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 $2.1 million, or $0.07 basic and diluted earnings per share for the first quarter of 2019, compared to $111,000, or $0.00 per basic and diluted share, for the prior quarter and $2.3 million, or $0.07 per basic and diluted share, for the same quarter prior year.
Selected highlights:
- Commercial loan growth of $37.2 million to $1.4 billion
- Deposits up 6% quarter over quarter to $2.8 billion, solid growth in core accounts
- Asset quality for the quarter remains strong
- Opening of Stoughton, Massachusetts branch in March 2019
“Our continued commitment to commercial assets drove core earnings with an increase of interest and fees on loans, along with other income from fees generated by the commercial business,” said James W. Blake, CEO. “Volatility in the capital markets resulted in a negative mark to market of $2.2 million on mortgage servicing rights and first quarter earnings were also negatively impacted by the operating loss at HarborOne Mortgage. The residential mortgage business as a whole has experienced lower income and spreads and we are actively managing the expense side of the business with $1.2 million in annual savings on a recent additional layoff. Although HarborOne Mortgage got off to a slow start this year, recent mortgage application volume spurred by the spring housing market and lower mortgage rates indicates an improved outlook in the second quarter of 2019.”
Net Interest Income
The Company’s net interest and dividend
income was $26.0 million for the quarter ended March 31, 2019, down
$760,000, or 2.8%, from $26.8 million for the quarter ended December 31,
2018 and up $5.9 million, or 29.3%, from $20.1 million for the quarter
ended March 31, 2018. The tax-equivalent interest rate spread and net
interest margin were 2.92% and 3.19%, respectively, for the quarter
ended March 31, 2019 compared to 3.00% and 3.26%, respectively, for the
quarter ended December 31, 2018 and 3.07% and 3.26%, respectively, for
the quarter ended March 31, 2018.
The decrease in net interest income from the previous quarter reflects a $130,000, or 0.4%, increase in total interest and dividend income offset by an increase of $890,000, or 8.8% in total interest expense. Compared to the prior quarter, interest and dividend income was relatively flat. Interest on loans in the first quarter of 2019 includes $670,000 in accretion income of the fair value discount on loans acquired from Coastway Bancorp, Inc. (“Coastway”) in October 2018, and $106,000 in prepayment penalties on commercial loans. Accretion income and prepayment penalties in the previous quarter were $900,000 and $226,000, respectively. The yield on loans was 4.67% for the quarter ended March 31, 2019 compared to 4.63% for the quarter ended December 31, 2018. The increase in interest expense is primarily due to an increase in higher cost money market accounts driving a 16 basis point increase in the cost of interest-bearing deposits. The increase was partially offset by a decrease in average FHLB advances of $45.5 million, tempered by an 18 basis point increase in the cost of those funds.
The increase in net interest income from the prior year quarter reflects a $12.4 million, or 50.1%, increase in total interest and dividend income and an increase of $6.5 million, or 141.7%, in total interest expense. The increases in total interest and dividend income reflect an increase in the yield on loans to 4.67% from 4.13%, primarily driven by growth due to the Coastway acquisition as well as organic commercial loan growth and 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 $578.6 million with a 62 basis point increase in the cost of those funds, due to deposits acquired from Coastway as well as organic deposit growth in money market and term certificate of deposits and a $139.1 million increase in average FHLB borrowings with a 69 basis point increase in the cost of those funds. Additionally the Company issued $35.0 million in subordinated notes in the third quarter of 2018.
Noninterest Income
Noninterest income decreased $1.8
million, or 15.5%, to $9.8 million for the quarter ended March 31, 2019
from the quarter ended December 31, 2018. The decrease is primarily due
to a decrease in mortgage banking income of $1.5 million and a net
decrease of $316,000 in the other noninterest income categories. Results
of HarborOne Mortgage, LLC (“HarborOne Mortgage”) were down compared to
the fourth quarter. Lower mortgage banking income reflects industry wide
conditions, including lack of inventory and lower refinancing activity
due to higher mortgage rates during the quarter. Additionally the
decrease in the 10-year Treasury Constant Maturity rate negatively
impacted the fair value of the mortgage servicing rights resulting in a
$2.2 million decrease in their fair value. The net decrease in the other
noninterest income categories compared to the prior quarter is primarily
due to a decrease of $750,000 in bank-owned life insurance income and a
$229,000 decrease in deposit account fees partially offset by an
increase of $673,000 in other income. The increase in other income
reflects $613,000 in swap fee income as compared to $124,000 in the
previous quarter. The quarter ended December 31, 2018 included a
$746,000 death benefit in bank-owned life insurance income with no such
benefit in the first quarter of 2019.
Noninterest income decreased $1.5 million or 13.3%, as compared to the quarter ended March 31, 2018. Mortgage banking income decreased $2.8 million, or 38.2%, partially offset by a net increase in the other noninterest income categories of $1.3 million. Mortgage banking income decreased compared to the prior year quarter due to lower mortgage originations, primarily as a result of higher residential mortgage interest rates, low housing inventories and reduced refinancing volume. Additionally, mortgage servicing rights fair value decreased $2.2 million for the quarter ended March 31, 2019 as compared to an increase of $1.0 million in the quarter ended March 31, 2018. The net increase in other noninterest income categories compared to prior year quarter is primarily due to an $811,000 increase in deposit account fee income reflecting the addition of Coastway accounts and an increase of $466,000 in other income primarily from swap fee income and other commercial loan fees.
