HarborOne Bancorp, Inc. (the “Company”) (NASDAQ: HONE), the holding company for HarborOne Bank (the “Bank”), announced net income of $1.6 million, or $0.05 per basic and diluted share, for the fourth quarter of 2017, compared to $2.8 million, or $0.09 per basic and diluted share, for the prior quarter and net income of $2.9 million, or $0.09 per basic and diluted share, for the same quarter last year. The decrease in net income in the fourth quarter of 2017 primarily reflects a decrease in mortgage banking income of $1.5 million due to a decrease in mortgage origination volumes. One-time items impacting fourth quarter net income include a $1.2 million reversal of a contingent consideration accrual for Merrimack Mortgage Company, LLC that was settled in the fourth quarter and is included in other income, an accrual of $925,000 to freeze the director’s post retirement benefit plan included in other expenses and a charge of $243,000 related to the revaluation of the Company’s net deferred tax assets as a result of the enactment of the Tax Cuts and Jobs Act of 2017 included in the income tax provision.

The Company reported net income for the full year of $10.4 million, or $0.33 per basic and diluted share, as compared to net income of $5.9 million for the prior year. The Company’s year-to-date results for 2016 included a one-time contribution of $4.8 million to The HarborOne Foundation; excluding this non-recurring expense, net income for 2016 would have been $8.8 million.

James W. Blake, President and CEO stated, “During the quarter we generated steady growth in our commercial loan portfolio and plan to maintain our growth strategy in 2018 with a new branch and the continued expansion of our lending portfolio. We look forward to the coming year as we strive to continue building a banking franchise dedicated to providing superior customer service, robust product offerings and committed support to our communities.”

Net Interest Income
The Company’s net interest and dividend income was $19.4 million for the quarter ended December 31, 2017, up $163,000, or 0.8%, from $19.3 million for the quarter ended September 30, 2017 and up $2.9 million, or 17.4%, from $16.6 million for the quarter ended December 31, 2016. The tax-equivalent interest rate spread and net interest margin were 2.90% and 3.07%, respectively, for the quarter ended December 31, 2017 compared to 2.91% and 3.07%, respectively, for the quarter ended September 30, 2017 and 2.77% and 2.92%, respectively, for the quarter ended December 31, 2016.

The increase in net interest income from the previous quarter reflects a $395,000, or 1.7%, increase in total interest and dividend income and an increase of $232,000, or 5.6% in total interest expense. The increase in interest and dividend income is primarily due commercial loan growth that provided an increase in average outstanding loans of $64.8 million that was partially offset by decreases in the average balances of residential real estate and consumer loans. The yield on loans was 3.94% for the quarter ended December 31, 2017 and 3.95% for the quarter ended September 30, 2017. The third quarter yield reflects the impact of a $680,000 commercial loan prepayment penalty. The increase in interest expense is due to an increase in average interest-bearing deposits of $14.8 million with a 7 basis point increase in the cost of those funds offset by a decrease in average FHLB advances of $7.8 million and a 10 basis point decrease in total cost of borrowed funds.

The increase in net interest income over the prior year quarter is primarily due to growth in the Company’s average loan balances to $2.23 billion from $2.06 billion and an increase in the yield on loans to 3.94% from 3.65%, again primarily driven by commercial loan growth as well as higher rates on variable rate loans. Total interest and dividend income increased $2.7 million, or 13.3%, and total interest expense increased $883,000, or 25.3% over the prior year quarter as a result of rising interest rates.

Noninterest Income
Noninterest income decreased to $14.2 million for the quarter ended December 31, 2017, down $473,000, or 3.2%, from the quarter ended September 30, 2017. The decrease is primarily due to a decrease in mortgage banking income of $1.5 million as mortgage originations decreased 12.4% from the prior quarter. Changes in the mortgage servicing rights fair value adjustments amounted to a $74,000 decrease in the fourth quarter of 2017 compared to a $488,000 decrease in the third quarter of 2017. An increase of $1.0 million in other income partially offset the mortgage banking income decrease. Other income includes a $1.2 million reversal of contingent consideration for the Merrimack Mortgage Company, LLC earn out agreement that was settled in full in the fourth quarter of 2017.

