Press Release

HarborOne Bancorp, Inc. Announces 2018 Third Quarter Earnings

Company Release - 10/25/2018 8:23 AM ET

BROCKTON, Mass.--(BUSINESS WIRE)-- HarborOne Bancorp, Inc. (the “Company” or “HarborOne”) (NASDAQ: HONE), the holding company for HarborOne Bank (the “Bank”), announced net income of $5.9 million, or $0.19 per basic and diluted share, for the third quarter of 2018, compared to $3.1 million, or $0.10 per basic and diluted share, for the prior quarter and net income of $2.8 million, or $0.09 per basic and diluted share, for the same quarter last year. For the nine months ended September 30, 2018 net income was $11.3 million, or $0.36 per basic and diluted share, as compared to $8.8 million, or $0.28 per basic and diluted share, for the same period last year.

Selected highlights:

  • Successful closing of the acquisition of Coastway Bancorp, Inc. (“Coastway”) and Coastway Community Bank into HarborOne on October 5, 2018
  • Subordinated debt issuance of $35.0 million to support growth
  • Continued shift in balance sheet mix
    • Sustained commercial loan growth
    • $105.4 million portfolio residential mortgage loans transferred to held for sale recognizing a $472,000 gain
  • Recognition of a tax refund of $826,000 for the tax year 2014
  • Opening of our Boston commercial loan office

“Our commercial loan growth strategy, and the investments we’ve made to enable that growth, continue to provide solid results,” said James W. Blake, CEO. “We’re pleased with the performance of our Boston loan office, and our recent expansion in Rhode Island, with the completed Coastway acquisition, provides tremendous new opportunities for our residential real estate, small business, and commercial lines of business.”

Net Income
The increase in net income from the prior quarter reflects a $226,000 increase in net interest and dividend income, a $254,000 decrease in provision for loan losses, a $1.1 million increase in noninterest income, a $1.1 million decrease in noninterest expense and a $127,000 decrease in income tax provision.

Net Interest Income
The Company’s net interest and dividend income was $21.1 million for the quarter ended September 30, 2018, up $226,000, or 1.1%, from $20.9 million for the quarter ended June 30, 2018 and up $1.8 million, or 9.6%, from $19.3 million for the quarter ended September 30, 2017. The tax-equivalent interest rate spread and net interest margin were 2.87% and 3.12%, respectively, for the quarter ended September 30, 2018 compared to 3.04% and 3.26%, respectively, for the quarter ended June 30, 2018 and 2.91% and 3.07%, respectively, for the quarter ended September 30, 2017.

The increase in net interest income from the previous quarter reflects a $1.6 million, or 6.1%, increase in total interest and dividend income offset by an increase of $1.4 million, or 25.6% 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 $85.2 million partially offset by decreases in the average balances of residential real estate and consumer loans. The yield on loans was 4.30% for the quarter ended September 30, 2018 compared to 4.25% for the quarter ended June 30, 2018. The increase in interest expense is due to an increase in average interest-bearing deposits of $47.0 million with a 17 basis point increase in the cost of those funds and an increase in average FHLB advances of $38.7 million and an 8 basis point increase in total cost of those funds. Additionally, $35.0 million of subordinated debentures were issued on August 30, 2018 with a rate of 5.625%.

The increase in net interest income from the prior year quarter reflects a $4.4 million, or 18.9%, increase in total interest and dividend income and an increase of $2.6 million, or 62.3%, in total interest expense. The increase in interest and dividend income is primarily due to growth in the Company’s average loan balances to $2.38 billion from $2.19 billion and an increase in the yield on loans to 4.30% from 3.95%, again primarily driven by commercial loan growth as well as higher rates on commercial loans. This is partially offset by the increase in total interest expense primarily due to an increase in average interest-bearing deposits of $158.8 million and a 49 basis point increase in the cost of those funds.