Noninterest Expense
Noninterest expenses were $32.6 million
for the quarter ended March 31, 2019, a decrease of $4.0 million, or
10.9%, from the quarter ended December 31, 2018 which included merger
expenses of $3.8 million as compared to none in the first quarter of
2019.
Other significant changes in noninterest expense included an $817,000 decrease in compensation and benefits partially offset by a $499,000 increase in occupancy and equipment expense. The decrease in compensation and benefits is due to a decrease in commission expense of $990,000 primarily due to the decrease in origination volume at HarborOne Mortgage and a $1.0 million decrease in management incentive plan expense partially offset by an increase in supplemental employee retirement plan expense of $535,000. Also impacting compensation and benefits in the first quarter of 2019 were severance payments $295,000 reflecting continued efforts to right size HarborOne Mortgage in response to economic conditions. The occupancy and equipment expense increase was primarily due to property maintenance expense increases due to the additional Coastway properties.
Total noninterest expenses increased $5.0 million, or 18.1%, from the quarter ended March 31, 2018. Compensation and benefits increased $2.9 million, occupancy and equipment expense increased $1.2 million, other expenses increased $802,000 and data processing expense increased $493,000. The increases primarily reflect the acquisition of Coastway and expenses related to the new Stoughton branch and Boston commercial loan office.
Income Tax Provision
The effective tax rate was 14.7% for
the quarter ended March 31, 2019, compared to 68.0% for the quarter
ended December 31, 2018 and 26.5% for the quarter ended March 31, 2018.
The effective tax rate for the quarter ended December 31, 2018 was
impacted by nondeductible merger expenses, while the quarter ended March
31, 2019 was impacted by the 2014 Massachusetts state tax refund of
$320,000 recognized in the quarter.
Asset Quality
The Company recorded a provision for loan
losses of $857,000 for the quarter ended March 31, 2019, compared to
$1.5 million for the quarter ended December 31, 2018 and $808,000 for
the quarter ended March 31, 2018. 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 higher provision for
the quarter ended December 31, 2018 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. 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.
Net charge-offs totaled $230,000 for the quarter ended March 31, 2019, or 0.03%, of average loans outstanding on an annualized basis, compared to $287,000, or 0.04% of average loans outstanding on an annualized basis, for the quarter ended December 31, 2018 and $434,000, or 0.08% of average loans outstanding on an annualized basis, for the quarter ended March 31, 2018.
The allowance for loan losses was $21.3 million, or 0.71%, of total loans at March 31, 2019, compared to $20.7 million, or 0.69%, of total loans at December 31, 2018 and $18.9 million, or 0.84%, of total loans at March 31, 2018. The decrease from March 31, 2018 reflects the loans acquired from Coastway. 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 $19.3 million at March 31, 2019 compared to $18.5 million at December 31, 2018 and $17.2 million at March 31, 2018. Nonperforming assets as a percentage of total assets were 0.53% at March 31, 2019, 0.51% at December 31, 2018 and 0.63% at March 31, 2018. The Company continues to minimize nonperforming assets through diligent collection efforts, prudent workout arrangements and strong underwriting.
Balance Sheet
Total assets increased $2.9 million, or 0.1%,
to $3.66 billion at March 31, 2019 from $3.65 billion at December 31,
2018.
Net loans increased $14.4 million, or 0.5%, to $2.98 billion at March 31, 2019 from $2.96 billion at December 31, 2018. The net increase in loans for the three months ended March 31, 2019 was primarily due increases in commercial real estate loans of $18.0 million and commercial loans of $22.4 million, partially offset by decreases in commercial construction loans of $3.2 million and consumer loans of $22.1 million. Loans held for sale decreased $9.7 million, or 22.9%, to $32.4 million at March 31, 2019 from $42.1 million at December 31, 2018.
Total deposits increased $151.6 million, or 5.6%, to $2.84 billion at March 31, 2019 from $2.69 billion at December 31, 2018. Compared to the prior quarter, non-certificate accounts increased $117.4 million, brokered deposits increased $40.4 million and term certificate accounts decreased $6.2 million. FHLB borrowings were $355.9 million at March 31, 2019 and $519.9 million at December 31, 2018.
