost of borrowed funds.

The increase in net interest income from the prior year quarter reflects a $4.3 million, or 19.8%, increase in total interest and dividend income and an increase of $1.7 million, or 44.9%, in total interest expense. The increase in interest and dividend income is primarily due to growth in the Company’s average loan balances to $2.30 billion from $2.13 billion and an increase in the yield on loans to 4.25% from 3.82%, again primarily driven by commercial loan growth as well as higher rates on commercial loans. The increase in total interest expense reflects increased average balances and rising interest rates.

Noninterest Income
Noninterest income increased to $12.6 million for the quarter ended June 30, 2018, up $1.2 million, or 10.6%, from the quarter ended March 31, 2018. The increase is primarily due to an increase in mortgage banking income of $1.2 million. Other mortgage banking income increased $2.5 million as mortgage originations increased 55.2% from the prior quarter. This was partially offset by a negative change in the mortgage servicing rights fair value of $306,000, as compared to a positive change in mortgage servicing rights fair market value of $1.0 million in the first quarter of 2018 due to flat rates as compared to the prior quarter. Other income was flat at $4.1 million for both quarters.

Noninterest income decreased $1.7 million, or 12.2%, as compared to the quarter ended June 30, 2017. Mortgage banking income decreased $1.7 million, or 16.6% despite an improvement in mortgage servicing rights fair value of $746,000. Other mortgage banking income decreased $2.4 million, or 21.7% compared to the prior year quarter due to lower mortgage originations in 2018. Compared to the same quarter prior year, mortgage originations decreased 13.5% in 2018 primarily as a result of higher residential mortgage interest rates, low housing inventories and reduced refinancing volume.

Noninterest Expense
Noninterest expenses were $28.5 million for the quarter ended June 30, 2018, an increase of $919,000, or 3.3%, from the quarter ended March 31, 2018 due to increases in compensation and benefits of $993,000, partially offset by a decrease of $314,000, or 9.6% in occupancy and equipment expenses. The decrease in occupancy and equipment expenses primarily reflects the seasonality of grounds’ maintenance costs.

The increase in compensation and benefits primarily reflects the increase in loan production volumes as compared to the first quarter. The results for the second quarter of 2018 include $80,000 in severance expense related to a workforce reduction at HarborOne Mortgage which is expected to result in annual cost reductions of approximately $1.0 million. The right sizing of HarborOne Mortgage was in response to efficiencies created by the consolidation of HarborOne Mortgage and the Bank’s residential mortgage group, as well as economic pressures within the mortgage industry.

Noninterest expenses increased $1.6 million, or 6.1%, from the quarter ended June 30, 2017. The increase was primarily due to increases in compensation and benefits of $1.0 million and other expenses of $907,000 partially offset by a decrease in loan expense of $492,000. The compensation and benefits and other expense increase reflects expenses related to the equity plan that was established in August 2017. The second quarter of 2018 includes $985,000 in compensation and benefits and $396,000 in other expenses related to the equity plan. There were no such expenses in the second quarter of 2017. Also contributing to the increase in other expenses was $524,000 in expenses related to the Coastway acquisition. Loan expense decreased as compared to the prior year consistent with the decrease in loan originations.

Income Tax Provision
The effective tax rate was 23.3% for the quarter ended June 30, 2018, 26.5% for the quarter ended March 31, 2018 and 37.8% for the quarter ended June 30, 2017. The effective tax rate for the six months ended June 30, 2018 and 2017 was 24.7% and 36.6%, respectively. 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. The decrease in the effective tax rate as compared to the prior quarter is primarily due to higher nondeductible merger expenses in the first quarter of 2018.

Asset Quality
The Company recorded a provision for loan losses of $886,000 for the quarter ended June 30, 2018, $808,000 for the quarter ended March 31, 2018 and $470,000 for the quarter ended June 30, 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 $19.2 million, or 0.84%, of total loans at June 30, 2018, compared to $18.9 million, or 0.84%, of total loans, at March 31, 2018 and $17.2 million, or 0.82%, of total loans at June 30, 2017. Net charge-offs totaled $505,000 for the quarter ended June 30, 2018, or 0.09%, of average loans outstanding on an annualized basis, compared to $434,000, or 0.08% of average loans outstanding on an annualized basis, for the quarter ended March 31, 2018 and $173,000, or 0.03% of average loans outstanding on an annualized basis , for the quarter ended June 30, 2017.

