HarborOne Bancorp, Inc. Announces 2019 Second Quarter Earnings

HarborOne Bancorp, Inc. (the “Company” or “HarborOne”) (NASDAQ: HONE), the holding company for HarborOne Bank (the “Bank”), announced net income of $4.8 million, or $0.15 per basic and diluted share for the second quarter of 2019, compared to $2.1 million, or $0.07 per basic and diluted share, for the prior quarter and $3.1 million, or $0.10 per basic and diluted share, for the same quarter prior year. For the six months ended June 30, 2019 net income was $6.8 million, or $0.22 per basic and diluted share, compared to $5.4 million, or $0.17 per basic and diluted share, for the same period last year.

Selected second quarter highlights:

• Commercial loan growth of $75.5 million, or 5% to $1.5 billion
• Deposits up 5% quarter over quarter to $3.0 billion, solid growth in core accounts
• $1.3 million gain on $27.1 million of investment sales
• Residential mortgage production increase of 94%
• Received depositor approval and commenced second-step conversion

“The first half of the year provided strong commercial loan and deposit growth. We were pleased with the increased production at HarborOne Mortgage this quarter, spurred by falling interest rates and the spring real estate market. Early indicators are that the mortgage application volume will remain strong through the summer,” said James W. Blake, CEO.

Net Interest Income
The Company’s net interest and dividend income was $26.7 million for the quarter ended June 30, 2019, up $683,000, or 2.6%, from $26.0 million for the quarter ended March 31, 2019 and up $5.8 million, or 27.8%, from $20.9 million for the quarter ended June 30, 2018. The tax-equivalent interest rate spread and net interest margin were 2.91% and 3.19%, respectively, for the quarter ended June 30, 2019 compared to 2.92% and 3.19%, respectively, for the quarter ended March 31, 2019 and 3.04% and 3.26%, respectively, for the quarter ended June 30, 2018.

The increase in net interest and dividend income from the previous quarter reflects a $1.2 million, or 3.3%, increase in total interest and dividend income offset in part by an increase of $542,000, or 4.9% in total interest expense. The increase in interest and dividend income primarily reflects an increase in interest income on commercial loans due to both rate and volume increases. Additionally, interest on loans in the second quarter of 2019 includes $614,000 in accretion income of the fair value discount on loans acquired from Coastway Bancorp, Inc. (“Coastway”) in October 2018, and $421,000 in prepayment penalties on commercial loans. Accretion income and prepayment penalties in the previous quarter were $670,000 and $106,000, respectively. The yield on loans was 4.70% for the quarter ended June 30, 2019 compared to 4.67% for the quarter ended March 31, 2019. The increase in interest expense is primarily due to an increase in higher cost money market accounts driving a 9 basis point increase in the cost of interest-bearing deposits. The increase was partially offset by a decrease in average FHLB advances of $100.6 million reducing interest expense on FHLB advances by $596,000.

The increase in net interest and dividend income from the prior year quarter reflects a $12.0 million, or 45.8%, increase in total interest and dividend income offset by an increase of $6.2 million, or 115.9%, in total interest expense. The increases in total interest and dividend income reflect an increase in the yield on loans to 4.70% from 4.25%, 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 $621.1 million with a 56 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, as well as a $74.1 million increase in average FHLB borrowings with a 64 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 increased $5.9 million, or 59.7%, to $15.7 million for the quarter ended June 30, 2019 from the quarter ended March 31, 2019. The increase is primarily due to a increase in mortgage banking income of $4.2 million, $1.3 million in gain on sale of securities and a net increase of $456,000 in the other noninterest income categories. HarborOne Mortgage, LLC (“HarborOne Mortgage”) results improved compared to the first quarter primarily driven by seasonal mortgage origination activity resulting in a 94% increase in mortgage production compared to the first quarter. Continued downward pressure on 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 in both the first and second quarter of 2019. The net increase in the other noninterest income categories compared to the prior quarter is primarily due to an increase of $278,000 in deposit account fees and an increase of $174,000 in other income primarily due to an increase in swap fee income.