Noninterest Income
Noninterest income increased to $13.6 million for the quarter ended September 30, 2018, up $1.1 million, or 8.6%, from the quarter ended June 30, 2018. The increase is primarily due to an increase in mortgage banking income of $412,000 and other income of $612,000. The increase in other income is primarily due to an increase of $744,000 in swap fee income for new interest rate swap deals. There was no swap fee income in the second quarter of 2018. Other mortgage banking income increased $484,000 primarily reflecting the gain on pending sale of the portfolio residential real estate mortgage loans. This was partially offset by a decrease in the mortgage servicing rights fair value of $378,000. Results of HarborOne Mortgage, LLC (“HarborOne Mortgage”) were flat as compared to the June 2018 quarter.

Noninterest income decreased $987,000, or 6.7%, as compared to the quarter ended September 30, 2017. Mortgage banking income decreased $1.7 million, or 16.2%, partially offset by an increase of $626,000 in other income. Other mortgage banking income decreased $1.8 million, or 16.5% compared to the prior year quarter due to lower mortgage originations in 2018, primarily as a result of higher residential mortgage interest rates, low housing inventories and reduced refinancing volume. The increase in other income compared to prior year quarter is primarily due to an increase of $544,000 in commercial loan interest rate swap fee income.

Noninterest Expense
Noninterest expenses were $27.4 million for the quarter ended September 30, 2018, a decrease of $1.1 million, or 4.0%, from the quarter ended June 30, 2018 due to a decrease in compensation and benefits of $536,000 and a decrease in marketing expense of $445,000.

The decrease in compensation and benefits primarily reflects a decrease in equity compensation expense. During the quarter a clerical error in the 2017 stock option award amounts was corrected resulting in a one-time $652,000 expense reversal. Additionally, HarborOne Mortgage’s compensation and benefits expense decreased by $289,000. Partially offsetting these decreases were increased accruals related to incentive plans. The decrease in marketing expense reflects seasonality of marketing campaigns.

Noninterest expenses decreased $1.1 million, or 3.7%, from the quarter ended September 30, 2017. The decrease was primarily due to decreases in compensation and benefits of $516,000, loan expense of $381,000, marketing expenses of $497,000 and professional fees of $414,000 partially offset by an increase in other expenses of $382,000. The compensation and benefits decrease reflects the correction noted above. Loan expense decreased as compared to the prior year consistent with the decrease in loan originations. The decrease in marketing and professional fees primarily reflects timing. The increase in other expenses reflects $274,000 in expenses related to the Coastway acquisition and $189,000 in employment agency fees that were not incurred in the third quarter of 2017.

Income Tax Provision
The effective tax rate was 12.1% for the quarter ended September 30, 2018, 23.3% for the quarter ended June 30, 2018 and 37.4% for the quarter ended September 30, 2017. The effective tax rate for the nine months ended September 30, 2018 and 2017 was 18.6% and 36.9%, respectively. The effective tax rate for the quarter and year to date ended September 30, 2018 is primarily being impacted by the $826,000 tax refund for the tax year 2014 that was recognized this quarter. In 2017 the Company filed amended returns that reflected a change in tax basis of certain assets. Additionally, 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.

Asset Quality
The Company recorded a provision for loan losses of $632,000 for the quarter ended September 30, 2018, $886,000 for the quarter ended June 30, 2018 and $921,000 for the quarter ended September 30, 2017. The decrease in the provision for the quarter ended September 30, 2018 reflects a $262,000 negative provision in conjunction with the sale of $105.4 million residential real estate mortgage loans from portfolio. There were also charge offs of $255,000 and $390,000 for the quarters ended September 30, 2018 and June 30, 2018, respectively, related to one commercial credit. Generally loan loss provisions each quarter are due to growth in the commercial loan portfolio. 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 $19.4 million, or 0.87%, of total loans at September 30, 2018, compared to $19.2 million, or 0.84%, of total loans at June 30, 2018 and $17.9 million, or 0.84%, of total loans at September 30, 2017. Net charge-offs totaled $436,000 for the quarter ended September 30, 2018, or 0.08%, of average loans outstanding on an annualized basis, compared to $505,000, or 0.09% of average loans outstanding on an annualized basis, for the quarter ended June 30, 2018 and $169,000, or 0.03% of average loans outstanding on an annualized basis , for the quarter ended September 30, 2017.