Total stockholders’ equity was $363.4 million at March 31, 2019 compared to $357.6 million at December 31, 2018 and $344.9 million at March 31, 2018. The tangible common equity to tangible assets ratio was 7.99% at March 31, 2019, 7.81% at December 31, 2018 and 12.17% at March 31, 2018. At March 31, 2019, 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 24 full-service branches located in
Massachusetts and Rhode Island, one limited service branch and a
commercial lending office in each of Boston, Massachusetts and
Providence, Rhode Island. 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, Rhode Island, New Hampshire, Maine,
and New Jersey and is also licensed to lend 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,
acquisitions may not produce results at levels or within time frames
originally anticipated; 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) |
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March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||||||
(in thousands) | 2019 | 2018 | 2018 | 2018 | 2018 | ||||||||||||||||||
Assets | |||||||||||||||||||||||
Cash and due from banks | $ | 25,227 | $ | 27,686 | $ | 18,478 | $ | 20,232 | $ | 15,205 | |||||||||||||
Short-term investments | 76,328 | 77,835 | 76,619 | 112,264 | 92,105 | ||||||||||||||||||
Total cash and cash equivalents | 101,555 | 105,521 | 95,097 | 132,496 | 107,310 | ||||||||||||||||||
Securities available for sale, at fair value | 219,966 | 209,293 | 191,847 | 185,702 | 182,173 | ||||||||||||||||||
Securities held to maturity, at amortized cost | 41,104 | 44,688 | 47,371 | 48,251 | 46,095 | ||||||||||||||||||
Federal Home Loan Bank stock, at cost | 16,134 | 24,969 | 13,263 | 15,310 | 13,538 | ||||||||||||||||||
Loans held for sale, at fair value | 32,449 | 42,107 | 155,268 | 71,017 | 34,129 | ||||||||||||||||||
Loans: | |||||||||||||||||||||||
Residential real estate | 1,115,424 | 1,115,456 | 661,755 | 768,537 | 774,083 | ||||||||||||||||||
Commercial real estate | 952,404 | 934,420 | 788,561 | 726,276 | 687,121 | ||||||||||||||||||
Commercial construction | 158,504 | 161,660 | 129,796 | 150,710 | 133,227 | ||||||||||||||||||
Total mortgage loans on real estate | 2,226,332 | 2,211,536 | 1,580,112 | 1,645,523 | 1,594,431 | ||||||||||||||||||
Commercial | 299,658 | 277,271 | 139,616 | 132,293 | 111,013 | ||||||||||||||||||
Consumer | 469,346 | 491,445 | 498,417 | 516,897 | 521,634 | ||||||||||||||||||
Loans | 2,995,336 | 2,980,252 | 2,218,145 | 2,294,713 | 2,227,078 | ||||||||||||||||||
Less: Allowance for loan losses | (21,282 | ) | (20,655 | ) | (19,440 | ) | (19,244 | ) | (18,863 | ) | |||||||||||||
Net deferred loan costs | 5,193 | 5,255 | 5,677 | 5,982 | 6,075 | ||||||||||||||||||
Net loans | 2,979,247 | 2,964,852 | 2,204,382 | 2,281,451 | 2,214,290 | ||||||||||||||||||
Mortgage servicing rights, at fair value | 20,231 | 22,217 | 23,748 | 22,832 | 22,696 | ||||||||||||||||||
Goodwill | 69,635 | 70,088 | 13,660 | 13,629 | 13,565 | ||||||||||||||||||
Intangible assets | 7,739 | 8,379 | 66 | 88 | 110 | ||||||||||||||||||
Other assets | 167,936 | 161,007 | 108,098 | 108,938 | 101,671 | ||||||||||||||||||
Total assets | $ | 3,655,996 | $ | 3,653,121 | $ | 2,852,800 | $ | 2,879,714 | $ | 2,735,577 | |||||||||||||
Liabilities and Stockholders' Equity | |||||||||||||||||||||||
Deposits: | |||||||||||||||||||||||
NOW and demand deposit accounts | $ | 574,379 | $ | 556,517 | $ | 432,628 | $ | 429,397 | $ | 419,776 | |||||||||||||
Regular savings and club accounts | 497,697 | 482,088 | 327,030 | 403,732 | 378,818 | ||||||||||||||||||
Money market deposit accounts | 842,824 | 758,933 | 674,657 | 681,524 | 701,360 | ||||||||||||||||||
Brokered deposits | 117,940 | 77,508 | 66,831 | 79,396 | 70,176 | ||||||||||||||||||
Term certificate accounts | 803,805 | 810,015 | 684,495 | 608,453 | 557,082 | ||||||||||||||||||
Total deposits | 2,836,645 | 2,685,061 | 2,185,641 | 2,202,502 | 2,127,212 | ||||||||||||||||||
Short-term borrowed funds | 126,000 | 290,000 | 25,000 | 70,000 | — | ||||||||||||||||||
Long-term borrowed funds | 229,935 | 229,936 | 206,187 | 217,438 | 226,364 | ||||||||||||||||||
Subordinated debt | 33,812 | 33,799 | 33,855 | — | — | ||||||||||||||||||
Other liabilities and accrued expenses | 66,156 | 56,751 | 48,772 | 41,198 | 37,144 | ||||||||||||||||||
Total liabilities | 3,292,548 | 3,295,547 | 2,499,455 | 2,531,138 | 2,390,720 | ||||||||||||||||||
