Press Release

HarborOne Bancorp, Inc. Announces 2018 Fourth Quarter Earnings

Company Release - 1/25/2019 8:46 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 $111,000, or $0.00 basic and diluted earnings per share for the fourth quarter of 2018, compared to $5.9 million, or $0.19 per basic and diluted share, for the prior quarter and net income of $1.6 million, or $0.05 per basic and diluted share, for the same quarter last year. For the year ended December 31, 2018 net income was $11.4 million, or $0.36 per basic and diluted share, as compared to $10.4 million, or $0.33 per basic and diluted share, for the same period last year.

Quarterly and annual earnings for 2018 were significantly impacted by the Coastway Bancorp, Inc. (“Coastway”) acquisition, which closed on October 5, 2018, resulting in merger expenses of $3.8 million and $5.1 million, respectively. Excluding merger expenses, net income for the three months and year ended December 31, 2018 was $3.0 million, or $0.09 per basic and diluted share and $15.3 million, or $0.49 per basic and diluted share, respectively.

Selected highlights:

  • Sustained commercial loan growth
  • 14 basis point net interest margin improvement quarter over quarter
  • Net interest income expands $14.6 million, or 19.6% year over year

“Our organic commercial loan growth and recent acquisition of Coastway has provided year over year net interest income expansion, as we continue to maintain strong credit quality, said James W. Blake, CEO. We look forward to continuing our momentum as we expand our New England franchise through new branches, product development and brand awareness.”

Net Interest Income
The Company’s net interest and dividend income was $26.8 million for the quarter ended December 31, 2018, up $5.7 million, or 26.8%, from $21.1 million for the quarter ended September 30, 2018 and up $7.4 million, or 37.9%, from $19.4 million for the quarter ended December 31, 2017. The tax-equivalent interest rate spread and net interest margin on a fully tax equivalent basis were 3.00% and 3.26%, respectively, for the quarter ended December 31, 2018 compared to 2.87% and 3.12%, respectively, for the quarter ended September 30, 2018 and 2.90% and 3.07%, respectively, for the quarter ended December 31, 2017.

The increase in net interest income from the previous quarter reflects a $9.1 million, or 32.6%, increase in total interest and dividend income partially offset by an increase of $3.4 million, or 50.6% in total interest expense. Compared to the prior quarter, interest and dividend income was positively impacted by the Coastway acquisition and organic commercial loan growth. Interest on loans in the fourth quarter of 2018 includes $900,000 in accretion income of the Coastway loans’ fair value discount and $338,000 in prepayment penalties on commercial loans. Prepayment penalties in the previous quarter were $233,000. The yield on loans was 4.63% for the quarter ended December 31, 2018 compared to 4.30% for the quarter ended September 30, 2018. The increase in interest expense is due to acquisition of Coastway deposits and an increase in higher cost money market balances driving a 14 basis point increase in the cost of interest-bearing deposits, and an increase in average FHLB advances of $181.6 million and a 42 basis point increase in the cost of those funds, primarily reflecting the Coastway borrowings acquired.

The increase in net interest income from the prior year quarter reflects a $13.1 million, or 55.1%, increase in total interest and dividend income and an increase of $5.8 million, or 131.5%, in total interest expense. The increases largely reflect the impact of the Coastway acquisition. Also positively impacting interest and dividend income is the Company’s commercial loan growth and an increase in the yield on loans to 4.63% from 3.94%, 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 $496.8 million with a 56 basis point increase in the cost of those funds and a $191.6 million increase in average borrowings with a 74 basis point increase in the cost of those funds. The increase in deposits reflects the Coastway acquired deposits and organic deposit growth in money market and term certificates of deposits.

Noninterest Income
Noninterest income decreased to $11.7 million for the quarter ended December 31, 2018, down $2.0 million, or 14.6%, from the quarter ended September 30, 2018. The decrease is primarily due to a decrease in mortgage banking income of $2.9 million and other income of $584,000. Results of HarborOne Mortgage, LLC (“HarborOne Mortgage”) were down compared to the third quarter. Lower mortgage banking income reflects industry wide conditions, including lack of inventory and lower refinancing activity due to higher mortgage rates. We expect these headwinds to continue into 2019. Other mortgage banking income decreased $1.5 million primarily reflecting the decrease in mortgage origination volumes. Additionally mortgage servicing rights fair value decreased $1.4 million. The decrease in other income is primarily due to a decrease of $621,000 in swap fee income. The decreases were partially offset by recognition of a $746,000 death benefit through bank-owned life insurance income and a $705,000 increase in deposit account fees reflecting the added Coastway accounts.

