HarborOne Bancorp Inc.

04/28/2022 | Press release | Distributed by Public on 04/28/2022 06:08

HarborOne Bancorp, Inc. Announces 2022 First Quarter Earnings - Form 8-K

HarborOneBancorp,Inc.Announces2022 First Quarter Earnings

Contact: Linda Simmons, EVP, CFO

Brockton,Massachusetts (April 28, 2022): HarborOne Bancorp, Inc. (the "Company" or "HarborOne") (NASDAQ: HONE), the holding company for HarborOne Bank (the "Bank"), announced net income of $12.3 million, or $0.25 per diluted share, for the first quarter of 2022, compared to net income of $12.6 million, or $0.25 per diluted share, for the preceding quarter and $19.4 million, or $0.37 per basic and diluted share, for the same period last year.

Selected First Quarter Financial Highlights:

● Return on average assets was 1.08% and return on average equity was 7.35%.
● Commercial loan growth of $123.3 million, or 5.5%.
● Core deposit growth of $109.5 million, or 3.6%.
● Net interest margin increased 2 basis points to 3.21%.
● Strong credit quality with nonperforming assets to total assets down 22 basis points to 0.57%.
● Announced fourth share repurchase program after completing third share repurchase program at $14.64 per share.
● Raised quarterly dividend rate 40%, from $0.05 to $0.07 per quarter.

"We remain focused on the core fundamentals of deposit and loan growth, as we continue to invest in building out our small business banking team and tools. The launch of our new BusinessOne lending platform for small businesses will provide our business banking customers with quick access to the capital they need to help them achieve their growth objectives" said James Blake, CEO. "We continue to be responsive to the challenges in the residential mortgage market in this rising rate environment, continuously assessing our operational costs, and making the necessary staff and expense adjustments" added Joseph Casey, President and COO.

NetInterestIncome

The Company's net interest and dividend income was $33.3 million for the quarter ended March 31, 2022, down $715,000, or 2.1%, from $34.0 million for the quarter ended December 31, 2021 and up $1.2 million, or 3.8%, from $32.1 million for the quarter ended March 31, 2021. The tax equivalent interest rate spread and net interest margin were 3.12% and 3.21%, respectively, for the quarter ended March 31, 2022, compared to 3.10% and 3.19%, respectively, for the quarter ended December 31, 2021, and 2.99% and 3.14%, respectively, for the quarter ended March 31, 2021. On a linked-quarter basis, the decrease in net interest and dividend income primarily reflects decreases in fees recognized in connection with U.S. Small Business Administration Paycheck Protection Program ("PPP") loans, accretion income and prepayment penalties as compared to the prior quarter, partially offset by increased rates on investments. The cost of funds was flat at 25 basis points.

The $751,000 decrease in total interest and dividend income primarily reflected a decrease in interest income on loans. The three months ended March 31, 2022 and December 31, 2021 include the recognition of deferred fees on PPP loans in the amount of $487,000 and $1.2 million, respectively. Interest on loans in the first quarter included $284,000 in accretion income from the fair value discount on loans acquired in connection with the merger with Coastway Bancorp, Inc. and $305,000 in prepayment penalties on commercial loans. Accretion income and prepayment penalties in the preceding quarter were $634,000 and $861,000, respectively.

The increase in net interest and dividend income from the prior year quarter reflected a decrease of $1.5 million, or 38.6%, in total interest expense, partially offset by a $245,000, or 0.7%, decrease in total interest and dividend income. The decreases reflect rate and volume changes in both interest-bearing assets and liabilities. The cost of interest-bearing liabilities decreased 21 basis points, while the average balance increased $60.7 million. The yield on interest-earning assets decreased 8 basis points, while the average balance increased $60.4 million.

Noninterest Income

Total noninterest income decreased $103,000, or 0.5%, to $19.1 million for the quarter ended March 31, 2022, from $19.2 million for the quarter ended December 31, 2021. Softening demand for mortgage loans resulted in mortgage loan closings of $253.8 million and a gain on loan sales of $5.3 million for the quarter ended March 31, 2022, compared to $451.4 million in mortgage closings and $10.1 million in gain on sales for the preceding quarter. The change in the fair value of derivatives included in mortgage banking income was a positive $1.0 million for the three months ended March 31, 2022, as compared to a negative $2.6 million for the three months ended December 31, 2021.

The change in the fair value of mortgage servicing rights positively impacted mortgage banking income; resulting in an increase of $5.3 million in the fair value of mortgage servicing rights for the three months ended March 31, 2022; as compared to a decrease of $245,000 in the fair value of mortgage servicing rights for the three months ended December 31, 2021. The 10-year Treasury Constant Maturity rate increased 80 basis points versus the fourth quarter of 2021, and prepayments slowed. The change in the fair value of the mortgage servicing rights is generally consistent with the change in the 10-year Treasury Constant Maturity rate. As interest rates rise and prepayment speeds slow, mortgage servicing rights values tend to increase; conversely, as interest rates fall and prepayment speeds quicken, mortgage servicing rights values tend to decrease.