Common stock | 327 | 327 | 327 | 327 | 327 | ||||||||||||||||||
Additional paid-in capital | 153,326 | 152,156 | 150,732 | 150,063 | 148,559 | ||||||||||||||||||
Unearned compensation - ESOP | (9,942 | ) | (10,091 | ) | (10,239 | ) | (10,388 | ) | (10,536 | ) | |||||||||||||
Retained earnings | 221,155 | 219,088 | 218,977 | 213,049 | 209,946 | ||||||||||||||||||
Treasury stock | (1,548 | ) | (1,548 | ) | (1,548 | ) | (742 | ) | (742 | ) | |||||||||||||
Accumulated other comprehensive income (loss) | 130 | (2,358 | ) | (4,904 | ) | (3,733 | ) | (2,697 | ) | ||||||||||||||
Total stockholders' equity | 363,448 | 357,574 | 353,345 | 348,576 | 344,857 | ||||||||||||||||||
Total liabilities and stockholders' equity | $ | 3,655,996 | $ | 3,653,121 | $ | 2,852,800 | $ | 2,879,714 | $ | 2,735,577 |
HarborOne Bancorp, Inc. Consolidated Statements of Net Income - Trend (Unaudited) |
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Quarters Ended | |||||||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||||||
(in thousands, except share data) | 2019 | 2018 | 2018 | 2018 | 2018 | ||||||||||||||||||
Interest and dividend income: | |||||||||||||||||||||||
Interest and fees on loans | $ | 34,365 | $ | 33,947 | $ | 25,115 | $ | 23,866 | $ | 22,504 | |||||||||||||
Interest on loans held for sale | 358 | 648 | 625 | 521 | 411 | ||||||||||||||||||
Interest on securities | 1,847 | 1,788 | 1,629 | 1,567 | 1,496 | ||||||||||||||||||
Other interest and dividend income | 483 | 540 | 480 | 297 | 274 | ||||||||||||||||||
Total interest and dividend income | 37,053 | 36,923 | 27,849 | 26,251 | 24,685 | ||||||||||||||||||
Interest expense: | |||||||||||||||||||||||
Interest on deposits | 8,243 | 7,181 | 5,409 | 4,450 | 3,523 | ||||||||||||||||||
Interest on FHLB borrowings | 2,275 | 2,400 | 1,130 | 906 | 1,038 | ||||||||||||||||||
Interest on subordinated debentures | 505 | 552 | 189 | — | — | ||||||||||||||||||
Total interest expense | 11,023 | 10,133 | 6,728 | 5,356 | 4,561 | ||||||||||||||||||
Net interest and dividend income | 26,030 | 26,790 | 21,121 | 20,895 | 20,124 | ||||||||||||||||||
Provision for loan losses | 857 | 1,502 | 632 | 886 | 808 | ||||||||||||||||||
Net interest income, after provision for loan losses | 25,173 | 25,288 | 20,489 | 20,009 | 19,316 | ||||||||||||||||||
Noninterest income: | |||||||||||||||||||||||
Mortgage banking income: | |||||||||||||||||||||||
Changes in mortgage servicing rights fair value | (2,151 | ) | (1,734 | ) | (378 | ) | (306 | ) | 1,022 | ||||||||||||||
Other | 6,653 | 7,730 | 9,249 | 8,765 | 6,261 | ||||||||||||||||||
Total mortgage banking income | 4,502 | 5,996 | 8,871 | 8,459 | 7,283 | ||||||||||||||||||
Deposit account fees | 3,778 | 4,007 | 3,302 | 3,224 | 2,967 | ||||||||||||||||||
Income on retirement plan annuities | 96 | 101 | 100 | 119 | 113 | ||||||||||||||||||
Gain on sale and call of securities, net | — | 5 | — | — | — | ||||||||||||||||||
Bank-owned life insurance income | 253 | 1,003 | 243 | 243 | 239 | ||||||||||||||||||
Other income | 1,213 | 540 | 1,124 | 512 | 747 | ||||||||||||||||||
Total noninterest income | 9,842 | 11,652 | 13,640 | 12,557 | 11,349 | ||||||||||||||||||
Noninterest expenses: | |||||||||||||||||||||||
Compensation and benefits | 19,245 | 20,062 | 16,809 | 17,345 | 16,352 | ||||||||||||||||||
Occupancy and equipment | 4,448 | 3,949 | 3,027 | 2,961 | 3,275 | ||||||||||||||||||
Data processing | 2,046 | 1,965 | 1,702 | 1,569 | 1,553 | ||||||||||||||||||
Loan expense | 1,271 | 1,227 | 1,503 | 1,390 | 1,262 | ||||||||||||||||||
Marketing | 958 | 611 | 639 | 1,084 | 999 | ||||||||||||||||||
Professional fees | 946 | 1,237 | 712 | 915 | 968 | ||||||||||||||||||
Deposit insurance | 666 | 572 | 540 | 491 | 494 | ||||||||||||||||||
Merger expenses | — | 3,808 | 274 | 524 | 486 | ||||||||||||||||||
Other expenses | 3,012 | 3,162 | 2,177 | 2,239 | 2,210 | ||||||||||||||||||
Total noninterest expenses | 32,592 | 36,593 | 27,383 | 28,518 | 27,599 | ||||||||||||||||||
Income before income taxes | 2,423 | 347 | 6,746 | 4,048 | 3,066 | ||||||||||||||||||
Income tax provision | 356 | 236 | 818 | 945 | 814 | ||||||||||||||||||
Net income | $ | 2,067 | $ | 111 | $ | 5,928 | $ | 3,103 | $ | 2,252 | |||||||||||||
Earnings per common share: | |||||||||||||||||||||||
Basic | $ | 0.07 | $ | — | $ | 0.19 | $ | 0.10 | $ | 0.07 | |||||||||||||
Diluted | $ | 0.07 | $ | — | $ | 0.19 | $ | 0.10 | $ | 0.07 | |||||||||||||