Noninterest income decreased $2.5 million or 17.7%, as compared to the quarter ended December 31, 2017. Mortgage banking income decreased $3.1 million, or 33.8%, and other income decreased $967,000, partially offset by an increase of $757,000 in bank owned life insurance income from the above mentioned death benefit and an increase in deposit account fee income of $784,000. Mortgage banking income decreased 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. Additionally, mortgage servicing rights fair value decreased $1.7 million. The decrease in other income compared to prior year quarter is primarily due to a $1.2 million reversal of contingent consideration in 2017 and no such transaction in 2018.

Noninterest Expense
Noninterest expenses were $36.6 million for the quarter ended December 31, 2018, an increase of $9.2 million, or 33.6%, from the quarter ended September 30, 2018 including merger expenses of $3.8 million as compared to $274,000 in the third quarter. The majority of these costs were related to contract terminations and legal and professional fees.

Additionally, compensation and benefits and occupancy and equipment increased $3.3 million and $922,000, respectively. The increase in compensation and benefits primarily reflects an increase in salary expense of $2.6 million primarily due to the addition of Coastway employees and a $642,000 increase in stock option expense. During the third quarter of 2018 a clerical error in the 2017 stock option award amounts was corrected resulting in a one-time $652,000 expense reversal, the 2018 fourth quarter results reflect the normalized quarterly expense for the plan. The occupancy and equipment expense increase is due to depreciation and real estate taxes on the additional Coastway properties. Other expenses increased $985,000 primarily due to amortization of core deposit intangibles of $618,000.

Total noninterest expenses increased $6.9 million, or 23.2%, from the quarter ended December 31, 2017. Compensation and benefits increased $2.4 million, occupancy and equipment expense increased $902,000 and the 2018 quarter included $3.8 million in merger expense whereas there were none in the quarter ended December 31, 2017, due primarily to the Coastway acquisition. Offsetting the increases was a loan expense decrease of $525,000 consistent with the decrease in loan originations. The $325,000 decrease in marketing expenses primarily reflects timing.

Income Tax Provision
The effective tax rate was 68.0% for the quarter ended December 31, 2018, compared to 12.1% for the quarter ended September 30, 2018 and 49.2% for the quarter ended December 31, 2017. The effective tax rate for the years ended December 31, 2018 and 2017 was 19.8% and 39.1%, respectively. The increase in the effective tax rate from the previous quarter primarily resulted from nondeductible merger expenses. Additionally, in the third quarter, an $826,000 tax refund for the tax year 2014 was recognized. In 2017 the Company filed amended returns that reflected a change in tax basis of certain assets. The effective tax rates for 2018 periods also have been impacted by the enactment of the Tax Cuts and Jobs Act of 2017 which 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 $1.5 million for the quarter ended December 31, 2018, compared to $632,000 for the quarter ended September 30, 2018 and $760,000 for the quarter ended December 31, 2017. The increase in the provision for the quarter ended December 31, 2018 is primarily due to commercial and construction loan growth. Also contributing to the increase in the provision was $18.1 million in loans that were downgraded to a watch risk rating and resulted in an increase in the allocated reserves of $439,000.

Net charge-offs totaled $287,000 for the quarter ended December 31, 2018, or 0.04%, of average loans outstanding on an annualized basis, compared to $436,000, or 0.08% of average loans outstanding on an annualized basis, for the quarter ended September 30, 2018 and $204,000, or 0.04% of average loans outstanding on an annualized basis, for the quarter ended December 31, 2017. Generally increases in loan loss provisions each quarter were 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 $20.7 million, or 0.69%, of total loans at December 31, 2018, compared to $19.4 million, or 0.87%, of total loans at September 30, 2018 and $18.5 million, or 0.84%, of total loans at December 31, 2017. In accordance with generally accepted accounting principles for acquisition accounting, the loans acquired through the acquisition of Coastway were recorded at fair value; accordingly, there was no allowance for loan losses associated with the acquired loans.