Noninterest income decreased $5.1 million, or 26.6%, as compared to the quarter ended December 31, 2016, primarily driven by a decrease of $6.3 million, or 41.1%, in mortgage banking income. Compared to the same quarter prior year, mortgage originations by Merrimack Mortgage Company, LLC decreased 28.7% in 2017 primarily as a result of higher residential mortgage interest rates and reduced refinance volume in 2017.

Noninterest Expense
Noninterest expenses were $29.7 million for the quarter ended December 31, 2017, an increase of $1.3 million, or 4.4%, from the quarter ended September 30, 2017. The increase was primarily due to an increase in other expenses of $1.2 million, or 56.2%. The increase primarily reflects an expense accrual of $925,000 to freeze the director postretirement benefit plan.

Noninterest expenses increased $330,000, or 1.1%, from the quarter ended December 31, 2016. Increases in occupancy and equipment of $529,000, marketing of $101,000, professional fees of $275,000, deposit insurance of $204,000 and other expenses of $1.0 million were partially offset by decreases in compensation and benefit expense of $866,000 and loan expense of $958,000. Decreased mortgage originations in the fourth quarter of 2017 primarily contributed to the expense decreases in that quarter as compared to the fourth quarter of 2016. The increase in occupancy and equipment expense is primarily due to an increase in service maintenance contract costs and the increase in other expenses is due to the aforementioned accrual to freeze the director postretirement benefits.

Income Tax Provision
The effective tax rate was 49.2% for the quarter ended December 31, 2017, 37.5% for the quarter ended September 30, 2017 and 41.5% for the quarter ended December 31, 2016. The enactment of the Tax Cuts and Jobs Act of 2017 resulted in significant changes to the U.S. tax code, including a reduction in the top corporate income tax rate from 35% to 21% effective January 1, 2018. As a result of the reduction in tax rate, the Company revalued its net deferred tax asset and recorded a one-time additional $243,000 tax provision in the fourth quarter of 2017. In addition, as a result of the recently enacted reduction in the corporate income tax rate the Company expects an effective tax rate for 2018 of approximately 26%.

Asset Quality
The Company recorded a provision for loan losses of $760,000 for the quarter ended December 31, 2017, $921,000 for the quarter ended September 30, 2017 and $1.5 million for the quarter ended December 31, 2016. The provisions for the fourth quarter of 2017 and 2016 were primarily due to commercial loan growth. The third quarter 2017 provision was a result of commercial loan growth and an additional specific reserve of $375,000 on a substandard commercial loan. In the first quarter of 2017, the Company adjusted general reserve allocations for commercial real estate and commercial loans based on updated peer data. The updated peer data resulted in lower general reserve rates on these loan types; however, this decrease was partially offset by commercial loan growth. Changes in the provision for loan losses are based on management’s assessment of loan portfolio growth and composition changes, historical charge-off trends, and ongoing evaluation of credit quality and current economic conditions. The allowance for loan losses was $18.5 million, or 0.84%, of total loans at December 31, 2017, compared to $17.9 million, or 0.84%, of total loans, at September 30, 2017 and $17.0 million, or 0.85%, of total loans at December 31, 2016. Net charge-offs totaled $204,000 for the quarter ended December 31, 2017, or 0.04%, of average loans outstanding on an annualized basis, compared to $169,000, or 0.03%, for the quarter ended September 30, 2017 and $320,000, or 0.06%, for the quarter ended December 31, 2016.

Nonperforming assets were $18.6 million at December 31, 2017 compared to $20.6 million at September 30, 2017 and $22.9 million at December 31, 2016. Nonperforming assets as a percentage of total assets were 0.69% at December 31, 2017, 0.78% at September 30, 2017 and 0.94% at December 31, 2016. The steady decline reflects the Company’s continued efforts to minimize nonperforming assets through diligent collection efforts, prudent workout arrangements and strong underwriting.