Noninterest income increased $3.2 million or 25.2%, as compared to the quarter ended June 30, 2018. Mortgage banking income increased $196,000, or 2.3%, and the other noninterest income categories increased $1.7 million, excluding the gain on sale of securities noted above. Mortgage banking income increased compared to the prior year quarter, despite the decrease in the fair value of mortgage servicing rights of $2.2 million in 2019 as compared to a $306,000 decrease in 2018. Mortgage originations increased primarily as a result of lower residential mortgage interest rates and increased refinancing volume. The net increase in other noninterest income categories compared to prior year quarter is primarily due to an $832,000 increase in deposit account fee income reflecting the addition of Coastway accounts and the addition of $748,000 in swap fee income in the second quarter of 2019.

Noninterest Expense
Noninterest expenses were $35.1 million for the quarter ended June 30, 2019, an increase of $2.5 million, or 7.6%, from the quarter ended March 31, 2019. The significant changes in noninterest expense included a $1.3 million increase in compensation and benefits, a $438,000 increase in professional fees, a $390,000 increase in other expenses and a $219,000 increase in marketing expense. The increase in compensation and benefits is due to an increase in commission expense of $2.0 million primarily due to the increase in origination volume at HarborOne Mortgage partially offset by a decrease in employee retirement plan expense of $227,000. 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. There were no such payments in the second quarter of 2019. In the quarter ended June 30, 2019 other expenses included $242,000 in non-capitalized expenses for the second-step conversion.

Total noninterest expenses increased $6.6 million, or 23.0%, from the quarter ended June 30, 2018. Compensation and benefits increased $3.2 million, occupancy and equipment expense increased $1.5 million, other expenses increased $1.2 million, professional fees increased $469,000 and data processing expense increased $630,000. Additionally, the quarter ended June 30, 2018 included $524,000 in merger expenses. The increases primarily reflect the acquisition of Coastway and expenses related to the new Stoughton branch and the Boston commercial loan office.

Income Tax Provision
The effective tax rate was 14.6% for the quarter ended June 30, 2019, compared to 14.7% for the quarter ended March 31, 2019 and 23.3% for the quarter ended June 30, 2018. The effective tax rate for the quarter ended June 30, 2019 was impacted by the 2013 federal tax refund of $603,000 and the 2013 Massachusetts state tax refund of $211,000 recognized in the quarter. The effective tax rate for the quarter ended March 31, 2019 was impacted by the 2014 Massachusetts state tax refund of $320,000 recognized in the quarter. The refunds were a result of previously amended returns filed for those years.

Asset Quality
The Company recorded a provision for loan losses of $1.8 million for the quarter ended June 30, 2019, compared to $857,000 for the quarter ended March 31, 2019 and $886,000 for the quarter ended June 30, 2018. The increase in the provision for the quarter ended June 30, 2019 is primarily due to commercial real estate loan growth. Also contributing to the higher provision for the quarter ended June 30, 2019 was a $738,000 commercial loan charge off. 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 $771,000 for the quarter ended June 30, 2019, or 0.10%, of average loans outstanding on an annualized basis, compared to $230,000, or 0.03% of average loans outstanding on an annualized basis, for the quarter ended March 31, 2019 and $505,000, or 0.09% of average loans outstanding on an annualized basis, for the quarter ended June 30, 2018.

The allowance for loan losses was $22.3 million, or 0.73%, of total loans at June 30, 2019, compared to $21.3 million, or 0.71%, of total loans at March 31, 2019 and $19.2 million, or 0.84%, of total loans at June 30, 2018. The decrease in the ratio of allowance for loan losses to total loans from June 30, 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 $17.2 million at June 30, 2019 compared to $19.3 million at March 31, 2019 and $17.4 million at June 30, 2018. Nonperforming assets as a percentage of total assets were 0.46% at June 30, 2019, 0.53% at March 31, 2019 and 0.60% at June 30, 2018. The Company continues to minimize nonperforming assets through diligent collection efforts, prudent workout arrangements and strong underwriting.

Balance Sheet
Total assets increased $81.4 million, or 2.2%, to $3.74 billion at June 30, 2019 from $3.66 billion at March 31, 2019.