Nonperforming assets were $17.4 million at June 30, 2018 compared to $17.2 million at March 31, 2018 and $22.5 million at June 30, 2017. Nonperforming assets as a percentage of total assets were 0.60% at June 30, 2018, 0.63% at March 31, 2018 and 0.86% at June 30, 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 $144.1 million, or 5.3%, to $2.88 billion at June 30, 2018 from $2.74 billion at March 31, 2018. Net loans increased $67.2 million, or 3.0%, to $2.28 billion at June 30, 2018 from $2.21 billion at March 31, 2018. The net increase in loans for the three months ended June 30, 2018 was primarily due to increases of $39.2 million in commercial real estate loans, $18.3 million in construction loans and $21.3 million in commercial and industrial loans partially offset by a decrease of $6.4 million in residential real estate loans and $4.7 million in consumer loans. Loans held for sale increased $36.9 million, or 108.1%, to $71.0 million at June 30, 2018 from $34.1 million at March 31, 2018 due to the seasonal increase in residential mortgage originations. Management proactively assesses the balance sheet mix to enhance margins. The decrease in consumer loans partially reflects the reallocation of funds into commercial lending.

Total deposits increased $75.3 million, or 3.5%, to $2.20 billion at June 30, 2018 from $2.13 billion at March 31, 2018. Compared to the prior quarter, non-certificate accounts increased $14.7 million, term certificate accounts increased $51.4 million and brokered deposits increased $9.2 million. Term certificate growth reflects a limited time offer 17 month term special offered during the quarter. Borrowings were $287.4 million at June 30, 2018 and $226.4 million at March 31, 2018.

Total stockholders’ equity was $348.6 million at June 30, 2018 compared to $344.9 million at March 31, 2018 and $336.6 million at June 30, 2017. The tangible common equity to tangible assets ratio was 11.68% at June 30, 2018, 12.17% at March 31, 2018 and 12.34% at June 30, 2017. At June 30, 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 Eastern Massachusetts through a network of 14 full-service branches, two limited service branches, two commercial loan offices in Boston, Massachusetts and 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)

 
June 30, March 31, December 31, September 30, June 30,
(Dollars in thousands) 2018 2018 2017 2017 2017
 
Assets
 
Cash and due from banks $ 20,232 $ 15,205 $ 16,348 $ 15,393 $ 17,492
Short-term investments       112,264         92,105     64,443     79,412         84,105  
Total cash and cash equivalents 132,496 107,310 80,791 94,805 101,597
 
Securities available for sale, at fair value 185,702 182,173 170,853 166,122 160,795
Securities held to maturity, at amortized cost 48,251 46,095 46,869 47,752 45,660
Federal Home Loan Bank stock, at cost 15,310 13,538 15,532 16,356 16,356
Loans held for sale, at fair value 71,017 34,129 59,460 96,201 91,849
Loans:
Residential real estate 756,007 762,361 766,917 769,418 771,121
Commercial real estate 726,276 687,121 655,419 623,054 592,325
Construction       163,240         144,949     128,643     76,668         66,908  
Total mortgage loans on real estate 1,645,523 1,594,431 1,550,979 1,469,140 1,430,354
Commercial 132,293 111,013 109,523 111,627 114,234
Consumer       516,897         521,634     527,820     533,707         543,394  
Loans 2,294,713 2,227,078 2,188,322 2,114,474 2,087,982
Less: Allowance for loan losses (19,244 ) (18,863 ) (18,489 ) (17,933 ) (17,181 )
Net deferred loan costs       5,982         6,075     6,645     8,035         8,682  
Net loans 2,281,451 2,214,290 2,176,478 2,104,576 2,079,483
Mortgage servicing rights, at fair value 22,832 22,696 21,092 20,376 20,313
Goodwill and other intangible assets 13,717 13,675 13,497 13,519 13,541
Other assets       108,938         101,671     100,348     99,752         102,476  
Total assets $     2,879,714   $     2,735,577   $ 2,684,920   $ 2,659,459   $     2,632,070  
 