Balance Sheet
Total assets increased $25.5 million, or 1.0%, to $2.68 billion at December 31, 2017 from $2.66 billion at September 30, 2017. Net loans increased $71.9 million, or 3.4%, to $2.18 billion at December 31, 2017 from $2.10 billion at September 30, 2017. The net increase in loans for the three months ended December 31, 2017 was primarily due to increases of $32.4 million in commercial real estate loans and $52.0 million in construction loans partially offset by a decrease of $2.5 million in residential real estate loans, $2.1 million in commercial and industrial loans, and $5.9 million in consumer loans. Loans held for sale decreased $36.7 million, or 38.2%, to $59.5 million at December 31, 2017 from $96.2 million at September 30, 2017 due to the seasonal decrease in residential mortgage originations.

Total deposits increased $10.2 million, or 0.5%, to $2.01 billion at December 31, 2017 from $2.00 billion at September 30, 2017. Compared to the prior quarter, non-certificate accounts increased $5.7 million, brokered deposits increased $363,000 and term certificate accounts increased $4.2 million. The increase in non-certificate accounts was primarily due to an increase in money market accounts. Borrowings were $290.4 million at December 31, 2017 and $276.4 million at September 30, 2017.

Total stockholders’ equity was $343.5 million at December 31, 2017 compared to $340.6 million at September 30, 2017 and $329.4 million at December 31, 2016. The tangible common equity to tangible assets ratio was 12.35% at December 31, 2017, 12.36% at September 30, 2017 and 12.97% at December 31, 2016. At December 31, 2017, the Company and the Bank exceed all regulatory capital requirements.

Annual Meeting
HarborOne Bancorp, Inc. has scheduled its annual meeting of shareholders for Thursday, May 10, 2018 at 5:00 p.m. local time, at Goodwin Procter LLP, 100 Northern Avenue, Boston, MA 02210. The date for determining the Company’s shareholders of record for the annual meeting is March 12, 2018.

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 Southeastern Massachusetts through a network of 14 full-service branches, two limited service branches, a commercial loan office in Providence, Rhode Island, a residential lending office in Westford, Massachusetts, and 13 free-standing ATMs. The Bank also provides a range of educational services through “HarborOne U,” with classes on small business, financial literacy and personal enrichment at two campuses located adjacent to our Brockton and Mansfield locations. Merrimack Mortgage Company, LLC, a subsidiary of HarborOne Bank, is a full-service mortgage lender with 33 offices in Massachusetts, New Hampshire and Maine, and also does business in seven 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, 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)

 
December 31, September 30, June 30, March 31, December 31,
(Dollars in thousands) 2017 2017 2017 2017 2016
 
Assets
 
Cash and due from banks $ 16,348 $ 15,393 $ 17,492 $ 18,621 $ 16,464
Short-term investments   64,443     79,412     84,105     83,778     33,751  
Total cash and cash equivalents 80,791 94,805 101,597 102,399 50,215
 
Securities available for sale, at fair value 170,853 166,122 160,795 165,348 136,469
Securities held to maturity, at amortized cost 46,869 47,752 45,660 46,531 47,877
Federal Home Loan Bank stock, at cost 15,532 16,356 16,356 17,863 15,749
Loans held for sale, at fair value 59,460 96,201 91,849 51,932 86,443
Loans:
Residential real estate 766,917 769,418 771,121 765,368 770,935
Commercial real estate 655,419 623,054 592,325 557,174 495,801
Construction   128,643     76,668     66,908     69,134     58,443  
Total mortgage loans on real estate 1,550,979 1,469,140 1,430,354 1,391,676 1,325,179
Commercial 109,523 111,627 114,234 111,849 100,501
Consumer   527,820     533,707     543,394     551,603     563,104  
Loans 2,188,322 2,114,474 2,087,982 2,055,128 1,988,784
Less: Allowance for loan losses (18,489 ) (17,933 ) (17,181 ) (16,884 ) (16,968 )
Net deferred loan costs   6,645     8,035     8,682     9,041     9,931  
Net loans 2,176,478 2,104,576 2,079,483 2,047,285 1,981,747
Mortgage servicing rights, at fair value 21,092 20,376 20,313 20,839 20,333
Goodwill and other intangible assets 13,497 13,519 13,541 13,563 13,585
Other assets   100,348     99,752     102,476     100,384     95,892  
Total assets $ 2,684,920   $ 2,659,459   $ 2,632,070   $ 2,566,144   $ 2,448,310  
 