Deposit account fees decreased $311,000, or 6.5%, to $4.5 million for the quarter ended March 31, 2022, from $4.8 million for the quarter ended December 31, 2021. Other income for the quarter ended March 31, 2022 increased $245,000. The fourth quarter of 2021 included a write-off of $431,000 on a direct interest-rate swap related to a non-accrual loan, and no such write-off was recorded in the first quarter of 2022.

Total noninterest income decreased $18.7 million, or 49.6%, as compared to the quarter ended March 31, 2021, primarily due to a $19.6 million, or 59.8%, decrease in mortgage banking income, driven by the decrease in loan closings and narrowing gain-on-sale margins. The decrease in mortgage banking income was offset by a $620,000 increase in deposit account fees.

Noninterest Expense

Total noninterest expenses were $34.8 million for the quarter ended March 31, 2022, a decrease of $3.4 million, or 8.8%, from the quarter ended December 31, 2021. The decrease primarily reflects the decrease in compensation and benefits, consistent with the decrease in residential mortgage loan closings at HarborOne Mortgage, LLC ("HarborOne Mortgage").

​

Total noninterest expenses decreased $8.0 million, or 18.6%, from the quarter ended March 31, 2021. Compensation and benefits decreased $6.7 million and loan expenses decreased $2.0 million, consistent with the decrease in residential mortgage loan closings.

​

Income Tax Provision

The effective tax rate was 28.5% for the quarter ended March 31, 2022, compared to 23.2% for the quarter ended December 31, 2021 and 28.1% for the quarter ended March 31, 2021. The effective tax rate for the quarter ended December 31, 2021 was impacted by the recognition of a net tax benefit in the amount of $754,000 for a reserve release upon the expiration of the applicable statute of limitations.

Asset Quality and Allowance for Credit Losses

Effective January 1, 2022, the Company adopted Accounting Standards Update No. 2016-13, commonly referred to as CECL, which requires the measurement of expected lifetime credit losses for financial assets measured at amortized cost, as well as unfunded commitments that are considered off-balance sheet credit exposures. CECL requires that the allowance for credit losses ("ACL") be calculated based on current expected credit losses over the full remaining expected life of the financial assets and also consider expected future changes in macroeconomic conditions. Upon adoption of CECL on January 1, 2022, the Company's ACL on loans decreased by $1.3 million, and the ACL on unfunded commitments increased by $3.9 million for a net increase of $2.6 million. The after-tax impact of $1.9 million was recognized as a one-time, cumulative-effect adjustment that decreased retained earnings.

​

Credit quality performance has remained strong with total nonperforming assets of $26.1 million at March 31, 2022, compared to $36.2 million at December 31, 2021 and $32.9 million at March 31, 2021. Nonperforming assets as a percentage of total assets were 0.57% at March 31, 2022, 0.79% at December 31, 2021, and 0.71% at March 31, 2021. The decrease in nonperforming assets was primarily due to the resolution of one credit in the amount of $8.8 million, previously included in the office at-risk sector, for which the Company also recorded a $2.8 million charge off in the first quarter of 2022.

Net charges-offs totaled $2.7 million, or 0.30% of average loans outstanding on an annualized basis, for the quarter ended March 31, 2022. Net charge-offs totaled $1.2 million, or 0.13% of average loans outstanding on an annualized basis, for the quarter ended December 31, 2021, and net charge-offs totaled $102,000, or 0.01% of average loans outstanding on an annualized basis, for the quarter ended March 31, 2021.

The ACL was $41.8 million, or 1.12% of total loans, at March 31, 2022, compared to $45.4 million, or 1.26% of total loans, at December 31, 2021 and $55.4 million, or 1.60% of total loans, at March 31, 2021. The ACL on unfunded commitments, included in other liabilities on the unaudited Consolidated Balance Sheets, amounted to $3.8 million at March 31, 2022, and there was no ACL on unfunded commitments at December 31, 2021.

Although we have not experienced any significant negative trends in the at-risk sectors previously identified, Management continues to monitor commercial loan sectors that may be susceptible to increased credit risk as a result of the COVID-19 pandemic: retail, office space, hotels, restaurants, and recreation. The five commercial sectors identified as at-risk totaled $835.2 million at March 31, 2022, which represents 35.1% of the commercial loan portfolio. The at-risk sectors include $712.7 million in commercial real estate loans, $73.8 million in commercial and industrial loans, and $48.7 million in commercial construction loans. Non-performing loans included in the at-risk sectors amounted to $10.8 million at March 31, 2022, the majority of which was included in the hotels sector.