Weighted average shares outstanding: | |||||||||||||||||||||||
Basic | 31,561,761 | 31,571,467 | 31,575,210 | 31,578,961 | 31,569,811 | ||||||||||||||||||
Diluted | 31,561,761 | 31,571,467 | 31,575,811 | 31,578,961 | 31,569,811 |
HarborOne Bancorp, Inc. Consolidated Statements of Net Income (Unaudited) |
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For the Three Months Ended March 31, | ||||||||||||||||||
(dollars in thousands, except share data) | 2019 | 2018 |
$ Change |
% Change | ||||||||||||||
Interest and dividend income: | ||||||||||||||||||
Interest and fees on loans | $ | 34,365 | $ | 22,504 | $ | 11,861 | 52.7 | % | ||||||||||
Interest on loans held for sale | 358 | 411 | (53 | ) | (12.9 | ) | ||||||||||||
Interest on securities | 1,847 | 1,496 | 351 | 23.5 | ||||||||||||||
Other interest and dividend income | 483 | 274 | 209 | 76.3 | ||||||||||||||
Total interest and dividend income | 37,053 | 24,685 | 12,368 | 50.1 | ||||||||||||||
Interest expense: | ||||||||||||||||||
Interest on deposits | 8,243 | 3,523 | 4,720 | 134.0 | ||||||||||||||
Interest on FHLB borrowings | 2,275 | 1,038 | 1,237 | 119.2 | ||||||||||||||
Interest on subordinated debentures | 505 | — | 505 | 100.0 | ||||||||||||||
Total interest expense | 11,023 | 4,561 | 6,462 | 141.7 | ||||||||||||||
Net interest and dividend income | 26,030 | 20,124 | 5,906 | 29.3 | ||||||||||||||
Provision for loan losses | 857 | 808 | 49 | 6.1 | ||||||||||||||
Net interest income, after provision for loan losses | 25,173 | 19,316 | 5,857 | 30.3 | ||||||||||||||
Noninterest income: | ||||||||||||||||||
Mortgage banking income: | ||||||||||||||||||
Changes in mortgage servicing rights fair value | (2,151 | ) | 1,022 | (3,173 | ) | (310.5 | ) | |||||||||||
Other | 6,653 | 6,261 | 392 | 6.3 | ||||||||||||||
Total mortgage banking income | 4,502 | 7,283 | (2,781 | ) | (38.2 | ) | ||||||||||||
Deposit account fees | 3,778 | 2,967 | 811 | 27.3 | ||||||||||||||
Income on retirement plan annuities | 96 | 113 | (17 | ) | (15.0 | ) | ||||||||||||
Bank-owned life insurance income | 253 | 239 | 14 | 5.9 | ||||||||||||||
Other income | 1,213 | 747 | 466 | 62.4 | ||||||||||||||
Total noninterest income | 9,842 | 11,349 | (1,507 | ) | (13.3 | ) | ||||||||||||
Noninterest expenses: | ||||||||||||||||||
Compensation and benefits | 19,245 | 16,352 | 2,893 | 17.7 | ||||||||||||||
Occupancy and equipment | 4,448 | 3,275 | 1,173 | 35.8 | ||||||||||||||
Data processing | 2,046 | 1,553 | 493 | 31.7 | ||||||||||||||
Loan expense | 1,271 | 1,262 | 9 | 0.7 | ||||||||||||||
Marketing | 958 | 999 | (41 | ) | (4.1 | ) | ||||||||||||
Professional fees | 946 | 968 | (22 | ) | (2.3 | ) | ||||||||||||
Deposit insurance | 666 | 494 | 172 | 34.8 | ||||||||||||||
Merger expenses | — | 486 | (486 | ) | (100.0 | ) | ||||||||||||
Other expenses | 3,012 | 2,210 | 802 | 36.3 | ||||||||||||||
Total noninterest expenses | 32,592 | 27,599 | 4,993 | 18.1 | ||||||||||||||
Income before income taxes | 2,423 | 3,066 | (643 | ) | (21.0 | ) | ||||||||||||
Income tax provision | 356 | 814 | (458 | ) | (56.3 | ) | ||||||||||||
Net income | $ | 2,067 | $ | 2,252 | $ | (185 | ) | (8.2 | ) | % | ||||||||
Earnings per common share: | ||||||||||||||||||
Basic | $ | 0.07 | $ | 0.07 | ||||||||||||||
Diluted | $ | 0.07 | $ | 0.07 | ||||||||||||||
Weighted average shares outstanding: | ||||||||||||||||||
Basic | 31,561,761 | 31,569,811 | ||||||||||||||||
Diluted | 31,561,761 | 31,569,811 |
HarborOne Bancorp, Inc. Average Balances / Yields (Unaudited) |
|||||||||||||||||||||||||||||||||||||
Quarters Ended | |||||||||||||||||||||||||||||||||||||
March 31, 2019 | December 31, 2018 | March 31, 2018 | |||||||||||||||||||||||||||||||||||
Average Outstanding Balance |
Average |
Average Outstanding Balance |
|||||||||||||||||||||||||||||||||||
Yield/ Cost (6) |
Yield/ Cost (6) |
Yield/ Cost (6) |
|||||||||||||||||||||||||||||||||||
Interest | Interest | Interest | |||||||||||||||||||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||||||||||||||||||||
Interest-earning assets: | |||||||||||||||||||||||||||||||||||||
Loans (1) | $ | 3,016,943 | $ | 34,723 | 4.67 | % | $ | 2,964,531 | $ | 34,595 | 4.63 | % | $ | 2,248,119 | $ | 22,915 | 4.13 | % | |||||||||||||||||||
Investment securities (2) | 260,211 | 1,886 | 2.94 | 253,631 | 1,832 | 2.87 | 227,362 | 1,541 | 2.75 | ||||||||||||||||||||||||||||