Liabilities and Stockholders' Equity
 
Deposits:
NOW and demand deposit accounts $ 395,153 $ 395,728 $ 395,150 $ 392,012 $ 365,869
Regular savings and club accounts 356,300 404,465 398,883 338,338 316,947
Money market deposit accounts 721,021 666,613 641,776 646,123 595,211
Brokered deposits 73,490 73,127 92,803 77,774 54,045
Term certificate accounts   467,774     463,612     465,179     470,490     472,681  
Total deposits 2,013,738 2,003,545 1,993,791 1,924,737 1,804,753
Short-term borrowed funds 44,000 10,000 30,000 75,000 80,000
Long-term borrowed funds 246,365 266,366 235,117 200,118 195,119
Other liabilities and accrued expenses   37,333     38,947     36,527     33,554     39,054  
Total liabilities   2,341,436     2,318,858     2,295,435     2,233,409     2,118,926  
 
Common stock 327 327 321 321 321
Additional paid-in capital 147,060 145,525 144,705 144,555 144,420
Unearned compensation - ESOP (10,685 ) (10,833 ) (10,982 ) (11,130 ) (11,278 )
Retained earnings 207,590 205,997 203,159 199,946 197,211
Treasury stock (280 ) — — — —
Accumulated other comprehensive loss   (528 )   (415 )   (568 )   (957 )   (1,290 )
Total stockholders' equity   343,484     340,601     336,635     332,735     329,384  
 
Total liabilities and stockholders' equity $ 2,684,920   $ 2,659,459   $ 2,632,070   $ 2,566,144   $ 2,448,310  
 
                             

HarborOne Bancorp, Inc.

Consolidated Statements of Net Income - Trend

(Unaudited)

 
Quarters Ended
December 31, September 30, June 30, March 31, December 31,
(Dollars in thousands, except per share amounts) 2017 2017 2017 2017 2016
 
Interest and dividend income:
Interest and fees on loans $ 21,349 $ 20,990 $ 19,640 $ 19,135 $ 18,092
Interest on loans held for sale 777 796 620 546 788
Interest on securities 1,389 1,334 1,332 1,216 1,002
Other interest and dividend income   294     294     320     252     167
Total interest and dividend income   23,809     23,414     21,912     21,149     20,049
 
Interest expense:
Interest on deposits 3,151 2,812 2,567 2,432 2,283
Interest on borrowed funds   1,226     1,333     1,130     1,285     1,211
Total interest expense   4,377     4,145     3,697     3,717     3,494
 
Net interest and dividend income 19,432 19,269 18,215 17,432 16,555
 
Provision for loan losses   760     921     470     265     1,456
 
Net interest income, after provision for loan losses   18,672     18,348     17,745     17,167     15,099
 
Noninterest income:
Mortgage banking income:
Changes in mortgage servicing rights fair value (74 ) (488 ) (1,052 ) (442 ) 2,970
Other   9,134     11,071     11,200     7,846     12,404
Total mortgage banking income 9,060 10,583 10,148 7,404 15,374
 
Deposit account fees 3,223 3,172 3,071 2,845 2,979
Income on retirement plan annuities 118 114 113 110 111
Gain on sale of consumer loans — — — 78 —
Bank-owned life insurance income 246 260 261 257 263
Other income   1,507     498     706     760     557
Total noninterest income   14,154     14,627     14,299     11,454     19,284
 