Net loans increased $64.4 million, or 2.2%, to $3.04 billion at June 30, 2019 from $2.98 billion at March 31, 2019. The net increase in loans for the three months ended June 30, 2019 was primarily due to increases in commercial real estate loans of $75.5 million, residential real estate loans of $5.9 million, and commercial loans of $1.4 million, partially offset by decreases in consumer loans of $16.2 million and commercial construction loans of $1.4 million. Loans held for sale increased $52.2 million, or 160.9%, to $84.7 million at June 30, 2019 from $32.4 million at March 31, 2019.

Total deposits increased $133.0 million, or 4.7%, to $2.97 billion at June 30, 2019 from $2.84 billion at March 31, 2019. Compared to the prior quarter, non-certificate accounts increased $109.8 million, brokered deposits increased $14.0 million and term certificate accounts increased $9.2 million. FHLB borrowings were $309.1 million at June 30, 2019 and $355.9 million at March 31, 2019.

Total stockholders’ equity was $371.1 million at June 30, 2019 compared to $363.4 million at March 31, 2019 and $348.6 million at June 30, 2018. The tangible common equity to tangible assets ratio was 8.04% at June 30, 2019, 7.99% at March 31, 2019 and 11.68% at June 30, 2018. At June 30, 2019, the Company and the Bank exceeded 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 more than 30 offices in Massachusetts, Rhode Island, New Hampshire, Maine, and New Jersey and is also licensed to lend in four 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)
		June 30,			March 31,			December 31,			September 30,			June 30,
(in thousands)		2019			2019			2018			2018			2018
Assets
Cash and due from banks		$	27,205		$	25,227		$	27,686		$	18,478		$	20,232
Short-term investments			51,502			76,328			77,835			76,619			112,264
Total cash and cash equivalents			78,707			101,555			105,521			95,097			132,496
Securities available for sale, at fair value			202,457			219,966			209,293			191,847			185,702
Securities held to maturity, at amortized cost			34,752			41,104			44,688			47,371			48,251
Federal Home Loan Bank stock, at cost			14,876			16,134			24,969			13,263			15,310
Loans held for sale, at fair value			84,651			32,449			42,107			155,268			71,017
Loans:
Residential real estate			1,121,335			1,115,424			1,115,456			661,755			768,537
Commercial real estate			1,027,884			952,404			934,420			788,561			726,276
Commercial construction			157,130			158,504			161,660			129,796			150,710
Total mortgage loans on real estate			2,306,349			2,226,332			2,211,536			1,580,112			1,645,523
Commercial			301,056			299,658			277,271			139,616			132,293
Consumer			453,159			469,346			491,445			498,417			516,897
Loans			3,060,564			2,995,336			2,980,252			2,218,145			2,294,713
Less: Allowance for loan losses			(22,261)			(21,282)			(20,655)			(19,440)			(19,244)
Net deferred loan costs			5,377			5,193			5,255			5,677			5,982
Net loans			3,043,680			2,979,247			2,964,852			2,204,382			2,281,451
Mortgage servicing rights, at fair value			18,156			20,231			22,217			23,748			22,832
Goodwill			69,635			69,635			70,088			13,660			13,629
Other intangible assets			7,100			7,739			8,379			66			88
Other assets			183,410			167,936			161,007			108,098			108,938
Total assets		$	3,737,424		$	3,655,996		$	3,653,121		$	2,852,800		$	2,879,714
Liabilities and Stockholders' Equity
Deposits:
NOW and demand deposit accounts		$	594,506		$	574,379		$	556,517		$	432,628		$	429,397
Regular savings and club accounts			544,401			497,697			482,088			327,030			403,732
Money market deposit accounts			885,775			842,824			758,933			674,657			681,524
Brokered deposits			131,936			117,940			77,508			66,831			79,396
Term certificate accounts			812,987			803,805			810,015			684,495			608,453
Total deposits			2,969,605			2,836,645			2,685,061			2,185,641			2,202,502
Short-term borrowed funds			98,000			126,000			290,000			25,000			70,000
Long-term borrowed funds			211,149			229,935			229,936			206,187			217,438
Subordinated debt			33,843			33,812			33,799			33,855			—
Other liabilities and accrued expenses			53,709			66,156			56,751			48,772			41,198
Total liabilities			3,366,306			3,292,548			3,295,547			2,499,455			2,531,138
Common stock			327			327			327			327			327
Additional paid-in capital			154,730			153,326			152,156			150,732			150,063
Unearned compensation - ESOP			(9,793)			(9,942)			(10,091)			(10,239)			(10,388)
Retained earnings			225,936			221,155			219,088			218,977			213,049
Treasury stock			(1,548)			(1,548)			(1,548)			(1,548)			(742)
Accumulated other comprehensive income (loss)			1,466			130			(2,358)			(4,904)			(3,733)
Total stockholders' equity			371,118			363,448			357,574			353,345			348,576
Total liabilities and stockholders' equity		$	3,737,424		$	3,655,996		$	3,653,121		$	2,852,800		$	2,879,714