Nonperforming assets were $17.4 million at September 30, 2018 compared to $17.4 million at June 30, 2018 and $20.6 million at September 30, 2017. Nonperforming assets as a percentage of total assets were 0.61% at September 30, 2018, 0.60% at June 30, 2018 and 0.78% at September 30, 2017. The Company’s continues to minimize nonperforming assets through diligent collection efforts, prudent workout arrangements and strong underwriting.

Balance Sheet
Total assets decreased $26.9 million, or 0.9%, to $2.85 billion at September 30, 2018 from $2.88 billion at June 30, 2018. Net loans decreased $77.1 million, or 3.4%, to $2.20 billion at September 30, 2018 from $2.28 billion at June 30, 2018. The net decrease in loans for the three months ended September 30, 2018 was primarily due to decreases of $103.1 million in residential real estate, $24.6 million in construction loans and $18.5 million in consumer loans partially offset by increases of $62.3 million in commercial real estate loans and $7.3 million in commercial loans. Loans held for sale increased $84.3 million, or 118.6%, to $155.3 million at September 30, 2018 from $71.0 million at June 30, 2018 due to the transfer of a $105.4 million residential real estate loan portfolio to held for sale. 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 decreased $16.9 million, or 0.8%, to $2.19 billion at September 30, 2018 from $2.20 billion at June 30, 2018. Compared to the prior quarter, non-certificate accounts decreased $80.3 million, term certificate accounts increased $76.0 million and brokered deposits decreased $12.6 million. Term certificate growth reflects special promotions offered during the quarter for 11 and 14 month term certificates. Borrowings were $265.0 million at September 30, 2018 and $287.4 million at June 30, 2018. We also issued $35.0 million of fixed-to-floating rate subordinated debentures on August 30, 2018 with a rate of 5.625%. Issuance costs of $1.2 million were deferred and are being amortized over the term of the debentures.

Total stockholders’ equity was $353.3 million at September 30, 2018 compared to $348.6 million at June 30, 2018 and $336.6 million at September 30, 2017. The tangible common equity to tangible assets ratio was 11.96% at September 30, 2018, 11.68% at June 30, 2018 and 12.36% at September 30, 2017. At September 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 23 full-service branches, two limited service branches, two commercial loan offices in Boston, Massachusetts and Providence, Rhode Island, and 16 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 40 offices in Massachusetts, Rhode Island, New Hampshire, Maine, and New Jersey and also does business in five 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’s ability to achieve the synergies and value creation contemplated by the Coastway acquisition; 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,
2018

June 30,
2018

March 31,
2018
December 31,
2017
September 30,
2017
(Dollars in thousands)
 
Assets
 
Cash and due from banks $ 18,478 $ 20,232 $ 15,205 $ 16,348 $ 15,393
Short-term investments   76,619       112,264       92,105   64,443   79,412
Total cash and cash equivalents 95,097 132,496 107,310 80,791 94,805
 
Securities available for sale, at fair value 191,847 185,702 182,173 170,853 166,122
Securities held to maturity, at amortized cost 47,371 48,251 46,095 46,869 47,752
Federal Home Loan Bank stock, at cost 13,263 15,310 13,538 15,532 16,356
Loans held for sale, at fair value 155,268 71,017 34,129 59,460 96,201
Loans:
Residential real estate 652,909 756,007 762,361 766,917 769,418
Commercial real estate 788,561 726,276 687,121 655,419 623,054
Construction   138,642       163,240       144,949   128,643   76,668
Total mortgage loans on real estate 1,580,112 1,645,523 1,594,431 1,550,979 1,469,140
Commercial 139,616 132,293 111,013 109,523 111,627
Consumer   498,417       516,897       521,634   527,820   533,707
Loans 2,218,145 2,294,713 2,227,078 2,188,322 2,114,474
Less: Allowance for loan losses (19,440) (19,244) (18,863) (18,489) (17,933)
Net deferred loan costs   5,677       5,982       6,075   6,645   8,035
Net loans 2,204,382 2,281,451 2,214,290 2,176,478 2,104,576
Mortgage servicing rights, at fair value 23,748 22,832 22,696 21,092 20,376
Goodwill and other intangible assets 13,726 13,717 13,675 13,497 13,519
Other assets   108,098       108,938       101,671   100,348   99,752
Total assets $ 2,852,800 $     2,879,714 $     2,735,577 $ 2,684,920 $ 2,659,459
 