Noninterest expenses:
Compensation and benefits 17,655 17,325 16,319 14,924 18,521
Occupancy and equipment 3,045 2,951 2,724 2,986 2,516
Data processing 1,560 1,547 1,528 1,522 1,557
Loan expense 1,752 1,884 1,882 1,363 2,710
Marketing 936 1,136 1,041 482 835
Professional fees 1,097 1,126 1,080 930 822
Deposit insurance 412 397 446 462 208
Other expenses   3,236     2,072     1,858     1,736     2,194
Total noninterest expenses   29,693     28,438     26,878     24,405     29,363
 
Income before income taxes 3,133 4,537 5,166 4,216 5,020
 
Income tax provision   1,540     1,699     1,953     1,481     2,084
 
Net income $ 1,593   $ 2,838   $ 3,213   $ 2,735   $ 2,936
 
Earnings per common share:
Basic $ 0.05 $ 0.09 $ 0.10 $ 0.09 $ 0.09
Diluted $ 0.05 $ 0.09 $ 0.10 $ 0.09 $ 0.09
Weighted average shares outstanding:
Basic 31,582,069 31,303,281 31,013,002 30,998,163 30,973,588
Diluted 31,582,069 31,303,281 31,013,002 30,998,163 30,973,588
 
                       

HarborOne Bancorp, Inc.

Consolidated Statements of Net Income

(Unaudited)

 
For the Years Ended December 31,
(Dollars in thousands, except per share amounts) 2017 2016 $ Change % Change
 
Interest and dividend income:
Interest and fees on loans $ 81,114 $ 67,172 $ 13,942 20.8 %
Interest on loans held for sale 2,739 2,695 44 1.6
Interest on securities 5,271 4,112 1,159 28.2
Other interest and dividend income   1,160   777   383 49.3
Total interest and dividend income   90,284   74,756   15,528 20.8
 
Interest expense:
Interest on deposits 10,962 8,710 2,252 25.9
Interest on borrowed funds   4,974   5,051   (77) (1.5)
Total interest expense   15,936   13,761   2,175 15.8
 
Net interest and dividend income 74,348 60,995 13,353 21.9
 
Provision for loan losses   2,416   4,172   (1,756) (42.1)
 
Net interest income, after provision for loan losses   71,932   56,823   15,109 26.6
 
Noninterest income:
Mortgage banking income:
Changes in mortgage servicing rights fair value (2,056) (1,130) (926) (81.9)
Other   39,251   52,129   (12,878) (24.7)
Total mortgage banking income 37,195 50,999 (13,804) (27.1)
 
Deposit account fees 12,311 11,664 647 5.5
Income on retirement plan annuities 455 436 19 4.4
Gain on sale of consumer loans 78 79 (1) (1.3)
Gain on sale and call of securities, net — 283 (283) (100.0)
Bank-owned life insurance income 1,024 1,088 (64) (5.9)
Other income   3,471   2,554   917 35.9
Total noninterest income   54,534   67,103   (12,569) (18.7)
 
Noninterest expenses:
Compensation and benefits 66,223 69,073 (2,850) (4.1)
Occupancy and equipment 11,706 10,221 1,485 14.5
Data processing 6,157 5,867 290 4.9
Loan expense 6,881 9,746 (2,865) (29.4)
Marketing 3,595 2,599 996 38.3
Professional fees 4,233 2,710 1,523 56.2
Deposit insurance 1,717 1,466 251 17.1
Prepayment penalties on Federal Home Loan Bank — 400 (400) (100.0)
Charitable foundation contributions — 4,820 (4,820) (100.0)
Other expenses   8,902   7,796   1,106 14.2
Total noninterest expenses   109,414   114,698   (5,284) (4.6)
 
Income before income taxes 17,052 9,228 7,824 84.8
 
Income tax provision   6,673   3,297   3,376 102.4
 
Net income $ 10,379 $ 5,931 $ 4,448 75.0 %
 
Earnings per common share:
Basic $ 0.33 N/A N/A
Diluted $ 0.33 N/A N/A
Weighted average shares outstanding:
Basic 31,228,317 N/A N/A
Diluted 31,228,317 N/A N/A
                                         

HarborOne Bancorp, Inc.