BalanceSheet

Total assets increased $37.9 million, or 0.8%, to $4.59 billion at March 31, 2022 from $4.55 billion at December 31, 2021. The increase primarily reflects an increase of $129.6 million in loans, partially offset by decreases of $55.0 million in cash and cash equivalents and $32.5 million in securities available for sale. Securities available for sale were negatively impacted by unrealized losses of $30.0 million as March 31, 2022, as compared to $3.6 million of unrealized losses as of December 31, 2021.

Loans increased $129.6 million, or 3.6%, to $3.74 billion at March 31, 2022, from $3.61 billion at December 31, 2021. The increase in loans for the three months ended March 31, 2022 was primarily due to an increase in total commercial loans of $123.3 million and residential real estate loans of $34.9 million, partially offset by a decrease in consumer loans of $28.6 million. As of March 31, 2022, outstanding PPP loans amounted to $13.6 million, and there was $462,000 in deferred processing fee income. We expect to complete the forgiveness process for the remaining PPP loans by the end of the second quarter of 2022.

Total deposits were $3.76 billion at March 31, 2022 and $3.68 billion at December 31, 2021. Compared to the prior quarter, non-certificate accounts increased $109.5 million, and term certificate accounts decreased $30.2 million. FHLB borrowings were flat at $55.7 million at March 31, 2022 and December 31, 2021.

Total stockholders' equity was $649.1 million at March 31, 2022, compared to $679.3 million at December 31, 2021 and $698.1 million at March 31, 2021. Stockholders' equity decreased 4.4% when compared to the prior quarter, as earnings were offset by share repurchases and elevated levels of unrealized losses on available-for-sale investment securities included in other comprehensive income. The Company completed its third share repurchase program on March 25, 2022 of 2,668,159 shares at an average price of $14.64. The Company announced a fourth share repurchase program on April 12, 2022, under which it may repurchase up to 2,526,134 shares of the Company's common stock, or approximately 5% of the Company's outstanding shares. The tangible-common-equity-to-tangible-assets ratio was 12.75% at March 31, 2022, 13.53% at December 31, 2021, and 13.77% at March 31, 2021. At March 31, 2022, the Company and the Bank had strong capital positions and exceeded all regulatory capital requirements.

AboutHarborOneBancorp, Inc.

HarborOne Bancorp, Inc. is the holding company for HarborOne Bank, a Massachusetts-chartered savings bank. HarborOne Bank serves the financial needs of consumers, businesses, and municipalities throughout Eastern Massachusetts and Rhode Island through a network of 30 full-service branches located in Massachusetts and Rhode Island, 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 more than 30 offices in Massachusetts, Rhode Island, and New Hampshire, and is licensed to lend in seven additional states.

Forward LookingStatements

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. We may also make forward-looking statements in other documents we file with the Securities and Exchange Commission ("SEC"), in our annual reports to shareholders, in press releases and other written materials, and in oral statements made by our officers, directors or employees. 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, ongoing disruptions due to the COVID-19 pandemic and the measures taken to contain its spread on our employees, customers, business operations, credit quality, financial position, liquidity and results of operations; changes in general business and economic conditions on a national basis and 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 customer behavior; turbulence in the capital and debt markets and the impact of such conditions on the Company's business activities; changes in interest rates; increases in loan default and charge-off rates; changes related to the discontinuation and replacement of LIBOR; decreases in the value of securities in the Company's investment portfolio; fluctuations in real estate values; the possibility that future credit losses may be higher than currently expected due to changes in economic assumptions, customer behavior or adverse economic developments; the adequacy of loan loss reserves; decreases in deposit levels necessitating increased borrowing to fund loans and investments; competitive pressures from other financial institutions; acquisitions may not produce results at levels or within time frames originally anticipated; operational risks including, but not limited to, cybersecurity incidents, fraud, natural disasters, war, terrorism, civil unrest and future pandemics; changes in 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 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's actual results could differ materially from those discussed. Readers are cautioned not to place undue reliance on these

forward-looking statements, which speak only as of the date of this release. The Company disclaims any obligation to publicly update or revise any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes, except as required by law.

Use of Non-GAAP Measures

In addition to results presented in accordance with generally accepted accounting principles ("GAAP"), this press release contains certain non-GAAP financial measures. The Company's management believes that the supplemental non-GAAP information, which consists of the tax equivalent basis for yields, the efficiency ratio, tangible common equity to tangible assets ratio and tangible book value per share, is utilized by regulators and market analysts to evaluate a company's financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.

HarborOne Bancorp, Inc.