Other interest-earning assets | 37,971 | 483 | 5.16 | 49,932 | 540 | 4.29 | 37,346 | 274 | 2.97 | ||||||||||||||||||||||||||||
Total interest-earning assets | 3,315,125 | 37,092 | 4.54 | 3,268,094 | 36,967 | 4.49 | 2,512,827 | 24,730 | 3.99 | ||||||||||||||||||||||||||||
Noninterest-earning assets | 252,882 | 252,652 | 125,640 | ||||||||||||||||||||||||||||||||||
Total assets | $ | 3,568,007 | $ | 3,520,746 | $ | 2,638,467 | |||||||||||||||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||||
Savings accounts | $ | 484,963 | 364 | 0.30 | $ | 484,153 | 319 | 0.26 | $ | 332,414 | 135 | 0.17 | |||||||||||||||||||||||||
NOW accounts | 136,954 | 25 | 0.07 | 139,517 | 24 | 0.07 | 125,602 | 20 | 0.06 | ||||||||||||||||||||||||||||
Money market accounts | 794,477 | 2,760 | 1.41 | 725,604 | 2,233 | 1.22 | 716,380 | 1,385 | 0.78 | ||||||||||||||||||||||||||||
Certificates of deposit | 812,992 | 4,512 | 2.25 | 820,109 | 4,265 | 2.06 | 496,839 | 1,718 | 1.40 | ||||||||||||||||||||||||||||
Brokered deposits | 99,341 | 582 | 2.38 | 63,258 | 340 | 2.13 | 78,930 | 265 | 1.36 | ||||||||||||||||||||||||||||
Total interest-bearing deposits | 2,328,727 | 8,243 | 1.44 | 2,232,641 | 7,181 | 1.28 | 1,750,165 | 3,523 | 0.82 | ||||||||||||||||||||||||||||
FHLB advances | 392,483 | 2,275 | 2.35 | 438,023 | 2,400 | 2.17 | 253,359 | 1,038 | 1.66 | ||||||||||||||||||||||||||||
Subordinated debentures | 33,822 | 505 | 6.05 | 33,668 | 552 | 6.51 | — | — | — | ||||||||||||||||||||||||||||
Total borrowings | 426,305 | 2,780 | 2.64 | 471,691 | 2,952 | 2.48 | 253,359 | 1,038 | 1.66 | ||||||||||||||||||||||||||||
Total interest-bearing liabilities | 2,755,032 | 11,023 | 1.62 | 2,704,332 | 10,133 | 1.49 | 2,003,524 | 4,561 | 0.92 | ||||||||||||||||||||||||||||
Noninterest-bearing liabilities: | |||||||||||||||||||||||||||||||||||||
Noninterest-bearing deposits | 400,573 | 408,074 | 260,455 | ||||||||||||||||||||||||||||||||||
Other noninterest-bearing liabilities | 52,219 | 54,493 | 31,457 | ||||||||||||||||||||||||||||||||||
Total liabilities | 3,207,824 | 3,166,899 | 2,295,436 | ||||||||||||||||||||||||||||||||||
Total equity | 360,183 | 353,847 | 343,031 | ||||||||||||||||||||||||||||||||||
Total liabilities and equity | $ | 3,568,007 | $ | 3,520,746 | $ | 2,638,467 | |||||||||||||||||||||||||||||||
Tax equivalent net interest income | 26,069 | 26,834 | 20,169 | ||||||||||||||||||||||||||||||||||
Tax equivalent interest rate spread (3) | 2.92 | % | 3.00 | % | 3.07 | % | |||||||||||||||||||||||||||||||
Less: tax equivalent adjustment | 39 | 44 | 45 | ||||||||||||||||||||||||||||||||||
Net interest income as reported | $ | 26,030 | $ | 26,790 | $ | 20,124 | |||||||||||||||||||||||||||||||
Net interest-earning assets (4) | $ | 560,093 | $ | 563,762 | $ | 509,303 | |||||||||||||||||||||||||||||||
Net interest margin (5) | 3.18 | % | 3.25 | % | 3.25 | % | |||||||||||||||||||||||||||||||
Tax equivalent effect | 0.01 | 0.01 | 0.01 | ||||||||||||||||||||||||||||||||||
Net interest margin on a fully tax equivalent basis | 3.19 | % | 3.26 | % | 3.26 | % | |||||||||||||||||||||||||||||||
Average interest-earning assets to average interest-bearing liabilities | 120.33 | % | 120.85 | % | 125.42 | % | |||||||||||||||||||||||||||||||
Supplemental information: | |||||||||||||||||||||||||||||||||||||
Total deposits, including demand deposits | $ | 2,729,300 | $ | 8,243 | $ | 2,640,715 | $ | 7,181 | $ | 2,010,620 | $ | 3,523 | |||||||||||||||||||||||||
Cost of total deposits | 1.22 | % | 1.08 | % | 0.71 | % | |||||||||||||||||||||||||||||||
Total funding liabilities, including demand deposits | $ | 3,155,605 | $ | 11,023 | $ | 3,112,406 | $ | 10,133 | $ | 2,263,979 | $ | 4,561 | |||||||||||||||||||||||||
Cost of total funding liabilities | 1.42 | % | 1.29 | % | 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. Interest
income from tax exempt securities is computed on a taxable equivalent
basis using a tax rate of 21% for the quarters presented. The yield on
investments before tax equivalent adjustments for the quarters presented
were 2.88%, 2.80%, and 2.67%, respectively.
(3) Net
interest rate spread represents the difference between the yield on
average interest-earning assets and the cost of average interest-bearing
liabilities.
(4) Net interest-earning assets represents
total interest-earning assets less total interest-bearing liabilities.
(5)
Net interest margin represents net interest income divided by average
total interest-earning assets.