Liabilities and Stockholders' Equity
 
Deposits:
NOW and demand deposit accounts $ 429,397 $ 419,776 $ 395,153 $ 395,728 $ 395,150
Regular savings and club accounts 403,732 378,818 356,300 404,465 398,883
Money market deposit accounts 681,524 701,360 721,021 666,613 641,776
Brokered deposits 79,396 70,176 73,490 73,127 92,803
Term certificate accounts       608,453         557,082     467,774     463,612         465,179  
Total deposits 2,202,502 2,127,212 2,013,738 2,003,545 1,993,791
Short-term borrowed funds 70,000 44,000 10,000 30,000
Long-term borrowed funds 217,438 226,364 246,365 266,366 235,117
Other liabilities and accrued expenses       41,198         37,144     37,333     38,947         36,527  
Total liabilities       2,531,138         2,390,720     2,341,436     2,318,858         2,295,435  
 
Common stock 327 327 327 327 321
Additional paid-in capital 150,063 148,559 147,060 145,525 144,705
Unearned compensation - ESOP (10,388 ) (10,536 ) (10,685 ) (10,833 ) (10,982 )
Retained earnings 213,049 209,946 207,590 205,997 203,159
Treasury stock (742 ) (742 ) (280 )
Accumulated other comprehensive loss       (3,733 )       (2,697 )   (528 )   (415 )       (568 )
Total stockholders' equity       348,576         344,857     343,484     340,601         336,635  
 
Total liabilities and stockholders' equity $     2,879,714   $     2,735,577   $ 2,684,920   $ 2,659,459   $     2,632,070  
 
                               

HarborOne Bancorp, Inc.

Consolidated Statements of Net Income - Trend

(Unaudited)

 
Quarters Ended
June 30, March 31, December 31, September 30, June 30,
(Dollars in thousands, except per share amounts) 2018 2018 2017 2017 2017
 
Interest and dividend income:
Interest and fees on loans $ 23,866 $ 22,504 $ 21,349 $ 20,990 $ 19,640
Interest on loans held for sale 521 411 777 796 620
Interest on securities 1,567 1,496 1,389 1,334 1,332
Other interest and dividend income       297         274   294     294         320  
Total interest and dividend income       26,251         24,685   23,809     23,414         21,912  
 
Interest expense:
Interest on deposits 4,450 3,523 3,151 2,812 2,567
Interest on borrowed funds       906         1,038   1,226     1,333         1,130  
Total interest expense       5,356         4,561   4,377     4,145         3,697  
 
Net interest and dividend income 20,895 20,124 19,432 19,269 18,215
 
Provision for loan losses       886         808   760     921         470  
 
Net interest income, after provision for loan losses       20,009         19,316   18,672     18,348         17,745  
 
Noninterest income:
Mortgage banking income:
Changes in mortgage servicing rights fair value (306 ) 1,022 (74 ) (488 ) (1,052 )
Other       8,765         6,261   9,134     11,071         11,200  
Total mortgage banking income 8,459 7,283 9,060 10,583 10,148
 
Deposit account fees 3,224 2,967 3,223 3,172 3,071
Income on retirement plan annuities 119 113 118 114 113
Bank-owned life insurance income 243 239 246 260 261
Other income       512         747   1,507     498         706  
Total noninterest income       12,557         11,349   14,154     14,627         14,299  
 
Noninterest expenses:
Compensation and benefits 17,345 16,352 17,655 17,325 16,319
Occupancy and equipment 2,961 3,275 3,047 2,954 2,726
Data processing 1,569 1,553 1,560 1,547 1,528
Loan expense 1,390 1,262 1,752 1,884 1,882
Marketing 1,084 999 936 1,136 1,041
Professional fees 915 968 1,097 1,126 1,080
Deposit insurance 491 494 412 397 446
Other expenses       2,763         2,696   3,234     2,069         1,856  
Total noninterest expenses       28,518         27,599   29,693     28,438         26,878  
 
Income before income taxes 4,048 3,066 3,133 4,537 5,166
 
Income tax provision       945         814   1,540     1,699         1,953  
 
Net income $     3,103   $     2,252 $ 1,593   $ 2,838   $     3,213  
 
Earnings per common share:
Basic $ 0.10 $ 0.07 $ 0.05 $ 0.09 $ 0.10
Diluted $ 0.10 $ 0.07 $ 0.05 $ 0.09 $ 0.10
Weighted average shares outstanding:
Basic 31,578,961 31,569,811 31,582,069 31,303,281 31,013,002
Diluted 31,578,961 31,569,811 31,582,069 31,303,281 31,013,002
 
               

HarborOne Bancorp, Inc.