Total nonperforming assets were $18.5 million at December 31, 2018 compared to $17.4 million at September 30, 2018 and $18.6 million at December 31, 2017. Nonperforming assets as a percentage of total assets were 0.51% at December 31, 2018, 0.61% at September 30, 2018 and 0.69% at December 31, 2017. The Company continues to minimize nonperforming assets through diligent collection efforts, prudent workout arrangements and strong underwriting.

Balance Sheet
Total assets increased $800.3 million, or 28.1%, to $3.65 billion at December 31, 2018 from $2.85 billion at September 30, 2018. On October 5, 2018, the Company completed the acquisition of Coastway, resulting in the addition of nine branch locations in Rhode Island. The transaction included the acquisition of $703.9 million in loans and the assumption of $476.5 million in deposits and $276.8 million in FHLB borrowings, each at fair value. The recording of the transaction resulted in $56.4 million in goodwill and $9.0 million in core deposit intangibles.

Net loans increased $760.5 million, or 34.5%, to $2.96 billion at December 31, 2018 from $2.20 billion at September 30, 2018. The net increase in loans for the three months ended December 31, 2018 was primarily due to the $703.9 million in loans at fair value acquired from Coastway. Gross loans excluding the Coastway loans increased $58.2 million from September 30, 2018, reflecting increases in commercial real estate of $31.5 million, construction loans of $37.7 million and commercial loans of $6.8 million offset by decreases in residential real estate loans of $9.7 million and consumer loans of $8.2 million. Loans held for sale decreased $113.2 million, or 72.9%, to $42.1 million at December 31, 2018 from $155.3 million at September 30, 2018 due to the settlement of a $105.4 million residential real estate loan portfolio 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 increased $499.4 million, or 22.9%, to $2.69 billion at December 31, 2018 from $2.19 billion at September 30, 2018 and primarily reflects the fair value of deposits acquired from Coastway of $476.5 million. Compared to the prior quarter, excluding the Coastway acquired balances, non-certificate accounts increased $50.8 million, brokered deposits increased $10.7 million and term certificate accounts decreased $38.6 million. The decrease in term certificates includes net maturities of $28.6 million in Coastway acquired term certificates. FHLB borrowings were $519.9 million at December 31, 2018 and $231.2 million at September 30, 2018. We acquired $276.8 million from Coastway. Subordinated debt was $33.8 million at December 31, 2018 and September 30, 2018.

Total stockholders’ equity was $357.6 million at December 31, 2018 compared to $353.3 million at September 30, 2018 and $343.5 million at December 31, 2017. The tangible common equity to tangible assets ratio was 7.81% at December 31, 2018, 11.96% at September 30, 2018 and 12.35% at December 31, 2017. At December 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 Eastern Massachusetts and Rhode Island 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 net income and earnings per share before merger expenses, 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)

 
December 31, September 30, June 30, March 31, December 31,
(Dollars in thousands) 2018 2018 2018 2018 2017
 
Assets
 
Cash and due from banks $ 27,686 $ 18,478 $ 20,232 $ 15,205 $ 16,348
Short-term investments   77,835     76,619     112,264     92,105     64,443  
Total cash and cash equivalents 105,521 95,097 132,496 107,310 80,791
 
Securities available for sale, at fair value 209,293 191,847 185,702 182,173 170,853
Securities held to maturity, at amortized cost 44,688 47,371 48,251 46,095 46,869
Federal Home Loan Bank stock, at cost 24,969 13,263 15,310 13,538 15,532
Loans held for sale, at fair value 42,107 155,268 71,017 34,129 59,460
Loans:
Residential real estate 1,100,797 652,909 756,007 762,361 766,917
Commercial real estate 934,420 788,561 726,276 687,121 655,419
Construction   176,319     138,642     163,240     144,949     128,643  
Total mortgage loans on real estate 2,211,536 1,580,112 1,645,523 1,594,431 1,550,979
Commercial 277,271 139,616 132,293 111,013 109,523
Consumer   491,445     498,417     516,897     521,634     527,820  
Loans 2,980,252 2,218,145 2,294,713 2,227,078 2,188,322
Less: Allowance for loan losses (20,655 ) (19,440 ) (19,244 ) (18,863 ) (18,489 )
Net deferred loan costs   5,255     5,677     5,982     6,075     6,645  
Net loans 2,964,852 2,204,382 2,281,451 2,214,290 2,176,478
Mortgage servicing rights, at fair value 22,217 23,748 22,832 22,696 21,092
Goodwill 70,088 13,660 13,629 13,565 13,365
Intangible assets 8,379 66 88 110 132
Other assets   161,007     108,098     108,938     101,671     100,348  
Total assets $ 3,653,121   $ 2,852,800   $ 2,879,714   $ 2,735,577   $ 2,684,920  
 