HarborOne Bancorp, Inc. Consolidated Statements of Net Income - Trend (Unaudited)
		Quarters Ended
		June 30,			March 31,			December 31,			September 30,			June 30,
(in thousands, except share data)		2019			2019			2018			2018			2018
Interest and dividend income:
Interest and fees on loans		$	35,438		$	34,365		$	33,947		$	25,115		$	23,866
Interest on loans held for sale			542			358			648			625			521
Interest on securities			1,850			1,847			1,788			1,629			1,567
Other interest and dividend income			448			483			540			480			297
Total interest and dividend income			38,278			37,053			36,923			27,849			26,251
Interest expense:
Interest on deposits			9,362			8,243			7,181			5,409			4,450
Interest on FHLB borrowings			1,679			2,275			2,400			1,130			906
Interest on subordinated debentures			524			505			552			189			—
Total interest expense			11,565			11,023			10,133			6,728			5,356
Net interest and dividend income			26,713			26,030			26,790			21,121			20,895
Provision for loan losses			1,750			857			1,502			632			886
Net interest and dividend income, after provision for loan losses			24,963			25,173			25,288			20,489			20,009
Noninterest income:
Mortgage banking income:
Changes in mortgage servicing rights fair value			(2,241)			(2,151)			(1,734)			(378)			(306)
Other			10,896			6,653			7,730			9,249			8,765
Total mortgage banking income			8,655			4,502			5,996			8,871			8,459
Deposit account fees			4,056			3,778			4,007			3,302			3,224
Income on retirement plan annuities			100			96			101			100			119
Gain on sale and call of securities, net			1,267			—			5			—			—
Bank-owned life insurance income			253			253			1,003			243			243
Other income			1,387			1,213			540			1,124			512
Total noninterest income			15,718			9,842			11,652			13,640			12,557
Noninterest expenses:
Compensation and benefits			20,585			19,245			20,062			16,809			17,345
Occupancy and equipment			4,411			4,448			3,949			3,027			2,961
Data processing			2,199			2,046			1,965			1,702			1,569
Loan expense			1,334			1,271			1,227			1,503			1,390
Marketing			1,177			958			611			639			1,084
Professional fees			1,384			946			1,237			712			915
Deposit insurance			589			666			572			540			491
Merger expenses			—			—			3,808			274			524
Other expenses			3,402			3,012			3,162			2,177			2,239
Total noninterest expenses			35,081			32,592			36,593			27,383			28,518
Income before income taxes			5,600			2,423			347			6,746			4,048
Income tax provision			819			356			236			818			945
Net income		$	4,781		$	2,067		$	111		$	5,928		$	3,103
Earnings per common share:
Basic		$	0.15		$	0.07		$	—		$	0.19		$	0.10
Diluted		$	0.15		$	0.07		$	—		$	0.19		$	0.10
Weighted average shares outstanding:
Basic			31,582,546			31,561,761			31,571,467			31,575,210			31,578,961
Diluted			31,582,546			31,561,761			31,571,467			31,575,811			31,578,961