Consolidated Balance Sheet Trend

(Unaudited)

March 31,

December 31,

September 30,

June 30,

March 31,

(in thousands)

2022

2021

2021

2021

2021

Assets

Cash and due from banks

$

41,862

$

35,549

$

42,589

$

41,328

$

37,074

Short-term investments

97,870

159,170

277,050

374,319

281,451

Total cash and cash equivalents

139,732

194,719

319,639

415,647

318,525

Securities available for sale, at fair value

361,529

394,036

390,552

353,848

304,168

Federal Home Loan Bank stock, at cost

5,931

5,931

6,828

7,241

7,572

Asset held for sale

678

881

881

-

-

Loans held for sale, at fair value

25,690

45,642

77,052

103,886

210,494

Loans:

Commercial real estate

1,816,484

1,699,877

1,573,284

1,561,873

1,559,056

Commercial construction

154,059

136,563

152,685

107,585

112,187

Commercial and industrial

410,787

421,608

414,814

467,479

499,728

Total commercial loans

2,381,330

2,258,048

2,140,783

2,136,937

2,170,971

Residential real estate

1,252,920

1,217,980

1,160,689

1,096,370

1,062,229

Consumer

103,100

131,705

156,272

186,430

228,279

Loans

3,737,350

3,607,733

3,457,744

3,419,737

3,461,479

Less: Allowance for credit losses on loans

(41,765)

(45,377)

(47,988)

(51,273)

(55,384)

Net loans

3,695,585

3,562,356

3,409,756

3,368,464

3,406,095

Mortgage servicing rights, at fair value

45,043

38,268

36,540

35,955

33,939

Goodwill

69,802

69,802

69,802

69,802

69,802

Other intangible assets

2,930

3,164

3,399

3,723

4,047

Other assets

244,405

238,606

252,645

257,856

251,316

Total assets

$

4,591,325

$

4,553,405

$

4,567,094

$

4,616,422

$

4,605,958

Liabilities and Stockholders' Equity

Deposits:

Demand deposit accounts

$

771,172

$

743,051

$

756,917

$

800,118

$

777,959

NOW accounts

310,090

313,733

300,577

250,099

224,869

Regular savings and club accounts

1,218,656

1,138,979

1,144,595

1,123,123

1,113,450

Money market deposit accounts

864,316

858,970

832,441

832,006

861,867

Term certificate accounts

597,746

627,916

659,850

682,594

696,438

Total deposits

3,761,980

3,682,649

3,694,380

3,687,940

3,674,583

Long-term borrowed funds

55,702

55,711

55,720

87,479

97,488

Subordinated debt

34,191

34,159

34,128

34,096

34,064

Other liabilities and accrued expenses

90,387

101,625

102,834

101,436

101,750

Total liabilities

3,942,260

3,874,144

3,887,062

3,910,951

3,907,885

Common stock

591

585

585

585

585

Additional paid-in capital

477,302

469,934

468,526

467,194

465,832

Unearned compensation - ESOP

(29,002)

(29,461)

(29,921)

(30,380)

(30,840)

Retained earnings

332,734

325,699

315,683

305,831

294,116

Treasury stock

(113,513)

(85,859)

(73,723)

(38,588)

(31,460)

Accumulated other comprehensive income (loss)

(19,047)

(1,637)

(1,118)

829

(160)

Total stockholders' equity

649,065

679,261

680,032

705,471

698,073

Total liabilities and stockholders' equity

$

4,591,325

$

4,553,405

$

4,567,094

$

4,616,422

$

4,605,958

HarborOne Bancorp, Inc.

Consolidated Statements of Net Income - Trend

(Unaudited)

Quarters Ended

March 31,

December 31,

September 30,

June 30,

March 31,

(in thousands, except share data)

2022

2021

2021

2021

2021

Interest and dividend income:

Interest and fees on loans

$

33,576

$

34,177

$

33,680

$

34,106

$

33,860

Interest on loans held for sale

264

501

665

852

1,324

Interest on securities

1,701

1,541

1,293

793

585

Other interest and dividend income

61

134

170

136

78

Total interest and dividend income

35,602

36,353

35,808

35,887

35,847

Interest expense:

Interest on deposits

1,621

1,651

2,050

2,302

2,720

Interest on FHLB borrowings

188

193

431

531

552

Interest on subordinated debentures

523

524

524

524

523

Total interest expense

2,332

2,368

3,005

3,357

3,795

Net interest and dividend income

33,270

33,985

32,803

32,530

32,052

Provision for credit losses

338

(1,436)

(1,627)

(4,286)

91

Net interest and dividend income, after provision for credit losses

32,932

35,421

34,430

36,816

31,961

Noninterest income:

Mortgage banking income:

Gain on sale of mortgage loans

5,322

10,063

12,756

14,262

24,802

Changes in mortgage servicing rights fair value

5,285

(245)

(992)

(2,552)