(6) Annualized.
HarborOne Bancorp, Inc. Average Balances and Yield Trend (Unaudited) |
||||||||||||||||||
Average Balances - Trend - Quarters Ended | ||||||||||||||||||
March 31, 2019 | December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | ||||||||||||||
(in thousands) | ||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||
Loans (1) | $ | 3,016,943 | $ | 2,964,531 | $ | 2,375,892 | $ | 2,303,245 | $ | 2,248,119 | ||||||||
Investment securities (2) | 260,211 | 253,631 | 239,443 | 233,587 | 227,362 | |||||||||||||
Other interest-earning assets | 37,971 | 49,932 | 74,390 | 41,584 | 37,346 | |||||||||||||
Total interest-earning assets | 3,315,125 | 3,268,094 | 2,689,725 | 2,578,416 | 2,512,827 | |||||||||||||
Noninterest-earning assets | 252,882 | 252,652 | 133,113 | 130,551 | 125,640 | |||||||||||||
Total assets | $ | 3,568,007 | $ | 3,520,746 | $ | 2,822,838 | $ | 2,708,967 | $ | 2,638,467 | ||||||||
Interest-bearing liabilities: | ||||||||||||||||||
Savings accounts | $ | 484,963 | $ | 484,153 | $ | 338,109 | $ | 346,201 | $ | 332,414 | ||||||||
NOW accounts | 136,954 | 139,517 | 126,978 | 128,360 | 125,602 | |||||||||||||
Money market accounts | 794,477 | 725,604 | 678,721 | 698,591 | 716,380 | |||||||||||||
Certificates of deposit | 812,992 | 820,109 | 670,029 | 592,811 | 496,839 | |||||||||||||
Brokered deposits | 99,341 | 63,258 | 65,998 | 66,892 | 78,930 | |||||||||||||
Total interest-bearing deposits | 2,328,727 | 2,232,641 | 1,879,835 | 1,832,855 | 1,750,165 | |||||||||||||
FHLB advances | 392,483 | 438,023 | 256,391 | 217,712 | 253,359 | |||||||||||||
Subordinated debentures | 33,822 | 33,668 | 11,788 | — | — | |||||||||||||
Total borrowings | 426,305 | 471,691 | 268,179 | 217,712 | 253,359 | |||||||||||||
Total interest-bearing liabilities | 2,755,032 | 2,704,332 | 2,148,014 | 2,050,567 | 2,003,524 | |||||||||||||
Noninterest-bearing liabilities: | ||||||||||||||||||
Noninterest-bearing deposits | 400,573 | 408,074 | 285,025 | 278,846 | 260,455 | |||||||||||||
Other noninterest-bearing liabilities | 52,219 | 54,493 | 39,445 | 33,561 | 31,457 | |||||||||||||
Total liabilities | 3,207,824 | 3,166,899 | 2,472,484 | 2,362,974 | 2,295,436 | |||||||||||||
Total equity | 360,183 | 353,847 | 350,354 | 345,993 | 343,031 | |||||||||||||
Total liabilities and equity | $ | 3,568,007 | $ | 3,520,746 | $ | 2,822,838 | $ | 2,708,967 | $ | 2,638,467 | ||||||||
Annualized Yield Trend - Quarters Ended | ||||||||||||||||||
March 31, 2019 | December 31, 2018 | September 30, 2018 | June 30, 2018 | March 31, 2018 | ||||||||||||||
Interest-earning assets: | ||||||||||||||||||
Loans (1) | 4.67 | % | 4.63 | % | 4.30 | % | 4.25 | % | 4.13 | % | ||||||||
Investment securities (2) | 2.94 | % | 2.87 | % | 2.77 | % | 2.77 | % | 2.75 | % | ||||||||
Other interest-earning assets | 5.16 | % | 4.29 | % | 2.56 | % | 2.87 | % | 2.97 | % | ||||||||
Total interest-earning assets | 4.54 | % | 4.49 | % | 4.11 | % | 4.09 | % | 3.99 | % | ||||||||
Interest-bearing liabilities: | ||||||||||||||||||
Savings accounts | 0.30 | % | 0.26 | % | 0.17 | % | 0.17 | % | 0.17 | % | ||||||||
NOW accounts | 0.07 | % | 0.07 | % | 0.06 | % | 0.06 | % | 0.06 | % | ||||||||
Money market accounts | 1.41 | % | 1.22 | % | 0.96 | % | 0.86 | % | 0.78 | % | ||||||||
Certificates of deposit | 2.25 | % | 2.06 | % | 1.94 | % | 1.71 | % | 1.40 | % | ||||||||
Brokered deposits | 2.38 | % | 2.13 | % | 1.84 | % | 1.50 | % | 1.36 | % | ||||||||
Total interest-bearing deposits | 1.44 | % | 1.28 | % | 1.14 | % | 0.97 | % | 0.82 | % | ||||||||
FHLB advances | 2.35 | % | 2.17 | % | 1.75 | % | 1.67 | % | 1.66 | % | ||||||||
Subordinated debentures | 6.05 | % | 6.51 | % | 6.36 | % | — | % | — | % | ||||||||
Total borrowings | 2.64 | % | 2.48 | % | 1.95 | % | 1.67 | % | 1.66 | % | ||||||||
Total interest-bearing liabilities | 1.62 | % | 1.49 | % | 1.24 | % | 1.05 | % | 0.92 | % | ||||||||
|
(1) Includes loans held for sale, nonaccruing loan balances
and interest received on such loans.