Consolidated Statements of Net Income

(Unaudited)

 
Six Months Ended June 30,
(Dollars in thousands, except per share amounts) 2018 2017 $ Change % Change
 
Interest and dividend income:
Interest and fees on loans $ 46,370 $ 38,775 $ 7,595 19.6 %
Interest on loans held for sale 932 1,166 (234 ) (20.1 )
Interest on securities 3,063 2,548 515 20.2
Other interest and dividend income   571   572     (1 ) (0.2 )

Total interest and dividend income

  50,936   43,061     7,875   18.3
 
Interest expense:
Interest on deposits 7,973 4,999 2,974 59.5
Interest on borrowed funds   1,944   2,415     (471 ) (19.5 )

Total interest expense

  9,917   7,414     2,503   33.8
 
Net interest and dividend income 41,019 35,647 5,372 15.1
 
Provision for loan losses   1,694   735     959   130.5
 
Net interest income, after provision for loan losses   39,325   34,912     4,413   12.6
 
Noninterest income:
Mortgage banking income:
Changes in mortgage servicing rights fair value 716 (1,494 ) 2,210 147.9
Other   15,026   19,046     (4,020 ) (21.1 )
Total mortgage banking income 15,742 17,552 (1,810 ) (10.3 )
 
Deposit account fees 6,191 5,916 275 4.6
Income on retirement plan annuities 232 223 9 4.0
Gain on sale of consumer loans 78 (78 ) (100.0 )
Bank-owned life insurance income 482 518 (36 ) (6.9 )
Other income   1,259   1,466     (207 ) (14.1 )
Total noninterest income   23,906   25,753     (1,847 ) (7.2 )
 
Noninterest expenses:
Compensation and benefits 33,697 31,243 2,454 7.9
Occupancy and equipment 6,236 5,714 522 9.1
Data processing 3,122 3,050 72 2.4
Loan expense 2,652 3,245 (593 ) (18.3 )
Marketing 2,083 1,523 560 36.8
Professional fees 1,883 2,010 (127 ) (6.3 )
Deposit insurance 985 908 77 8.5
Other expenses   5,459   3,590     1,869   52.1
Total noninterest expenses   56,117   51,283     4,834   9.4
 
Income before income taxes 7,114 9,382 (2,268 ) (24.2 )
 
Income tax provision   1,759   3,434     (1,675 ) (48.8 )
 
Net income $ 5,355 $ 5,948   $ (593 ) (10.0 )%
 
Earnings per common share:
Basic $ 0.17 $ 0.19
Diluted $ 0.17 $ 0.19
Weighted average shares outstanding:
Basic 31,574,411 31,005,623
Diluted 31,574,411 31,005,623
 
                                   

HarborOne Bancorp, Inc.

Average Balances / Yields

(Unaudited)

 
Quarters Ended
June 30, 2018 March 31, 2018 June 30, 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) $ 2,303,245 $ 24,387 4.25 % $ 2,248,119 $ 22,915 4.13 % $ 2,129,280 $ 20,260 3.82 %
Investment securities (2) 233,587 1,613 2.77 227,362 1,541 2.75 209,691 1,408 2.69
Other interest-earning assets   41,584   297 2.87   37,346   274 2.97   81,370   320 1.58
Total interest-earning assets 2,578,416   26,297 4.09 2,512,827   24,730 3.99 2,420,341   21,988 3.64
Noninterest-earning assets   130,551   125,640   129,281
Total assets $ 2,708,967 $ 2,638,467 $ 2,549,622
Interest-bearing liabilities:
Savings accounts $ 346,201 150 0.17 $ 332,414 137 0.17 $ 351,948 151 0.17
NOW accounts 128,360 21 0.06 125,602 20 0.06 128,794 20 0.06
Money market accounts 698,591 1,496 0.86 716,380 1,383 0.78 654,127 821 0.50
Certificates of deposit 592,811 2,534 1.71 496,839 1,718 1.40 469,249 1,369 1.17
Brokered deposits   66,892   249 1.50   78,930   265 1.36   76,555   206 1.08
Total interest-bearing deposits 1,832,855 4,450 0.97 1,750,165 3,523 0.82 1,680,673 2,567 0.61
FHLB advances   217,712   906 1.67   253,359   1,038 1.66   254,832   1,130 1.78
Total interest-bearing liabilities 2,050,567   5,356 1.05 2,003,524   4,561 0.92 1,935,505   3,697 0.77
Noninterest-bearing liabilities:
Noninterest-bearing deposits 278,846 260,455 250,654
Other noninterest-bearing liabilities   33,561   31,457   29,432
Total liabilities 2,362,974 2,295,436 2,215,591
Total equity   345,993   343,031   334,031
Total liabilities and equity $ 2,708,967 $ 2,638,467 $ 2,549,622
Tax equivalent net interest income 20,941 20,169 18,291
Tax equivalent interest rate spread (3) 3.04 % 3.07 % 2.87 %
Less: tax equivalent adjustment   46   45   76
Net interest income as reported $ 20,895 $ 20,124 $ 18,215
Net interest-earning assets (4) $ 527,849 $ 509,303 $ 484,836
Net interest margin (5) 3.25 % 3.25 % 3.02 %
Tax equivalent effect 0.01 0.01 0.01
Net interest margin on a fully tax equivalent basis 3.26 % 3.26 % 3.03 %
Average interest-earning assets to average interest-bearing liabilities 125.74 % 125.42 % 125.05 %
 