3,409

Other

2,558

3,359

3,882

4,075

4,515

Total mortgage banking income

13,165

13,177

15,646

15,785

32,726

Deposit account fees

4,472

4,783

4,658

4,546

3,852

Income on retirement plan annuities

107

109

108

106

104

Gain on sale and call of securities, net

-

-

241

-

-

Bank-owned life insurance income

483

506

515

508

493

Other income

834

589

842

758

634

Total noninterest income

19,061

19,164

22,010

21,703

37,809

Noninterest expenses:

Compensation and benefits

20,723

24,564

24,760

25,146

27,454

Occupancy and equipment

5,428

4,923

4,765

4,702

5,256

Data processing

2,241

2,244

2,205

2,362

2,343

Loan expense

478

732

1,323

1,250

2,435

Marketing

1,218

1,120

880

831

813

Professional fees

1,539

1,443

1,362

1,487

1,583

Deposit insurance

349

345

341

332

320

Prepayment penalties on Federal Home Loan Bank advances

-

-

1,095

-

-

Other expenses

2,859

2,817

2,543

2,488

2,598

Total noninterest expenses

34,835

38,188

39,274

38,598

42,802

Income before income taxes

17,158

16,397

17,166

19,921

26,968

Income tax provision

4,891

3,807

4,907

5,645

7,576

Net income

$

12,267

$

12,590

$

12,259

$

14,276

$

19,392

Earnings per common share:

Basic

$

0.26

$

0.26

$

0.25

$

0.28

$

0.37

Diluted

$

0.25

$

0.25

$

0.24

$

0.27

$

0.37

Weighted average shares outstanding:

Basic

47,836,410

48,918,539

49,801,123

51,778,293

52,537,409

Diluted

48,690,420

49,828,379

50,663,415

52,650,071

53,000,830

HarborOne Bancorp, Inc.

Consolidated Statements of Net Income

(Unaudited)

For the Three Months Ended March 31,

(dollars in thousands, except share data)

2022

2021

$ Change

% Change

Interest and dividend income:

​

Interest and fees on loans

$

33,576

$

33,860

$

(284)

(0.8)

%

Interest on loans held for sale

264

1,324

(1,060)

(80.1)

Interest on securities

1,701

585

1,116

190.8

Other interest and dividend income

61

78

(17)

(21.8)

Total interest and dividend income

35,602

35,847

(245)

(0.7)

Interest expense:

Interest on deposits

1,621

2,720

(1,099)

(40.4)

Interest on FHLB borrowings

188

552

(364)

(65.9)

Interest on subordinated debentures

523

523

-

0.0

Total interest expense

2,332

3,795

(1,463)

(38.6)

Net interest and dividend income

33,270

32,052

1,218

3.8

Provision for credit losses

338

91

247

271.4

Net interest and dividend income, after provision for credit losses

32,932

31,961

971

3.0

Noninterest income:

Mortgage banking income:

Gain on sale of mortgage loans

5,322

24,802

(19,480)

(78.5)

Changes in mortgage servicing rights fair value

5,285

3,409

1,876

55.0

Other

2,558

4,515

(1,957)

(43.3)

Total mortgage banking income

13,165

32,726

(19,561)

(59.8)

Deposit account fees

4,472

3,852

620

16.1

Income on retirement plan annuities

107

104

3

2.9

Bank-owned life insurance income

483

493

(10)

(2.0)

Other income

834

634

200

31.5

Total noninterest income

19,061

37,809

(18,748)

(49.6)

Noninterest expenses:

Compensation and benefits

20,723

27,454

(6,731)

(24.5)

Occupancy and equipment

5,428

5,256

172

3.3

Data processing

2,241

2,343

(102)

(4.4)

Loan expense

478

2,435

(1,957)

(80.4)

Marketing

1,218

813

405

49.8

Professional fees

1,539

1,583

(44)

(2.8)

Deposit insurance

349

320

29

9.1

Other expenses

2,859

2,598

261

10.0

Total noninterest expenses

34,835

42,802

(7,967)

(18.6)

Income before income taxes

17,158

26,968

(9,810)

(36.4)

Income tax provision

4,891

7,576

(2,685)

(35.4)

Net income

$

12,267

$

19,392

$

(7,125)

(36.7)

%

Earnings per common share:

Basic

$

0.26

$

0.37

Diluted

$

0.25

$

0.37

Weighted average shares outstanding:

Basic

47,836,410

52,537,409

Diluted

48,690,420

53,000,830

HarborOne Bancorp, Inc.