HarborOne Bancorp, Inc. Consolidated Statements of Net Income (Unaudited)
		For the Six Months Ended June 30,
(dollars in thousands, except share data)		2019					2018				$ Change					% Change
Interest and dividend income:
Interest and fees on loans		$		69,803			$		46,370		$		23,433			50.5		%
Interest on loans held for sale				900					932				(32	)		(3.4	)
Interest on securities				3,697					3,063				634			20.7
Other interest and dividend income				931					571				360			63.0
Total interest and dividend income				75,331					50,936				24,395			47.9
Interest expense:
Interest on deposits				17,605					7,973				9,632			120.8
Interest on FHLB borrowings				3,954					1,944				2,010			103.4
Interest on subordinated debentures				1,029					—				1,029			100.0
Total interest expense				22,588					9,917				12,671			127.8
Net interest and dividend income				52,743					41,019				11,724			28.6
Provision for loan losses				2,607					1,694				913			53.9
Net interest and dividend income, after provision for loan losses				50,136					39,325				10,811			27.5
Noninterest income:
Mortgage banking income:
Changes in mortgage servicing rights fair value				(4,392	)				716				(5,108	)		(713.4	)
Other				17,549					15,026				2,523			16.8
Total mortgage banking income				13,157					15,742				(2,585	)		(16.4	)
Deposit account fees				7,834					6,191				1,643			26.5
Income on retirement plan annuities				196					232				(36	)		(15.5	)
Gain on sale and call of securities, net				1,267					—				1,267			100.0
Bank-owned life insurance income				506					482				24			5.0
Other income				2,600					1,259				1,341			106.5
Total noninterest income				25,560					23,906				1,654			6.9
Noninterest expenses:
Compensation and benefits				39,830					33,697				6,133			18.2
Occupancy and equipment				8,859					6,236				2,623			42.1
Data processing				4,245					3,122				1,123			36.0
Loan expense				2,605					2,652				(47	)		(1.8	)
Marketing				2,135					2,083				52			2.5
Professional fees				2,330					1,883				447			23.7
Deposit insurance				1,255					985				270			27.4
Merger expenses				—					1,010				(1,010	)		(100.0	)
Other expenses				6,414					4,449				1,965			44.2
Total noninterest expenses				67,673					56,117				11,556			20.6
Income before income taxes				8,023					7,114				909			12.8
Income tax provision				1,175					1,759				(584	)		(33.2	)
Net income		$		6,848			$		5,355		$		1,493			27.9		%
Earnings per common share:
Basic		$		0.22			$		0.17
Diluted		$		0.22			$		0.17
Weighted average shares outstanding:
Basic				31,572,211					31,574,411
Diluted				31,572,211					31,574,411