Liabilities and Stockholders' Equity
 
Deposits:
NOW and demand deposit accounts $ 556,517 $ 432,628 $ 429,397 $ 419,776 $ 395,153
Regular savings and club accounts 482,088 327,030 403,732 378,818 356,300
Money market deposit accounts 758,933 674,657 681,524 701,360 721,021
Brokered deposits 77,508 66,831 79,396 70,176 73,490
Term certificate accounts   810,015     684,495     608,453     557,082     467,774  
Total deposits 2,685,061 2,185,641 2,202,502 2,127,212 2,013,738
Short-term borrowed funds 290,000 25,000 70,000 44,000
Long-term borrowed funds 229,936 206,187 217,438 226,364 246,365
Subordinated debt 33,799 33,855
Other liabilities and accrued expenses   56,751     48,772     41,198     37,144     37,333  
Total liabilities   3,295,547     2,499,455     2,531,138     2,390,720     2,341,436  
 
Common stock 327 327 327 327 327
Additional paid-in capital 152,156 150,732 150,063 148,559 147,060
Unearned compensation - ESOP (10,091 ) (10,239 ) (10,388 ) (10,536 ) (10,685 )
Retained earnings 219,088 218,977 213,049 209,946 207,590
Treasury stock (1,548 ) (1,548 ) (742 ) (742 ) (280 )
Accumulated other comprehensive loss   (2,358 )   (4,904 )   (3,733 )   (2,697 )   (528 )
Total stockholders' equity   357,574     353,345     348,576     344,857     343,484  
 
Total liabilities and stockholders' equity $ 3,653,121   $ 2,852,800   $ 2,879,714   $ 2,735,577   $ 2,684,920  
 
                 

HarborOne Bancorp, Inc.
Consolidated Statements of Net Income - Trend
(Unaudited)

 
Quarters Ended
December 31, September 30, June 30, March 31, December 31,
(Dollars in thousands, except per share amounts) 2018 2018 2018 2018 2017
 
Interest and dividend income:
Interest and fees on loans $ 33,947 $ 25,115 $ 23,866 $ 22,504 $ 21,349
Interest on loans held for sale 648 625 521 411 777
Interest on securities 1,788 1,629 1,567 1,496 1,389
Other interest and dividend income   540     480     297     274   294  
Total interest and dividend income   36,923     27,849     26,251     24,685   23,809  
 
Interest expense:
Interest on deposits 7,181 5,409 4,450 3,523 3,151
Interest on FHLB borrowings 2,400 1,130 906 1,038 1,226
Interest on subordinated debentures   552     189            
Total interest expense   10,133     6,728     5,356     4,561   4,377  
 
Net interest and dividend income 26,790 21,121 20,895 20,124 19,432
 
Provision for loan losses   1,502     632     886     808   760  
 
Net interest income, after provision for loan losses   25,288     20,489     20,009     19,316   18,672  
 
Noninterest income:
Mortgage banking income:
Changes in mortgage servicing rights fair value (1,734 ) (378 ) (306 ) 1,022 (74 )
Other   7,730     9,249     8,765     6,261   9,134  
Total mortgage banking income 5,996 8,871 8,459 7,283 9,060
 
Deposit account fees 4,007 3,302 3,224 2,967 3,223
Income on retirement plan annuities 101 100 119 113 118
Gain on sale and call of securities, net 5
Bank-owned life insurance income 1,003 243 243 239 246
Other income   540     1,124     512     747   1,507  
Total noninterest income   11,652     13,640     12,557     11,349   14,154  
 