Average Balances / Yields

(Unaudited)

Quarters Ended

March 31, 2022

December 31, 2021

March 31, 2021

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:

Investment securities (1)

$

393,364

$

1,701

1.75

%

$

394,301

$

1,541

1.55

%

$

271,357

$

585

0.87

%

Other interest-earning assets

150,569

61

0.16

286,026

134

0.19

180,526

78

0.18

Loans held for sale

29,842

264

3.59

63,833

501

3.11

193,426

1,324

2.78

Loans

Commercial loans (2)

2,291,343

22,095

3.91

2,165,739

22,658

4.15

2,161,076

20,780

3.90

Residential real estate loans (2)

1,220,703

10,142

3.37

1,171,608

9,870

3.34

1,084,292

10,340

3.87

Consumer loans (2)

118,242

1,339

4.59

143,577

1,649

4.56

253,014

2,740

4.39

Total loans

3,630,288

33,576

3.75

3,480,924

34,177

3.90

3,498,382

33,860

3.93

Total interest-earning assets

4,204,063

35,602

3.43

4,225,084

36,353

3.41

4,143,691

35,847

3.51

Noninterest-earning assets

326,811

337,310

330,257

Total assets

$

4,530,874

$

4,562,394

$

4,473,948

Interest-bearing liabilities:

Savings accounts

$

1,165,683

366

0.13

$

1,147,855

247

0.09

$

1,058,820

537

0.21

NOW accounts

301,279

36

0.05

300,459

40

0.05

212,282

37

0.07

Money market accounts

858,792

303

0.14

839,977

307

0.15

861,518

560

0.26

Certificates of deposit

522,211

729

0.57

543,208

878

0.64

608,089

1,444

0.96

Brokered deposits

100,000

187

0.76

100,000

179

0.71

100,000

142

0.58

Total interest-bearing deposits

2,947,965

1,621

0.22

2,931,499

1,651

0.22

2,840,709

2,720

0.39

FHLB advances

55,706

188

1.37

55,714

193

1.37

102,383

552

2.19

Subordinated debentures

34,173

523

6.21

34,144

524

6.09

34,048

523

6.23

Total borrowings

89,879

711

3.21

89,858

717

3.17

136,431

1,075

3.20

Total interest-bearing liabilities

3,037,844

2,332

0.31

3,021,357

2,368

0.31

2,977,140

3,795

0.52

Noninterest-bearing liabilities:

Noninterest-bearing deposits

738,578

768,361

706,274

Other noninterest-bearing liabilities

86,763

92,034

93,380

Total liabilities

3,863,185

3,881,752

3,776,794

Total stockholders' equity

667,689

680,642

697,154

Total liabilities and stockholders' equity

$

4,530,874

$

4,562,394

$

4,473,948

Tax equivalent net interest income

33,270

33,985

32,052

Tax equivalent interest rate spread (3)

3.12

%

3.10

%

2.99

%

Less: tax equivalent adjustment

-

-

-

Net interest income as reported

$

33,270

$

33,985

$

32,052

Net interest-earning assets (4)

$

1,166,219

$

1,203,727

$

1,166,551

Net interest margin (5)

3.21

%

3.19

%

3.14

%

Tax equivalent effect

-

-

-

Net interest margin on a fully tax equivalent basis

3.21

%

3.19

%

3.14

%

Average interest-earning assets to average interest-bearing liabilities

138.39

%

139.84

%

139.18

%

Supplemental information:

Total deposits, including demand deposits

$

3,686,543

$

1,621

$

3,699,860

$

1,651

$

3,546,983

$

2,720

Cost of total deposits

0.18

%

0.18

%

0.31

%

Total funding liabilities, including demand deposits

$

3,776,422

$

2,332

$

3,789,718

$

2,368

$

3,683,414

$

3,795

Cost of total funding liabilities

0.25

%

0.25

%

0.42

%

(1) Includes securities available for sale. Interest income from tax exempt securities is computed on a tax equivalent basis using a tax rate of 21%. There were no tax exempt securities in the quarters presented.

(2) Includes nonaccruing loan balances and interest received on such loans.

(3) Tax equivalent 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, 2022

December 31, 2021

September 30, 2021

June 30, 2021

March 31, 2021

(in thousands)

Interest-earning assets:

Investment securities (1)

$

393,364

$

394,301

$

358,927

$

325,205

$

271,357

Other interest-earning assets

150,569

286,026

372,892

397,979

180,526

Loans held for sale

29,842

63,833

84,399

115,240

193,426

Loans

Commercial loans (2)

2,291,343

2,165,739

2,121,432

2,152,105

2,161,076

Residential real estate loans (2)

1,220,703

1,171,608

1,121,898

1,064,481

1,084,292

Consumer loans (2)

118,242

143,577

170,366

205,856

253,014

Total loans

3,630,288

3,480,924

3,413,696

3,422,442

3,498,382

Total interest-earning assets

4,204,063

4,225,084

4,229,914

4,260,866

4,143,691

Noninterest-earning assets

326,811

337,310

347,060

339,438

330,257

Total assets

$

4,530,874

$

4,562,394

$

4,576,974

$

4,600,304

$

4,473,948

Interest-bearing liabilities:

Savings accounts

$

1,165,683

$

1,147,855

$

1,136,131

$

1,118,494

$

1,058,820

NOW accounts

301,279

300,459

283,725

231,075

212,282

Money market accounts

858,792

839,977

832,340

853,586

861,518

Certificates of deposit

522,211

543,208

570,570

589,964

608,089

Brokered deposits

100,000

100,000

100,000

100,000

100,000

Total interest-bearing deposits

2,947,965

2,931,499

2,922,766

2,893,119

2,840,709

FHLB advances

55,706

55,714

84,438

96,823

102,383

Subordinated debentures

34,173

34,144

34,111

34,080

34,048

Total borrowings

89,879

89,858

118,549

130,903

136,431

Total interest-bearing liabilities

3,037,844

3,021,357

3,041,315

3,024,022

2,977,140

Noninterest-bearing liabilities:

Noninterest-bearing deposits

738,578

768,361

756,927

784,521

706,274

Other noninterest-bearing liabilities

86,763

92,034

90,366

88,577

93,380

Total liabilities

3,863,185

3,881,752

3,888,608

3,897,120

3,776,794

Total stockholders' equity

667,689

680,642

688,366

703,184

697,154

Total liabilities and stockholders' equity

$

4,530,874

$

4,562,394

$

4,576,974

$

4,600,304

$

4,473,948

Annualized Yield Trend - Quarters Ended

March 31, 2022

December 31, 2021

September 30, 2021

June 30, 2021

March 31, 2021

Interest-earning assets:

Investment securities (1)

1.75

%

1.55

%

1.43

%

0.98

%

0.87

%

Other interest-earning assets

0.16

%

0.19

%

0.18

%

0.14

%

0.18

%

Loans held for sale

3.59

%

3.11

%

3.13

%

2.97

%

2.78

%

Commercial loans (2)

3.91

%

4.15

%

4.19

%

4.11

%

3.90

%

Residential real estate loans (2)

3.37

%

3.34

%

3.31

%

3.67

%

3.87

%

Consumer loans (2)

4.59

%

4.56

%

4.50

%

4.44

%

4.39

%

Total loans

3.75

%

3.90

%

3.91

%

4.00

%

3.93

%

Total interest-earning assets

3.43

%

3.41

%

3.36

%

3.38

%

3.51

%

Interest-bearing liabilities:

Savings accounts

0.13

%

0.09

%

0.13

%

0.17

%

0.21

%

NOW accounts

0.05

%

0.05

%

0.06

%

0.07

%

0.07

%

Money market accounts

0.14

%

0.15

%

0.19

%

0.20

%

0.26

%

Certificates of deposit

0.57

%

0.64

%

0.76

%

0.84

%

0.96

%

Brokered deposits

0.76

%

0.71

%

0.64

%

0.62

%

0.58

%

Total interest-bearing deposits

0.22

%

0.22

%

0.28

%

0.32

%

0.39

%

FHLB advances

1.37

%

1.37

%

2.03

%

2.20

%

2.19

%

Subordinated debentures

6.21

%

6.09

%

6.09

%

6.17

%

6.23

%

Total borrowings

3.21

%

3.17

%

3.20

%

3.23

%

3.20

%

Total interest-bearing liabilities

0.31

%

0.31

%

0.39

%

0.45

%

0.52

%

(1) Includes securities available for sale.

(2) Includes nonaccruing loan balances and interest received on such loans.

HarborOne Bancorp, Inc.

Selected Financial Highlights

(Unaudited)

Quarters Ended

March 31,

December 31,

September 30,

June 30,

March 31,

Performance Ratios (annualized):

2022

2021

2021

2021

2021

(dollars in thousands)

Return on average assets (ROAA)

1.08

%

1.10

%

1.07

%

1.24

%

1.73

%

Return on average equity (ROAE)

7.35

%

7.40

%

7.12

%

8.12

%

11.13

%

Total noninterest expense

$

34,835

$

38,188

$

39,274

$

38,598

$

42,802

Less: Amortization of other intangible assets

235

235

324

324

324

Total adjusted noninterest expense

$

34,600

$

37,953

$

38,950

$

38,274

$

42,478

Net interest and dividend income

$

33,270

$

33,985

$

32,803

$

32,530

$

32,052

Total noninterest income

19,061

19,164

22,010

21,703

37,809

Total revenue

$

52,331

$

53,149

$

54,813

$

54,233

$

69,861

Efficiency ratio (1)

66.12

%

71.41

%

71.06

%

70.57

%

60.80

%

(1) This non-GAAP measure represents adjusted noninterest expense divided by total revenue

At or for the Quarters Ended

March 31,

December 31,

September 30,

June 30,

March 31,

Asset Quality

2022

2021

2021

2021

2021

(dollars in thousands)