HarborOne Bancorp, Inc. Average Balances / Yields (Unaudited)
		Quarters Ended
		June 30, 2019								March 31, 2019								June 30, 2018
		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)		$	3,072,345		$	35,980		4.70	%	$	3,016,943		$	34,723		4.67	%	$	2,303,245		$	24,387		4.25	%
Investment securities (2)			259,151			1,880		2.91			260,211			1,886		2.94			233,587			1,613		2.77
Other interest-earning assets			26,758			448		6.71			37,971			483		5.16			41,584			297		2.87
Total interest-earning assets			3,358,254			38,308		4.58			3,315,125			37,092		4.54			2,578,416			26,297		4.09
Noninterest-earning assets			260,864								252,882								130,551
Total assets		$	3,619,118							$	3,568,007							$	2,708,967
Interest-bearing liabilities:
Savings accounts		$	528,360			564		0.43		$	484,963			364		0.30		$	346,201			150		0.17
NOW accounts			140,115			25		0.07			136,954			25		0.07			128,360			21		0.06
Money market accounts			872,653			3,384		1.56			794,477			2,760		1.41			698,591			1,496		0.86
Certificates of deposit			788,701			4,627		2.35			812,992			4,512		2.25			592,811			2,534		1.71
Brokered deposits			124,122			762		2.46			99,341			582		2.38			66,892			249		1.50
Total interest-bearing deposits			2,453,951			9,362		1.53			2,328,727			8,243		1.44			1,832,855			4,450		0.97
FHLB advances			291,835			1,679		2.31			392,483			2,275		2.35			217,712			906		1.67
Subordinated debentures			33,826			524		6.21			33,822			505		6.05			—			—		—
Total borrowings			325,661			2,203		2.71			426,305			2,780		2.64			217,712			906		1.67
Total interest-bearing liabilities			2,779,612			11,565		1.67			2,755,032			11,023		1.62			2,050,567			5,356		1.05
Noninterest-bearing liabilities:
Noninterest-bearing deposits			423,462								400,573								278,846
Other noninterest-bearing liabilities			49,163								52,219								33,561
Total liabilities			3,252,237								3,207,824								2,362,974
Total equity			366,881								360,183								345,993
Total liabilities and equity		$	3,619,118							$	3,568,007							$	2,708,967
Tax equivalent net interest income						26,743								26,069								20,941
Tax equivalent interest rate spread (3)								2.91	%							2.92	%							3.04	%
Less: tax equivalent adjustment						30								39								46
Net interest income as reported					$	26,713							$	26,030							$	20,895
Net interest-earning assets (4)		$	578,642							$	560,093							$	527,849
Net interest margin (5)								3.19	%							3.18	%							3.25	%
Tax equivalent effect								—								0.01								0.01
Net interest margin on a fully tax equivalent basis								3.19	%							3.19	%							3.26	%
Average interest-earning assets to average interest-bearing liabilities			120.82	%							120.33	%							125.74	%
Supplemental information:
Total deposits, including demand deposits		$	2,877,413		$	9,362				$	2,729,300		$	8,243				$	2,111,701		$	4,450
Cost of total deposits								1.31	%							1.22	%							0.85	%
Total funding liabilities, including demand deposits		$	3,203,074		$	11,565				$	3,155,605		$	11,023				$	2,329,413		$	5,356
Cost of total funding liabilities								1.45	%							1.42	%							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. 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 2.86%, 2.88%, and 2.69%, respectively.
(3) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(4) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
(5) Net interest margin represents net interest income divided by average total interest-earning assets.
(6) Annualized.