Noninterest expenses:
Compensation and benefits 20,062 16,809 17,345 16,352 17,655
Occupancy and equipment 3,949 3,027 2,961 3,275 3,047
Data processing 1,965 1,702 1,569 1,553 1,560
Loan expense 1,227 1,503 1,390 1,262 1,752
Marketing 611 639 1,084 999 936
Professional fees 1,237 712 915 968 1,097
Deposit insurance 572 540 491 494 412
Merger expenses 3,808 274 524 486
Other expenses   3,162     2,177     2,239     2,210   3,234  
Total noninterest expenses   36,593     27,383     28,518     27,599   29,693  
 
Income before income taxes 347 6,746 4,048 3,066 3,133
 
Income tax provision   236     818     945     814   1,540  
 
Net income $ 111   $ 5,928   $ 3,103   $ 2,252 $ 1,593  
 
Earnings per common share:
Basic $ $ 0.19 $ 0.10 $ 0.07 $ 0.05
Diluted $ $ 0.19 $ 0.10 $ 0.07 $ 0.05
Weighted average shares outstanding:
Basic 31,571,467 31,575,210 31,578,961 31,569,811 31,582,069
Diluted 31,571,467 31,575,811 31,578,961 31,569,811 31,582,069
 
               

HarborOne Bancorp, Inc.
Consolidated Statements of Net Income
(Unaudited)

 
For the Years Ended December 31,
(Dollars in thousands, except per share amounts) 2018 2017 $ Change % Change
 
Interest and dividend income:
Interest and fees on loans $ 105,432 $ 81,114 $ 24,318 30.0 %
Interest on loans held for sale 2,205 2,739 (534 ) (19.5 )
Interest on securities 6,480 5,271 1,209 22.9
Other interest and dividend income   1,591     1,160     431   37.2
Total interest and dividend income   115,708     90,284     25,424   28.2
 
Interest expense:
Interest on deposits 20,563 10,962 9,601 87.6
Interest on FHLB borrowings 5,474 4,974 500 10.1
Interest on subordinated debentures   741         741   100.0
Total interest expense   26,778     15,936     10,842   68.0
 
Net interest and dividend income 88,930 74,348 14,582 19.6
 
Provision for loan losses   3,828     2,416     1,412   58.4
 
Net interest income, after provision for loan losses   85,102     71,932     13,170   18.3
 
Noninterest income:
Mortgage banking income:
Changes in mortgage servicing rights fair value (1,396 ) (2,056 ) 660 32.1
Other   32,005     39,251     (7,246 ) (18.5 )
Total mortgage banking income 30,609 37,195 (6,586 ) (17.7 )
 
Deposit account fees 13,500 12,311 1,189 9.7
Income on retirement plan annuities 433 455 (22 ) (4.8 )
Gain on sale of consumer loans 78 (78 ) (100.0 )
Gain on sale and call of securities, net 5 5 100.0
Bank-owned life insurance income 1,728 1,024 704 68.8
Other income   2,923     3,471     (548 ) (15.8 )
Total noninterest income   49,198     54,534     (5,336 ) (9.8 )
 
Noninterest expenses:
Compensation and benefits 70,568 66,223 4,345 6.6
Occupancy and equipment 13,212 11,715 1,497 12.8
Data processing 6,789 6,157 632 10.3
Loan expense 5,382 6,881 (1,499 ) (21.8 )
Marketing 3,333 3,595 (262 ) (7.3 )
Professional fees 3,832 4,233 (401 ) (9.5 )
Deposit insurance 2,097 1,717 380 22.1
Merger expenses 5,092 5,092 100.0
Other expenses   9,788     8,893     895   10.1
Total noninterest expenses   120,093     109,414     10,679   9.8
 
Income before income taxes 14,207 17,052 (2,845 ) (16.7 )
 
Income tax provision   2,813     6,673     (3,860 ) (57.8 )
 
Net income $ 11,394   $ 10,379   $ 1,015   9.8 %
 
Earnings per common share:
Basic $ 0.36 $ 0.33
Diluted $ 0.36 $ 0.33
Weighted average shares outstanding:
Basic 31,574,356 31,228,317
Diluted 31,574,356 31,228,317
 

 

                         

HarborOne Bancorp, Inc.
Average Balances / Yields
(Unaudited)