Liabilities and Stockholders' Equity
 
Deposits:
NOW and demand deposit accounts $ 432,628 $ 429,397 $ 419,776 $ 395,153 $ 395,728
Regular savings and club accounts 327,030 403,732 378,818 356,300 404,465
Money market deposit accounts 674,657 681,524 701,360 721,021 666,613
Brokered deposits 66,831 79,396 70,176 73,490 73,127
Term certificate accounts   684,495       608,453       557,082   467,774   463,612
Total deposits 2,185,641 2,202,502 2,127,212 2,013,738 2,003,545
Short-term borrowed funds 25,000 70,000 44,000 10,000
Long-term borrowed funds 206,187 217,438 226,364 246,365 266,366
Subordinated debt 33,855
Other liabilities and accrued expenses   48,772       41,198       37,144   37,333   38,947
Total liabilities   2,499,455       2,531,138       2,390,720   2,341,436   2,318,858
 
Common stock 327 327 327 327 327
Additional paid-in capital 150,732 150,063 148,559 147,060 145,525
Unearned compensation - ESOP (10,239) (10,388) (10,536) (10,685) (10,833)
Retained earnings 218,977 213,049 209,946 207,590 205,997
Treasury stock (1,548) (742) (742) (280)
Accumulated other comprehensive loss   (4,904)       (3,733)       (2,697)   (528)   (415)
Total stockholders' equity   353,345       348,576       344,857   343,484   340,601
 
Total liabilities and stockholders' equity $ 2,852,800 $     2,879,714 $     2,735,577 $ 2,684,920 $ 2,659,459
                             

HarborOne Bancorp, Inc.

Consolidated Statements of Net Income - Trend

(Unaudited)

 
Quarters Ended
September 30,
2018
June 30,
2018
March 31,
2018
December 31,
2017
September 30,
2017
(Dollars in thousands, except per share amounts)
 
Interest and dividend income:
Interest and fees on loans $ 25,115 $ 23,866 $ 22,504 $ 21,349 $ 20,990
Interest on loans held for sale 625 521 411 777 796
Interest on securities 1,629 1,567 1,496 1,389 1,334
Other interest and dividend income   480         297         274   294     294  
Total interest and dividend income   27,849         26,251         24,685   23,809     23,414  
 
Interest expense:
Interest on deposits 5,409 4,450 3,523 3,151 2,812
Interest on FHLB borrowings 1,130 906 1,038 1,226 1,333
Interest on subordinated debentures   189                        
Total interest expense   6,728         5,356         4,561   4,377     4,145  
 
Net interest and dividend income 21,121 20,895 20,124 19,432 19,269
 
Provision for loan losses   632         886         808   760     921  
 
Net interest income, after provision for loan losses   20,489         20,009         19,316   18,672     18,348  
 
Noninterest income:
Mortgage banking income:
Changes in mortgage servicing rights fair value (378 ) (306 ) 1,022 (74 ) (488 )
Other   9,249         8,765         6,261   9,134     11,071  
Total mortgage banking income 8,871 8,459 7,283 9,060 10,583
 
Deposit account fees 3,302 3,224 2,967 3,223 3,172
Income on retirement plan annuities 100 119 113 118 114
Bank-owned life insurance income 243 243 239 246 260
Other income   1,124         512         747   1,507     498  
Total noninterest income   13,640         12,557         11,349   14,154     14,627  
 
Noninterest expenses:
Compensation and benefits 16,809 17,345 16,352 17,655 17,325
Occupancy and equipment 3,027 2,961 3,275 3,047 2,954
Data processing 1,702 1,569 1,553 1,560 1,547
Loan expense 1,503 1,390 1,262 1,752 1,884
Marketing 639 1,084 999 936 1,136
Professional fees 712 915 968 1,097 1,126
Deposit insurance 540 491 494 412 397
Other expenses   2,451         2,763         2,696   3,234     2,069  
Total noninterest expenses   27,383         28,518         27,599   29,693     28,438  
 