Supplemental information:
Total deposits, including demand deposits $ 2,111,701 $ 4,450 $ 2,010,620 $ 3,523 $ 1,931,327 $ 2,567
Cost of total deposits 0.85 % 0.71 % 0.53 %
Total funding liabilities, including demand deposits $ 2,329,413 $ 5,356 $ 2,263,979 $ 4,561 $ 2,186,159 $ 3,697
Cost of total funding liabilities 0.92 % 0.82 % 0.68 %
 

(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 periods ended June 30, 2018 and March 31, 2018 and 35% for the period ended June 30, 2017. The yield on investments before tax equivalent adjustments for the quarters presented were 2.69%, 2.67%, and 2.55%, 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
June 30, 2018 June 30, 2017
Average Average
Outstanding Yield/ Outstanding Yield/
Balance Interest Cost (6) Balance Interest Cost (6)
(Dollars in thousands)
Interest-earning assets:
Loans (1) $ 2,275,834 $ 47,302 4.19 % $ 2,120,573 $ 39,941 3.80 %
Investment securities (2) 230,492 3,154 2.76 203,642 2,700 2.67
Other interest-earning assets   39,477   571 2.92   74,437   572 1.55
Total interest-earning assets 2,545,803   51,027 4.04 2,398,652   43,213 3.63
Noninterest-earning assets   128,109   126,729
Total assets $ 2,673,912 $ 2,525,381
Interest-bearing liabilities:
Savings accounts $ 339,149 285 0.17 $ 339,409 302 0.18
NOW accounts 126,988 41 0.06 126,037 39 0.06
Money market accounts 707,633 2,881 0.82 640,676 1,574 0.50
Certificates of deposit 545,090 4,252 1.57 469,510 2,719 1.17
Brokered deposits   72,878   514 1.42   71,156   365 1.03
Total interest-bearing deposits 1,791,738 7,973 0.90 1,646,788 4,999 0.61
FHLB advances   235,437   1,944 1.66   273,262   2,415 1.78
Total interest-bearing liabilities 2,027,175   9,917 0.99 1,920,050   7,414 0.78
Noninterest-bearing liabilities:
Noninterest-bearing deposits 269,701 243,937
Other noninterest-bearing liabilities   32,516   29,207
Total liabilities 2,329,392 2,193,194
Total equity   344,520   332,187
Total liabilities and equity $ 2,673,912 $ 2,525,381
Tax equivalent net interest income 41,110 35,799
Tax equivalent interest rate spread (3) 3.05 % 2.85 %
Less: tax equivalent adjustment   91   152
Net interest income as reported $ 41,019 $ 35,647
Net interest-earning assets (4) $ 518,628 $ 478,602
Net interest margin (5) 3.25 % 3.00 %
Tax equivalent effect 0.01 0.01
Net interest margin on a fully tax equivalent basis 3.26 % 3.01 %
Average interest-earning assets to average interest-bearing liabilities 125.58 % 124.93 %
 
Supplemental information:
Total deposits, including demand deposits $ 2,061,439 $ 7,973 $ 1,890,725 $ 4,999
Cost of total deposits 0.78 % 0.53 %
Total funding liabilities, including demand deposits $ 2,296,876 $ 9,917 $ 2,163,987 $ 7,414
Cost of total funding liabilities 0.87 % 0.69 %
 