 
Quarters Ended
December 31, 2018 September 30, 2018 December 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) $ 2,964,531 $ 34,595 4.63 % $ 2,375,892 $ 25,740 4.30 % $ 2,230,303 $ 22,126 3.94 %
Investment securities (2) 253,631 1,832 2.87 239,443 1,674 2.77 214,127 1,465 2.71
Other interest-earning assets   49,932   540 4.29   74,390   480 2.56   73,014   294 1.60
Total interest-earning assets 3,268,094   36,967 4.49 2,689,725   27,894 4.11 2,517,444   23,885 3.76
Noninterest-earning assets   252,652   133,113   127,374
Total assets $ 3,520,746 $ 2,822,838 $ 2,644,818
Interest-bearing liabilities:
Savings accounts $ 484,153 319 0.26 $ 338,109 149 0.17 $ 353,350 159 0.18
NOW accounts 139,517 24 0.07 126,978 21 0.06 126,661 20 0.06
Money market accounts 725,604 2,233 1.22 678,721 1,650 0.96 716,862 1,287 0.71
Certificates of deposit 820,109 4,265 2.06 670,029 3,283 1.94 464,139 1,444 1.23
Brokered deposits   63,258   340 2.13   65,998   306 1.84   74,783   241 1.28
Total interest-bearing deposits 2,232,641 7,181 1.28 1,879,835 5,409 1.14 1,735,795 3,151 0.72
FHLB advances 438,023 2,400 2.17 256,391 1,130 1.75 280,092 1,226 1.74
Subordinated debentures   33,668   552 6.51   11,788   189 6.36    
Total borrowings   471,691   2,952 2.48   268,179   1,319 1.95   280,092   1,226 1.74
Total interest-bearing liabilities 2,704,332   10,133 1.49 2,148,014   6,728 1.24 2,015,887   4,377 0.86
Noninterest-bearing liabilities:
Noninterest-bearing deposits 408,074 285,025 256,522
Other noninterest-bearing liabilities   54,493   39,445   31,459
Total liabilities 3,166,899 2,472,484 2,303,868
Total equity   353,847   350,354   340,950
Total liabilities and equity $ 3,520,746 $ 2,822,838 $ 2,644,818
Tax equivalent net interest income 26,834 21,166 19,508
Tax equivalent interest rate spread (3) 3.00 % 2.87 % 2.90 %
Less: tax equivalent adjustment   44   45   76
Net interest income as reported $ 26,790 $ 21,121 $ 19,432
Net interest-earning assets (4) $ 563,762 $ 541,711 $ 501,557
Net interest margin (5) 3.25 % 3.12 % 3.06 %
Tax equivalent effect 0.01 0.01
Net interest margin on a fully tax equivalent basis 3.26 % 3.12 % 3.07 %
Average interest-earning assets to average interest-bearing liabilities 120.85 % 125.22 % 124.88 %
 
Supplemental information:
Total deposits, including demand deposits $ 2,640,715 $ 7,181 $ 2,164,860 $ 5,409 $ 1,992,317 $ 3,151
Cost of total deposits 1.08 % 0.99 % 0.63 %
Total funding liabilities, including demand deposits $ 3,112,406 $ 10,133 $ 2,433,039 $ 6,728 $ 2,272,409 $ 4,377
Cost of total funding liabilities 1.29 % 1.10 % 0.76 %

 