Income before income taxes 6,746 4,048 3,066 3,133 4,537
 
Income tax provision   818         945         814   1,540     1,699  
 
Net income $ 5,928   $     3,103   $     2,252 $ 1,593   $ 2,838  
 
Earnings per common share:
Basic $ 0.19 $ 0.10 $ 0.07 $ 0.05 $ 0.09
Diluted $ 0.19 $ 0.10 $ 0.07 $ 0.05 $ 0.09
Weighted average shares outstanding:
Basic 31,575,210 31,578,961 31,569,811 31,582,069 31,303,281
Diluted 31,575,811 31,578,961 31,569,811 31,582,069 31,303,281
                   

HarborOne Bancorp, Inc.

Consolidated Statements of Net Income

(Unaudited)

 
Nine Months Ended September 30,
(Dollars in thousands, except per share amounts) 2018 2017 $ Change % Change
 
Interest and dividend income:
Interest and fees on loans $ 71,485 $ 59,765 $ 11,720 19.6 %
Interest on loans held for sale 1,557 1,962 (405) (20.6)
Interest on securities 4,692 3,882 810 20.9
Other interest and dividend income   1,051   866   185 21.4
Total interest and dividend income   78,785   66,475   12,310 18.5
 
Interest expense:
Interest on deposits 13,382 7,811 5,571 71.3
Interest on FHLB borrowings 3,074 3,748 (674) (18.0)
Interest on subordinated debentures   189     189 100.0
Total interest expense   16,645   11,559   5,086 44.0
 
Net interest and dividend income 62,140 54,916 7,224 13.2
 
Provision for loan losses   2,326   1,656   670 40.5
 
Net interest income, after provision for loan losses   59,814   53,260   6,554 12.3
 
Noninterest income:
Mortgage banking income:
Changes in mortgage servicing rights fair value 338 (1,982) 2,320 117.1
Other   24,275   30,117   (5,842) (19.4)
Total mortgage banking income 24,613 28,135 (3,522) (12.5)
 
Deposit account fees 9,493 9,088 405 4.5
Income on retirement plan annuities 332 337 (5) (1.5)
Gain on sale of consumer loans 78 (78) (100.0)
Bank-owned life insurance income 725 778 (53) (6.8)
Other income   2,383   1,964   419 21.3
Total noninterest income   37,546   40,380   (2,834) (7.0)
 
Noninterest expenses:
Compensation and benefits 50,506 48,568 1,938 4.0
Occupancy and equipment 9,263 8,668 595 6.9
Data processing 4,824 4,597 227 4.9
Loan expense 4,155 5,129 (974) (19.0)
Marketing 2,722 2,659 63 2.4
Professional fees 2,595 3,136 (541) (17.3)
Deposit insurance 1,525 1,305 220 16.9
Other expenses   7,910   5,659   2,251 39.8
Total noninterest expenses   83,500   79,721   3,779 4.7
 
Income before income taxes 13,860 13,919 (59) (0.4)
 
Income tax provision   2,577   5,133   (2,556) (49.8)
 
Net income $ 11,283 $ 8,786 $ 2,497 28.4 %
 
Earnings per common share:
Basic $ 0.36 $ 0.28
Diluted $ 0.36 $ 0.28
Weighted average shares outstanding:
Basic 31,574,681 31,109,104
Diluted 31,574,881 31,109,104
                             

HarborOne Bancorp, Inc.

Average Balances / Yields

(Unaudited)

 
Quarters Ended
September 30, 2018 June 30, 2018 September 30, 2017

Average
Outstanding
Balance

Interest

Yield/
Cost (6)

Average
Outstanding
Balance
Interest

Yield/
Cost (6)

Average
Outstanding
Balance
Interest

Yield/
Cost (6)

 
 
(Dollars in thousands)

Interest-earning assets:

Loans (1) $ 2,375,892 $ 25,740 4.30 % $ 2,303,245 $ 24,387 4.25 % $ 2,190,303 $ 21,786 3.95 %
Investment securities (2) 239,443 1,674 2.77 233,587 1,613 2.77 206,761 1,409 2.70
Other interest-earning assets   74,390   480 2.56   41,584   297 2.87       102,589   294 1.14
Total interest-earning assets 2,689,725   27,894 4.11 2,578,416   26,297 4.09 2,499,653   23,489 3.73
Noninterest-earning assets   133,113   130,551       128,966
Total assets $ 2,822,838 $ 2,708,967 $     2,628,619
Interest-bearing liabilities:
Savings accounts $ 338,109 149 0.17 $ 346,201 150 0.17 $ 402,470 195 0.19
NOW accounts 126,978 21 0.06 128,360 21 0.06 125,636 20 0.06
Money market accounts 678,721 1,650 0.96 698,591 1,496 0.86 646,873 970 0.59
Certificates of deposit 670,029 3,283 1.94 592,811 2,534 1.71 463,077 1,382 1.18
Brokered deposits   65,998   306 1.84   66,892   249 1.50       82,976   245 1.17
Total interest-bearing deposits 1,879,835 5,409 1.14 1,832,855 4,450 0.97 1,721,032 2,812 0.65
FHLB advances 256,391 1,130 1.75 217,712 906 1.67 287,858 1,333 1.84
Subordinated debentures   11,788   189 6.36            
Total borrowings   268,179   1,319 1.95   217,712   906 1.67       287,858   1,333 1.84
Total interest-bearing liabilities 2,148,014   6,728 1.24 2,050,567   5,356 1.05 2,008,890   4,145 0.82
Noninterest-bearing liabilities:
Noninterest-bearing deposits 285,025 278,846 251,579
Other noninterest-bearing liabilities   39,445   33,561       30,815
Total liabilities 2,472,484 2,362,974 2,291,284
Total equity   350,354   345,993       337,335
Total liabilities and equity $ 2,822,838 $ 2,708,967 $     2,628,619
Tax equivalent net interest income 21,166 20,941 19,344
Tax equivalent interest rate spread (3) 2.87 % 3.04 % 2.91 %
Less: tax equivalent adjustment   45   46   75
Net interest income as reported $ 21,121 $ 20,895 $ 19,269
Net interest-earning assets (4) $ 541,711 $ 527,849 $     490,763
Net interest margin (5) 3.12 % 3.25 % 3.06 %
Tax equivalent effect 0.01 0.01
Net interest margin on a fully tax equivalent basis 3.12 % 3.26 % 3.07 %
Average interest-earning assets to average interest-bearing liabilities 125.22 % 125.74 % 124.43 %
 
Supplemental information:
Total deposits, including demand deposits $ 2,164,860 $ 5,409 $ 2,111,701 $ 4,450 $ 1,972,611 $ 2,812
Cost of total deposits 0.99 % 0.85 % 0.57 %
Total funding liabilities, including demand deposits $ 2,433,039 $ 6,728 $ 2,329,413 $ 5,356 $ 2,260,469 $ 4,145
Cost of total funding liabilities 1.10 % 0.92 % 0.73 %
 
 
(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 September 30, 2018 and June 30, 2018 and 35% for the period ended September 30, 2017. The yield on investments before tax equivalent adjustments for the quarters presented were 2.70%, 2.69%, and 2.56%, 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, 2018 September 30, 2017

Average
Outstanding
Balance

Interest

Yield/
Cost (6)

Average
Outstanding
Balance

Interest

Yield/
Cost (6)

 
 