HarborOne Bancorp, Inc. Average Balances / Yields (Unaudited)
		Year to Date
		June 30, 2019								June 30, 2018
		Average								Average
		Outstanding						Yield/		Outstanding						Yield/
		Balance			Interest			Cost		Balance			Interest			Cost
		(dollars in thousands)
Interest-earning assets:
Loans (1)		$	3,044,796		$	70,703		4.68	%	$	2,275,834		$	47,302		4.19	%
Investment securities (2)			259,678			3,766		2.92			230,492			3,154		2.76
Other interest-earning assets			32,334			931		5.81			39,477			571		2.92
Total interest-earning assets			3,336,808			75,400		4.56			2,545,803			51,027		4.04
Noninterest-earning assets			256,895								128,109
Total assets		$	3,593,703							$	2,673,912
Interest-bearing liabilities:
Savings accounts		$	506,782			928		0.37		$	339,149			285		0.17
NOW accounts			138,543			50		0.07			126,988			41		0.06
Money market accounts			833,781			6,144		1.49			707,633			2,881		0.82
Certificates of deposit			800,780			9,139		2.30			545,090			4,252		1.57
Brokered deposits			111,800			1,344		2.42			72,878			514		1.42
Total interest-bearing deposits			2,391,686			17,605		1.48			1,791,738			7,973		0.90
FHLB advances			341,880			3,954		2.33			235,437			1,944		1.66
Subordinated debentures			33,824			1,029		6.13			—			—		—
Total borrowings			375,704			4,983		2.67			235,437			1,944		1.66
Total interest-bearing liabilities			2,767,390			22,588		1.65			2,027,175			9,917		0.99
Noninterest-bearing liabilities:
Noninterest-bearing deposits			412,081								269,701
Other noninterest-bearing liabilities			50,682								32,516
Total liabilities			3,230,153								2,329,392
Total equity			363,550								344,520
Total liabilities and equity		$	3,593,703							$	2,673,912
Tax equivalent net interest income						52,812								41,110
Tax equivalent interest rate spread (3)								2.91	%							3.05	%
Less: tax equivalent adjustment						69								91
Net interest income as reported					$	52,743							$	41,019
Net interest-earning assets (4)		$	569,418							$	518,628
Net interest margin (5)								3.19	%							3.25	%
Tax equivalent effect								—								0.01
Net interest margin on a fully tax equivalent basis								3.19	%							3.26	%
Average interest-earning assets to average interest-bearing liabilities			120.58	%							125.58	%
Supplemental information:
Total deposits, including demand deposits		$	2,803,767		$	17,605				$	2,061,439		$	7,973
Cost of total deposits								1.27	%							0.78	%
Total funding liabilities, including demand deposits		$	3,179,471		$	22,588				$	2,296,876		$	9,917
Cost of total funding liabilities								1.43	%							0.87	%
(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%. The yield on investments before tax equivalent adjustments was 2.87% and 2.68% for the six months ended June 30, 2019 and 2018, 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
		June 30, 2019			March 31, 2019			December 31, 2018			September 30, 2018			June 30, 2018
		(in thousands)
Interest-earning assets:
Loans (1)		$	3,072,345		$	3,016,943		$	2,964,531		$	2,375,892		$	2,303,245
Investment securities (2)			259,151			260,211			253,631			239,443			233,587
Other interest-earning assets			26,758			37,971			49,932			74,390			41,584
Total interest-earning assets			3,358,254			3,315,125			3,268,094			2,689,725			2,578,416
Noninterest-earning assets			260,864			252,882			252,652			133,113			130,551
Total assets		$	3,619,118		$	3,568,007		$	3,520,746		$	2,822,838		$	2,708,967
Interest-bearing liabilities:
Savings accounts		$	528,360		$	484,963		$	484,153		$	338,109		$	346,201
NOW accounts			140,115			136,954			139,517			126,978			128,360
Money market accounts			872,653			794,477			725,604			678,721			698,591
Certificates of deposit			788,701			812,992			820,109			670,029			592,811
Brokered deposits			124,122			99,341			63,258			65,998			66,892
Total interest-bearing deposits			2,453,951			2,328,727			2,232,641			1,879,835			1,832,855
FHLB advances			291,835			392,483			438,023			256,391			217,712
Subordinated debentures			33,826			33,822			33,668			11,788			—
Total borrowings			325,661			426,305			471,691			268,179			217,712
Total interest-bearing liabilities			2,779,612			2,755,032			2,704,332			2,148,014			2,050,567
Noninterest-bearing liabilities:
Noninterest-bearing deposits			423,462			400,573			408,074			285,025			278,846
Other noninterest-bearing liabilities			49,163			52,219			54,493			39,445			33,561
Total liabilities			3,252,237			3,207,824			3,166,899			2,472,484			2,362,974
Total equity			366,881			360,183			353,847			350,354			345,993
Total liabilities and equity		$	3,619,118		$	3,568,007		$	3,520,746		$	2,822,838		$	2,708,967
		Annualized Yield Trend - Quarters Ended
		June 30, 2019			March 31, 2019			December 31, 2018			September 30, 2018			June 30, 2018
Interest-earning assets:
Loans (1)			4.70	%		4.67	%		4.63	%		4.30	%		4.25	%
Investment securities (2)			2.91	%		2.94	%		2.87	%		2.77	%		2.77	%
Other interest-earning assets			6.71	%		5.16	%		4.29	%		2.56	%		2.87	%
Total interest-earning assets			4.58	%		4.54	%		4.49	%		4.11	%		4.09	%
Interest-bearing liabilities:
Savings accounts			0.43	%		0.30	%		0.26	%		0.17	%		0.17	%
NOW accounts			0.07	%		0.07	%		0.07	%		0.06	%		0.06	%
Money market accounts			1.56	%		1.41	%		1.22	%		0.96	%		0.86	%
Certificates of deposit			2.35	%		2.25	%		2.06	%		1.94	%		1.71	%
Brokered deposits			2.46	%		2.38	%		2.13	%		1.84	%		1.50	%
Total interest-bearing deposits			1.53	%		1.44	%		1.28	%		1.14	%		0.97	%
FHLB advances			2.31	%		2.35	%		2.17	%		1.75	%		1.67	%
Subordinated debentures			6.21	%		6.05	%		6.51	%		6.36	%		0.00	%
Total borrowings			2.71	%		2.64	%		2.48	%		1.95	%		1.67	%
Total interest-bearing liabilities			1.67	%		1.62	%		1.49	%		1.24	%		1.05	%
(1) Includes loans held for sale, nonaccruing loan balances and interest received on such loans.
(2) Includes securities available for sale and securities held to maturity.