(2) Includes
securities available for sale and securities held to maturity.
HarborOne Bancorp, Inc. Selected Financial Highlights (Unaudited) |
|||||||||||||||||||
Quarters Ended | |||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
Performance Ratios (annualized): | 2019 | 2018 | 2018 | 2018 | 2018 | ||||||||||||||
(dollars in thousands) | |||||||||||||||||||
Return on average assets (ROAA) | 0.23 | % | 0.01 | % | 0.84 | % | 0.46 | % | 0.34 | % | |||||||||
Return on average equity (ROAE) | 2.30 | % | 0.13 | % | 6.77 | % | 3.59 | % | 2.63 | % | |||||||||
Total noninterest expense | $ | 32,592 | $ | 36,593 | $ | 27,383 | $ | 28,518 | $ | 27,599 | |||||||||
Less: Core deposit intangible expense | 618 | 618 | — | — | — | ||||||||||||||
Less: Noncompete intangible expense | 22 | 22 | 22 | 22 | 22 | ||||||||||||||
Total adjusted noninterest expense | $ | 31,952 | $ | 35,953 | $ | 27,361 | $ | 28,496 | $ | 27,577 | |||||||||
Net interest income | $ | 26,030 | $ | 26,790 | $ | 21,121 | $ | 20,895 | $ | 20,124 | |||||||||
Total noninterest income | 9,842 | 11,652 | 13,640 | 12,557 | 11,349 | ||||||||||||||
Total revenue | $ | 35,872 | $ | 38,442 | $ | 34,761 | $ | 33,452 | $ | 31,473 | |||||||||
Efficiency ratio (1) | 89.07 | % | 93.52 | % | 78.71 | % | 85.19 | % | 87.62 | % | |||||||||
(1) This non-GAAP measure represents noninterest expense divided by the sum of net interest income and noninterest income | |||||||||||||||||||
At or for the Quarters Ended | |||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||
Asset Quality | 2019 | 2018 | 2018 | 2018 | 2018 | ||||||||||||||
(dollars in thousands) | |||||||||||||||||||
Total nonperforming assets | $ | 19,266 | $ | 18,460 | $ | 17,407 | $ | 17,397 | $ | 17,171 | |||||||||
Nonperforming assets to total assets | 0.53 | % | 0.51 | % | 0.61 | % | 0.60 | % | 0.63 | % | |||||||||
Allowance for loan losses to total loans | 0.71 | % | 0.69 | % | 0.87 | % | 0.84 | % | 0.84 | % | |||||||||
Net charge offs | $ | 230 | $ | 287 | $ | 436 | $ | 505 | $ | 434 | |||||||||
Annualized net charge offs/average loans | 0.03 | % | 0.04 | % | 0.08 | % | 0.09 | % | 0.08 | % | |||||||||
Allowance for loan losses to nonperforming loans | 116.41 | % | 116.62 | % | 116.16 | % | 117.57 | % | 115.51 | % |
HarborOne Bancorp, Inc. Selected Financial Highlights (Unaudited) |
||||||||||||||||||
March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||
Capital and Share Related | 2019 | 2018 | 2018 | 2018 | 2018 | |||||||||||||
(dollars in thousands, except share data) | ||||||||||||||||||
Common stock outstanding | 32,560,136 | 32,563,485 | 32,585,519 | 32,622,695 | 32,622,695 | |||||||||||||
Book value per share | $ | 11.16 | $ | 10.98 | $ | 10.84 | $ | 10.69 | $ | 10.57 | ||||||||
Tangible common equity: | ||||||||||||||||||
Total stockholders' equity | $ | 363,448 | $ | 357,574 | $ | 353,345 | $ | 348,576 | $ | 344,857 | ||||||||
Less: Goodwill | 69,635 | 70,088 | 13,660 | 13,629 | 13,565 | |||||||||||||
Less: Intangible assets (1) | 7,739 | 8,379 | 66 | 88 | 110 | |||||||||||||
Tangible common equity | $ | 286,074 | $ | 279,107 | $ | 339,619 | $ | 334,859 | $ | 331,182 | ||||||||
Tangible book value per share (2) | $ | 8.79 | $ | 8.57 | $ | 10.42 | $ | 10.26 | $ | 10.15 | ||||||||
Tangible assets: | ||||||||||||||||||
Total assets | $ | 3,655,996 | $ | 3,653,121 | $ | 2,852,800 | $ | 2,879,714 | $ | 2,735,577 | ||||||||
Less: Goodwill | 69,635 | 70,088 | 13,660 | 13,629 | 13,565 | |||||||||||||
Less: Intangible assets (1) | 7,739 | 8,379 | 66 | 88 | 110 | |||||||||||||
Tangible assets | $ | 3,578,622 | $ | 3,574,654 | $ | 2,839,074 | $ | 2,865,997 | $ | 2,721,902 | ||||||||
Tangible common equity / tangible assets (3) | 7.99 | % | 7.81 | % | 11.96 | % | 11.68 | % | 12.17 | % | ||||||||
|
(1) Intangible assets includes core deposit intangible and
noncompete intangible.
(2) This non-GAAP ratio is total
stockholders' equity less goodwill and intangible assets divided by
common stock outstanding.
(3) This non-GAAP ratio is
total stockholders' equity less goodwill and intangible assets to total
assets less goodwill and intangible assets.