(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 December 31, 2018 and September 30, 2018 and 35% for the period ended December 31, 2017. The yield on investments before tax equivalent adjustments for the quarters presented were 2.80%, 2.70%, and 2.57%, 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
December 31, 2018 December 31, 2017
Average Average
Outstanding Yield/ Outstanding Yield/
Balance Interest Cost Balance Interest Cost
(Dollars in thousands)
Interest-earning assets:
Loans (1) $ 2,474,644 $ 107,637 4.35 % $ 2,165,806 $ 83,853 3.87 %
Investment securities (2) 238,580 6,660 2.79 207,071 5,574 2.69
Other interest-earning assets   50,912   1,591 3.12   81,082   1,160 1.43
Total interest-earning assets 2,764,136   115,888 4.19 2,453,959   90,587 3.69
Noninterest-earning assets   160,762   127,548
Total assets $ 2,924,898 $ 2,581,507
Interest-bearing liabilities:
Savings accounts $ 375,436 755 0.20 $ 357,777 644 0.18
NOW accounts 130,143 86 0.07 126,093 79 0.06
Money market accounts 704,876 6,762 0.96 662,482 3,843 0.58
Certificates of deposit 645,901 11,800 1.83 466,535 5,545 1.19
Brokered deposits   68,719   1,160 1.69   75,050   851 1.13
Total interest-bearing deposits 1,925,075 20,563 1.07 1,687,937 10,962 0.65
FHLB advances 291,782 5,474 1.88 278,663 4,974 1.78
Subordinated debentures   11,457   741 6.47    
Total borrowings   303,239   6,215 2.05   278,663   4,974 1.78
Total interest-bearing liabilities 2,228,314   26,778 1.20 1,966,600   15,936 0.81
Noninterest-bearing liabilities:
Noninterest-bearing deposits 308,441 249,035
Other noninterest-bearing liabilities   39,802   30,179
Total liabilities 2,576,557 2,245,814
Total equity   348,341   335,693
Total liabilities and equity $ 2,924,898 $ 2,581,507
Tax equivalent net interest income 89,110 74,651
Tax equivalent interest rate spread (3) 2.99 % 2.88 %
Less: tax equivalent adjustment   180   303
Net interest income as reported $ 88,930 $ 74,348
Net interest-earning assets (4) $ 535,822 $ 487,359
Net interest margin (5) 3.22 % 3.03 %
Tax equivalent effect 0.01
Net interest margin on a fully tax equivalent basis 3.22 % 3.04 %
Average interest-earning assets to average interest-bearing liabilities 124.05 % 124.78 %
 
Supplemental information:
Total deposits, including demand deposits $ 2,233,516 $ 20,563 $ 1,936,972 $ 10,962
Cost of total deposits 0.92 % 0.57 %
Total funding liabilities, including demand deposits $ 2,536,755 $ 26,778 $ 2,215,635 $ 15,936
Cost of total funding liabilities 1.06 % 0.72 %

 

(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 2.72% and 2.55% for the years ended December 31, 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.
 
           

HarborOne Bancorp, Inc.
Average Balances and Yield Trend
(Unaudited)

 
Average Balances - Trend - Quarters Ended
December 31, 2018 September 30, 2018 June 30, 2018 March 31, 2018 December 31, 2017
(In thousands)
Interest-earning assets:
Loans (1) $ 2,964,531 $ 2,375,892 $ 2,303,245 $ 2,248,119 $ 2,230,303
Investment securities (2) 253,631 239,443 233,587 227,362 214,127
Other interest-earning assets   49,932   74,390   41,584   37,346   73,014
Total interest-earning assets 3,268,094 2,689,725 2,578,416 2,512,827 2,517,444
Noninterest-earning assets   252,652   133,113   130,551   125,640   127,374
Total assets $ 3,520,746 $ 2,822,838 $ 2,708,967 $ 2,638,467 $ 2,644,818
Interest-bearing liabilities:
Savings accounts $ 484,153 $ 338,109 $ 346,201 $ 332,414 $ 353,350
NOW accounts 139,517 126,978 128,360 125,602 126,661
Money market accounts 725,604 678,721 698,591 716,380 716,862
Certificates of deposit 820,109 670,029 592,811 496,839 464,139
Brokered deposits   63,258   65,998   66,892   78,930   74,783
Total interest-bearing deposits 2,232,641 1,879,835 1,832,855 1,750,165 1,735,795
FHLB advances 438,023 256,391 217,712 253,359 280,092
Subordinated debentures   33,668   11,788      
Total borrowings   471,691   268,179   217,712   253,359   280,092
Total interest-bearing liabilities 2,704,332 2,148,014 2,050,567 2,003,524 2,015,887
Noninterest-bearing liabilities:
Noninterest-bearing deposits 408,074 285,025 278,846 260,455 256,522
Other noninterest-bearing liabilities   54,493   39,445   33,561   31,457   31,459
Total liabilities 3,166,899 2,472,484 2,362,974 2,295,436 2,303,868
Total equity   353,847   350,354   345,993   343,031   340,950
Total liabilities and equity $ 3,520,746 $ 2,822,838 $ 2,708,967 $ 2,638,467 $ 2,644,818
 