(Dollars in thousands)
Interest-earning assets:
Loans (1) $ 2,309,554 $ 73,042 4.23 % $ 2,144,071 $ 61,727 3.85 %
Investment securities (2) 233,508 4,828 2.76 204,693 4,109 2.68
Other interest-earning assets   51,242   1,051 2.74   79,354   866 1.46
Total interest-earning assets 2,594,304   78,921 4.07 2,428,118   66,702 3.67
Noninterest-earning assets   129,795   132,054
Total assets $ 2,724,099 $ 2,560,172
Interest-bearing liabilities:
Savings accounts $ 338,799 434 0.17 $ 360,660 497 0.18
NOW accounts 126,985 62 0.06 125,902 59 0.06
Money market accounts 697,889 4,531 0.87 642,764 2,544 0.53
Certificates of deposit 587,194 7,535 1.72 467,342 4,101 1.17
Brokered deposits   70,559   820 1.55   75,140   610 1.08
Total interest-bearing deposits 1,821,426 13,382 0.98 1,671,808 7,811 0.62
FHLB advances 242,499 3,074 1.69 278,181 3,748 1.80
Subordinated debentures   3,972   189 6.36    
Total borrowings   246,471   3,263 1.77   278,181   3,748 1.80
Total interest-bearing liabilities 2,067,897   16,645 1.08 1,949,989   11,559 0.79
Noninterest-bearing liabilities:
Noninterest-bearing deposits 274,866 246,512
Other noninterest-bearing liabilities   34,851   29,750
Total liabilities 2,377,614 2,226,251
Total equity   346,485   333,921
Total liabilities and equity $ 2,724,099 $ 2,560,172
Tax equivalent net interest income 62,276 55,143
Tax equivalent interest rate spread (3) 2.99 % 2.88 %
Less: tax equivalent adjustment   136   227
Net interest income as reported $ 62,140 $ 54,916
Net interest-earning assets (4) $ 526,407 $ 478,129
Net interest margin (5) 3.20 % 3.02 %
Tax equivalent effect 0.01 0.02
Net interest margin on a fully tax equivalent basis 3.21 % 3.04 %
Average interest-earning assets to average interest-bearing liabilities 125.46 % 124.52 %
 
Supplemental information:
Total deposits, including demand deposits $ 2,096,292 $ 13,382 $ 1,918,320 $ 7,811
Cost of total deposits 0.85 % 0.54 %
Total funding liabilities, including demand deposits $ 2,342,763 $ 16,645 $ 2,196,501 $ 11,559
Cost of total funding liabilities 0.95 % 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 tax equivalent basis using a tax rate of 21% for 2018 and 35% for 2017. The yield on investments before tax equivalent adjustments was 2.69% and 2.54% for the years ended September 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
September 30, 2018 June 30, 2018 March 31, 2018 December 31, 2017 September 30, 2017
(In thousands)
Interest-earning assets:
Loans (1) $ 2,375,892 $ 2,303,245 $ 2,248,119 $ 2,230,303 $ 2,190,303
Investment securities (2) 239,443 233,587 227,362 214,127 206,761
Other interest-earning assets   74,390               41,584               37,346   73,014   102,589
Total interest-earning assets 2,689,725 2,578,416 2,512,827 2,517,444 2,499,653
Noninterest-earning assets   133,113               130,551               125,640   127,374   128,966
Total assets $ 2,822,838 $             2,708,967 $             2,638,467 $ 2,644,818 $ 2,628,619
Interest-bearing liabilities:
Savings accounts $ 338,109 $ 346,201 $ 332,414 $ 353,350 $ 402,470
NOW accounts 126,978 128,360 125,602 126,661 125,636
Money market accounts 678,721 698,591 716,380 716,862 646,873
Certificates of deposit 670,029 592,811 496,839 464,139 463,077
Brokered deposits   65,998               66,892               78,930   74,783   82,976
Total interest-bearing deposits 1,879,835 1,832,855 1,750,165 1,735,795 1,721,032
FHLB advances 256,391 217,712 253,359 280,092 287,858
Subordinated debentures   11,788                                
Total borrowings   268,179               217,712               253,359   280,092   287,858
Total interest-bearing liabilities 2,148,014 2,050,567 2,003,524 2,015,887 2,008,890
Noninterest-bearing liabilities:
Noninterest-bearing deposits 285,025 278,846 260,455 256,522 251,579
Other noninterest-bearing liabilities   39,445               33,561               31,457   31,459   30,815
Total liabilities 2,472,484 2,362,974 2,295,436 2,303,868 2,291,284
Total equity   350,354               345,993               343,031   340,950   337,335
Total liabilities and equity $ 2,822,838 $             2,708,967 $             2,638,467 $ 2,644,818 $ 2,628,619
 