Total nonperforming assets

$

26,109

$

36,186

$

36,514

$

32,731

$

32,886

Nonperforming assets to total assets

0.57

%

0.79

%

0.80

%

0.71

%

0.71

%

Allowance for credit losses on loans to total loans

1.12

%

1.26

%

1.39

%

1.50

%

1.60

%

Net charge-offs

$

2,730

$

1,174

$

1,658

$

(175)

$

102

Annualized net charge-offs/average loans

0.30

%

0.13

%

0.19

%

(0.02)

%

0.01

%

Allowance for credit losses on loans to nonperforming loans

159.96

%

125.60

%

131.52

%

158.08

%

171.18

%

HarborOne Bancorp, Inc.

Selected Financial Highlights

(Unaudited)

March 31,

December 31,

September 30,

June 30,

March 31,

Capital and Share Related

2022

2021

2021

2021

2021

(dollars in thousands, except share data)

Common stock outstanding

51,257,696

52,390,478

53,232,110

55,735,623

56,228,762

Book value per share

$

12.66

$

12.97

$

12.77

$

12.66

$

12.41

Tangible common equity:

Total stockholders' equity

$

649,065

$

679,261

$

680,032

$

705,471

$

698,073

Less: Goodwill

69,802

69,802

69,802

69,802

69,802

Less: Other intangible assets (1)

2,930

3,164

3,399

3,723

4,047

Tangible common equity

$

576,333

$

606,295

$

606,831

$

631,946

$

624,224

Tangible book value per share (2)

$

11.24

$

11.57

$

11.40

$

11.34

$

11.10

Tangible assets:

Total assets

$

4,591,325

$

4,553,405

$

4,567,094

$

4,616,422

$

4,605,958

Less: Goodwill

69,802

69,802

69,802

69,802

69,802

Less: Other intangible assets

2,930

3,164

3,399

3,723

4,047

Tangible assets

$

4,518,593

$

4,480,439

$

4,493,893

$

4,542,897

$

4,532,109

Tangible common equity / tangible assets (3)

12.75

%

13.53

%

13.50

%

13.91

%

13.77

%

(1) Other intangible assets are core deposit intangibles.

(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.

HarborOne Bancorp, Inc.

Segments Statements of Net Income

(Unaudited)

HarborOne Mortgage

HarborOne Bank

For the Quarter Ended

For the Quarter Ended

March 31,

December 31,

March 31,

March 31,

December 31,

March 31,

2022

2021

2021

2022

2021

2021

(in thousands)

Net interest and dividend income

$

350

$

571

$

1,250

$

33,424

$

33,909

$

31,248

Provision for credit losses

-

-

-

338

(1,436)

91

Net interest and dividend income, after provision for loan losses

350

571

1,250

33,086

35,345

31,157

Mortgage banking income:

Gain on sale of mortgage loans

5,322

10,063

24,802

-

-

-

Intersegment gain (loss)

837

496

662

(608)

(720)

(662)

Changes in mortgage servicing rights fair value

4,695

(315)

3,123

590

70

286

Other

2,325

3,108

4,215

233

251

300

Total mortgage banking income (loss)

13,179

13,352

32,802

215

(399)

(76)

Other noninterest income (loss)

9

7

(8)

5,887

5,980

5,091

Total noninterest income

13,188

13,359

32,794

6,102

5,581

5,015

Noninterest expense

7,761

10,467

18,057

26,825

27,396

24,463

Income before income taxes

5,777

3,463

15,987

12,363

13,530

11,709

Provision for income taxes

1,541

664

4,333

3,557

3,060

3,435

Net income

$

4,236

$

2,799

$

11,654

$

8,806

$

10,470

$

8,274

HarborOne Bancorp, Inc.

COVID Loans at Risk as of March 31, 2022

(Unaudited)

At Risk Sectors

Percent

Total

at risk

at risk

Total

sector

Retail

Office Space

Hotels

Restaurants

Recreation

sectors

loans

to total

(dollars in thousands)

Commercial real estate

$

249,010

$

182,041

$

251,081

$

16,183

$

14,351

$

712,666

$

1,816,484

39.2

%

Commercial and industrial

31,811

12,858

3,134

21,786

4,193

73,782

410,787

18.0

Commercial construction

19,076

1,028

9,342

18,575

696

48,717

154,059

31.6

Total

$

299,897

$

195,927

$

263,557

$

56,544

$

19,240

$

835,165

$

2,381,330

35.1

%

PPP loans, net of fees

$

522

$

-

$

1,252

$

1,706

$

1,251

$

4,731

$

13,155

36.0

%

Nonaccrual loans

$

49

$

-

$

10,752

$

-

$

-

$

10,801

$

26,109

41.4

%