HarborOne Bancorp, Inc. Selected Financial Highlights (Unaudited)
		Quarters Ended
		June 30,			March 31,			December 31,			September 30,			June 30,
Performance Ratios (annualized):		2019			2019			2018			2018			2018
(dollars in thousands)
Return on average assets (ROAA)			0.53	%		0.23	%		0.01	%		0.84	%		0.46	%
Return on average equity (ROAE)			5.21	%		2.30	%		0.13	%		6.77	%		3.59	%
Total noninterest expense		$	35,081		$	32,592		$	36,593		$	27,383		$	28,518
Less: Amortization of other intangible assets			639			640			640			22			22
Total adjusted noninterest expense		$	34,442		$	31,952		$	35,953		$	27,361		$	28,496
Net interest and dividend income		$	26,713		$	26,030		$	26,790		$	21,121		$	20,895
Total noninterest income			15,718			9,842			11,652			13,640			12,557
Total revenue		$	42,431		$	35,872		$	38,442		$	34,761		$	33,452
Efficiency ratio (1)			81.17	%		89.07	%		93.52	%		78.71	%		85.19	%
(1) This non-GAAP measure represents adjusted noninterest expense divided by total revenue

		At or for the Quarters Ended
		June 30,			March 31,			December 31,			September 30,			June 30,
Asset Quality		2019			2019			2018			2018			2018
(dollars in thousands)
Total nonperforming assets		$	17,165		$	19,266		$	18,460		$	17,407		$	17,397
Nonperforming assets to total assets			0.46	%		0.53	%		0.51	%		0.61	%		0.60	%
Allowance for loan losses to total loans			0.73	%		0.71	%		0.69	%		0.87	%		0.84	%
Net charge offs		$	771		$	230		$	287		$	436		$	505
Annualized net charge offs/average loans			0.10	%		0.03	%		0.04	%		0.08	%		0.09	%
Allowance for loan losses to nonperforming loans			133.61	%		116.41	%		116.62	%		116.16	%		117.57	%

HarborOne Bancorp, Inc. Selected Financial Highlights (Unaudited)
		June 30,			March 31,			December 31,			September 30,			June 30,
Capital and Share Related		2019			2019			2018			2018			2018
(dollars in thousands, except share data)
Common stock outstanding			32,573,244			32,560,136			32,563,485			32,585,519			32,622,695
Book value per share		$	11.39		$	11.16		$	10.98		$	10.84		$	10.69
Tangible common equity:
Total stockholders' equity		$	371,118		$	363,448		$	357,574		$	353,345		$	348,576
Less: Goodwill			69,635			69,635			70,088			13,660			13,629
Less: Other intangible assets (1)			7,100			7,739			8,379			66			88
Tangible common equity		$	294,383		$	286,074		$	279,107		$	339,619		$	334,859
Tangible book value per share (2)		$	9.04		$	8.79		$	8.57		$	10.42		$	10.26
Tangible assets:
Total assets		$	3,737,424		$	3,655,996		$	3,653,121		$	2,852,800		$	2,879,714
Less: Goodwill			69,635			69,635			70,088			13,660			13,629
Less: Other intangible assets (1)			7,100			7,739			8,379			66			88
Tangible assets		$	3,660,689		$	3,578,622		$	3,574,654		$	2,839,074		$	2,865,997
Tangible common equity / tangible assets (3)			8.04	%		7.99	%		7.81	%		11.96	%		11.68	%
(1) Other 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.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20190725005403/en/