(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 tax equivalent basis using a tax rate of 21% for 2018 and 35% for 2017. The yield on investments before tax equivalent adjustments was 2.68% and 2.52% for the years ended June 30, 2018 and 2017, 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
June 30, 2018 March 31, 2018 December 31, 2017 September 30, 2017 June 30, 2017
(In thousands)
Interest-earning assets:
Loans (1) $ 2,303,245 $ 2,248,119 $ 2,230,303 $ 2,190,303 $ 2,129,280
Investment securities (2) 233,587 227,362 214,127 206,761 209,691
Other interest-earning assets               41,584               37,346   73,014   102,589               81,370
Total interest-earning assets 2,578,416 2,512,827 2,517,444 2,499,653 2,420,341
Noninterest-earning assets               130,551               125,640   127,374   128,966               129,281
Total assets $             2,708,967 $             2,638,467 $ 2,644,818 $ 2,628,619 $             2,549,622
Interest-bearing liabilities:
Savings accounts $ 346,201 $ 332,414 $ 353,350 $ 402,470 $ 351,948
NOW accounts 128,360 125,602 126,661 125,636 128,794
Money market accounts 698,591 716,380 716,862 646,873 654,127
Certificates of deposit 592,811 496,839 464,139 463,077 469,249
Brokered deposits               66,892               78,930   74,783   82,976               76,555
Total interest-bearing deposits 1,832,855 1,750,165 1,735,795 1,721,032 1,680,673
FHLB advances               217,712               253,359   280,092   287,858               254,832
Total interest-bearing liabilities 2,050,567 2,003,524 2,015,887 2,008,890 1,935,505
Noninterest-bearing liabilities:
Noninterest-bearing deposits 278,846 260,455 256,522 251,579 250,654
Other noninterest-bearing liabilities               33,561               31,457   31,459   30,815               29,432
Total liabilities 2,362,974 2,295,436 2,303,868 2,291,284 2,215,591
Total equity               345,993               343,031   340,950   337,335               334,031
Total liabilities and equity $             2,708,967 $             2,638,467 $ 2,644,818 $ 2,628,619 $             2,549,622
 
Annualized Yield Trend - Quarters Ended
June 30, 2018 March 31, 2018 December 31, 2017 September 30, 2017 June 30, 2017
Interest-earning assets:
Loans (1) 4.25 % 4.13 % 3.94 % 3.95 % 3.82 %
Investment securities (2) 2.77 % 2.75 % 2.71 % 2.70 % 2.69 %
Other interest-earning assets 2.87 % 2.97 % 1.60 % 1.14 % 1.58 %
Total interest-earning assets 4.09 % 3.99 % 3.76 % 3.73 % 3.64 %
 
Interest-bearing liabilities:
Savings accounts 0.17 % 0.17 % 0.18 % 0.19 % 0.17 %
NOW accounts 0.06 % 0.06 % 0.06 % 0.06 % 0.06 %
Money market accounts 0.86 % 0.78 % 0.71 % 0.59 % 0.50 %
Certificates of deposit 1.71 % 1.40 % 1.23 % 1.18 % 1.17 %
Brokered deposits 1.50 % 1.36 % 1.28 % 1.17 % 1.08 %
Total interest-bearing deposits 0.97 % 0.82 % 0.72 % 0.65 % 0.61 %
FHLB advances 1.67 % 1.66 % 1.74 % 1.84 % 1.78 %
Total interest-bearing liabilities 1.05 % 0.92 % 0.86 % 0.82 % 0.77 %
 

(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
June 30, March 31, December 31, September 30, June 30,
Performance Ratios (annualized): 2018 2018 2017 2017 2017
 
Return on average assets (ROAA) 0.46 % 0.34 % 0.24 % 0.43 % 0.50 %
 
Return on average equity (ROAE) 3.59 % 2.63 % 1.87 % 3.37 % 3.85 %
 
Efficiency ratio (1) 85.19 % 87.62 % 88.34 % 83.83 % 82.60 %
 

(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
June 30, March 31, December 31, September 30, June 30,
Asset Quality 2018 2018 2017 2017 2017
(Dollars in thousands)
 
Total nonperforming assets $ 17,397 $ 17,171 $ 18,617 $ 20,627 $ 22,522
 
Nonperforming assets to total assets 0.60 % 0.63 % 0.69 % 0.78 % 0.86 %
 
Allowance for loan losses to total loans 0.84 % 0.84 % 0.84 % 0.84 % 0.82