Annualized Yield Trend - Quarters Ended
December 31, 2018 September 30, 2018 June 30, 2018 March 31, 2018 December 31, 2017
Interest-earning assets:
Loans (1) 4.63 % 4.30 % 4.25 % 4.13 % 3.94 %
Investment securities (2) 2.87 % 2.77 % 2.77 % 2.75 % 2.71 %
Other interest-earning assets 4.29 % 2.56 % 2.87 % 2.97 % 1.60 %
Total interest-earning assets 4.49 % 4.11 % 4.09 % 3.99 % 3.76 %
 
Interest-bearing liabilities:
Savings accounts 0.26 % 0.17 % 0.17 % 0.17 % 0.18 %
NOW accounts 0.07 % 0.06 % 0.06 % 0.06 % 0.06 %
Money market accounts 1.22 % 0.96 % 0.86 % 0.78 % 0.71 %
Certificates of deposit 2.06 % 1.94 % 1.71 % 1.40 % 1.23 %
Brokered deposits 2.13 % 1.84 % 1.50 % 1.36 % 1.28 %
Total interest-bearing deposits 1.28 % 1.14 % 0.97 % 0.82 % 0.72 %
FHLB advances 2.17 % 1.75 % 1.67 % 1.66 % 1.74 %
Subordinated debentures 6.51 % 6.36 % % % %
Total borrowings 2.48 % 1.95 % 1.67 % 1.66 % 1.74 %
Total interest-bearing liabilities 1.49 % 1.24 % 1.05 % 0.92 % 0.86 %

 

(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
December 31, September 30, June 30, March 31, December 31,
Performance Ratios (annualized): 2018 2018 2018 2018 2017
 
Return on average assets (ROAA) 0.01 % 0.84 % 0.46 % 0.34 % 0.24 %
 
Return on average equity (ROAE) 0.13 % 6.77 % 3.59 % 2.63 % 1.87 %
 
Efficiency ratio (1) 93.52 % 78.71 % 85.19 % 87.62 % 88.34 %

 

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

HarborOne Bancorp, Inc.
Selected Financial Highlights
(Unaudited)

           
At or for the Quarters Ended
December 31, September 30, June 30, March 31, December 31,
Asset Quality 2018 2018 2018 2018 2017
(Dollars in thousands)
 
Total nonperforming assets $ 18,460 $ 17,407 $ 17,397 $ 17,171 $ 18,617
 
Nonperforming assets to total assets 0.51 % 0.61 % 0.60 % 0.63 % 0.69 %
 
Allowance for loan losses to total loans 0.69 % 0.87 % 0.84 % 0.84 % 0.84 %
 
Net charge offs $ 287 $ 436 $ 505 $ 434 $ 204
 
Annualized net charge offs/average loans 0.04 % 0.08 % 0.09 % 0.08 % 0.04 %
 
Allowance for loan losses to nonperforming loans 116.62 % 116.16 % 117.57 % 115.51 % 103.55 %
 
           

HarborOne Bancorp, Inc.
Selected Financial Highlights
(Unaudited)

 
December 31, September 30, June 30, March 31, December 31,
Capital and Share Related 2018 2018 2018 2018 2017
(Dollars in thousands, except per share data)
 
Common stock outstanding 32,585,519 32,585,519 32,622,695 32,622,695 32,647,395
 
Book value per share $ 10.97 $ 10.84 $ 10.69 $ 10.57 $ 10.52
 
Tangible common equity
Total stockholders' equity $ 357,574 $ 353,345 $ 348,576 $ 344,857 $ 343,484
Less: Goodwill 70,088 13,726 13,717 13,675 13,497
Less: Core deposit intangible 8,379
Tangible common equity $ 279,107 $ 339,619 $ 334,859 $ 331,182 $ 329,987
 
Tangible book value per share (1) $ 8.57 $ 10.42 $ 10.26 $ 10.15 $ 10.11
 
Tangible assets
Total assets $ 3,653,121 $ 2,852,800 $ 2,879,714 $ 2,735,577 $ 2,684,920
Less: Goodwill 70,088 13,726 13,717 13,675 13,497
Less: Core deposit intangible 8,379
Tangible assets $ 3,574,654 $ 2,839,074 $ 2,865,997 $ 2,721,902 $ 2,671,423
 
Tangible common equity / tangible assets (2) 7.81 % 11.96 % 11.68 % 12.17 % 12.35 %
 

 

(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.

Linda Simmons, SVP, CFO 508 895-1379

Source: HarborOne Bancorp, Inc.