Annualized Yield Trend - Quarters Ended
September 30, 2018 June 30, 2018 March 31, 2018 December 31, 2017 September 30, 2017
Interest-earning assets:
Loans (1) 4.30 % 4.25 % 4.13 % 3.94 % 3.95 %
Investment securities (2) 2.77 % 2.77 % 2.75 % 2.71 % 2.70 %
Other interest-earning assets 2.56 % 2.87 % 2.97 % 1.60 % 1.14 %
Total interest-earning assets 4.11 % 4.09 % 3.99 % 3.76 % 3.73 %
 
Interest-bearing liabilities:
Savings accounts 0.17 % 0.17 % 0.17 % 0.18 % 0.19 %
NOW accounts 0.06 % 0.06 % 0.06 % 0.06 % 0.06 %
Money market accounts 0.96 % 0.86 % 0.78 % 0.71 % 0.59 %
Certificates of deposit 1.94 % 1.71 % 1.40 % 1.23 % 1.18 %
Brokered deposits 1.84 % 1.50 % 1.36 % 1.28 % 1.17 %
Total interest-bearing deposits 1.14 % 0.97 % 0.82 % 0.72 % 0.65 %
FHLB advances 1.75 % 1.67 % 1.66 % 1.74 % 1.84 %
Subordinated debentures 6.36 % % % % %
Total borrowings 1.95 % 1.67 % 1.66 % 1.74 % 1.84 %
Total interest-bearing liabilities 1.24 % 1.05 % 0.92 % 0.86 % 0.82 %
 
(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): 2018 2018 2018 2017 2017
 
Return on average assets (ROAA) 0.84 % 0.46 % 0.34 % 0.24 % 0.43
 
Return on average equity (ROAE) 6.77 % 3.59 % 2.63 % 1.87 % 3.37
 
Efficiency ratio (1) 78.71 % 85.19 % 87.62 % 88.34 % 83.83
 
(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,
2018

June 30,
2018

March 31,
2018

December 31,
2017

September 30,
2017

Asset Quality
(Dollars in thousands)
 
Total nonperforming assets $ 17,407 $ 17,397 $ 17,171 $ 18,617 $ 20,627
 
Nonperforming assets to total assets 0.61 % 0.60 % 0.63 % 0.69 % 0.78 %
 
Allowance for loan losses to total loans 0.87 % 0.84 % 0.84 % 0.84 % 0.84 %
 
Net charge offs $ 436 $ 505 $ 434 $ 204 $ 169
 
Annualized net charge offs/average loans 0.08 % 0.09 % 0.08 % 0.04 % 0.03 %
 
Allowance for loan losses to nonperforming loans 116.16 % 117.57 % 115.51 % 103.55 % 91.47 %
                   

HarborOne Bancorp, Inc.

Selected Financial Highlights

(Unaudited)

 
September 30,
2018
June 30,
2018
March 31,
2018
December 31,
2017
September 30,
2017
Capital and Share Related
(Dollars in thousands, except per share data)
 
Common stock outstanding 32,585,519 32,622,695 32,622,695 32,647,395 32,662,295
 
Book value per share $ 10.84 $ 10.69 $ 10.57 $ 10.52 $ 10.43
 
Tangible common equity
Total stockholders' equity $ 353,345 $ 348,576 $ 344,857 $ 343,484 $ 340,601
Less: Goodwill and other intangibles 13,726     13,717     13,675 13,497 13,519
Tangible common equity $ 339,619 $     334,859 $     331,182 $ 329,987 $ 327,082
 
Tangible book value per share (1) $ 10.42 $ 10.26 $ 10.15 $ 10.11 $ 10.01
 
Tangible assets
Total assets $ 2,852,800 $ 2,879,714 $ 2,735,577 $ 2,684,920 $ 2,659,459
Less: Goodwill and other intangibles 13,726     13,717     13,675 13,497 13,519
Tangible assets $ 2,839,074 $     2,865,997 $     2,721,902 $ 2,671,423 $ 2,645,940
 
Tangible common equity / tangible assets (2) 11.96 % 11.68 % 12.17 % 12.35 % 12.36 %
 
(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.
Linda Simmons, 508-895-1379
SVP, CFO

Source: HarborOne Bancorp, Inc.