Average Balances / Yields

(Unaudited)

 
Quarters Ended
December 31, 2017 September 30, 2017 December 31, 2016
Average Average Average
Outstanding Yield/ Outstanding Yield/ Outstanding Yield/
Balance Interest Cost (6) Balance Interest Cost (6) Balance Interest Cost (6)
(Dollars in thousands)
Interest-earning assets:
Loans (1) $ 2,230,303 $ 22,126 3.94 % $ 2,190,303 $ 21,786 3.95 % $ 2,055,444 $ 18,880 3.65 %
Investment securities (2) 214,127 1,465 2.71 206,761 1,409 2.70 168,485 1,079 2.55
Other interest-earning assets   73,014   294 1.60   102,589   294 1.14   38,912   167 1.71
Total interest-earning assets 2,517,444   23,885 3.76 2,499,653   23,489 3.73 2,262,841   20,126 3.54
Noninterest-earning assets   127,374   128,966   126,899
Total assets $ 2,644,818 $ 2,628,619 $ 2,389,740
Interest-bearing liabilities:
Savings accounts $ 353,350 159 0.18 $ 398,340 183 0.18 $ 319,166 142 0.18
NOW accounts 126,661 20 0.06 125,636 20 0.06 124,134 19 0.06
Money market accounts 716,862 1,287 0.71 651,003 982 0.60 602,263 692 0.46
Certificates of deposit 464,139 1,444 1.23 463,077 1,382 1.18 458,491 1,339 1.16
Brokered deposit   74,783   241 1.28   82,976   245 1.17   39,689   91 0.92
Total interest-bearing deposits 1,735,795 3,151 0.72 1,721,032 2,812 0.65 1,543,743 2,283 0.59
FHLB advances   280,092   1,226 1.74   287,858   1,333 1.84   257,568   1,211 1.87
Total interest-bearing liabilities 2,015,887   4,377 0.86 2,008,890   4,145 0.82 1,801,311   3,494 0.77
Noninterest-bearing liabilities:
Noninterest-bearing deposits 256,522 251,579 227,918
Other noninterest-bearing liabilities   31,459   30,815   31,055
Total liabilities 2,303,868 2,291,284 2,060,284
Total equity   340,950   337,335   329,456
Total liabilities and equity $ 2,644,818 $ 2,628,619 $ 2,389,740
Tax equivalent net interest income 19,508 19,344 16,632
Tax equivalent interest rate spread (3) 2.90 % 2.91 % 2.77 %
Less: tax equivalent adjustment   76   75   77
Net interest income as reported $ 19,432 $ 19,269 $ 16,555
Net interest-earning assets (4) $ 501,557 $ 490,763 $ 461,530
Net interest margin (5) 3.06 % 3.06 % 2.91 %
Tax equivalent effect 0.01 0.01 0.01
Net interest margin on a fully tax equivalent basis 3.07 % 3.07 % 2.92 %
Average interest-earning assets to average interest-bearing liabilities 124.88 % 124.43 % 125.62 %
 
Supplemental information:
Total deposits, including demand deposits $ 1,992,317 $ 3,151 $ 1,972,611 $ 2,812 $ 1,771,661 $ 2,283
Cost of total deposits 0.63 % 0.57 % 0.51 %
Total funding liabilities, including demand deposits $ 2,272,409 $ 4,377 $ 2,260,469 $ 4,145 $ 2,029,229 $ 3,494
Cost of total funding liabilities 0.76 % 0.73 % 0.69 %

(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 35% for all periods presented. The yield on investments before tax equivalent adjustments for the quarters presented were 2.57%, 2.56%, and 2.37%, respectively.
(3) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(4) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
(5) Net interest margin represents net interest income divided by average total interest-earning assets.
(6) Annualized

                             

HarborOne Bancorp, Inc.

Average Balances / Yields

(Unaudited)

 
Year to Date
December 31, 2017 December 31, 2016
Average Average
Outstanding Yield/ Outstanding Yield/
Balance Interest Cost (6) Balance Interest Cost
(Dollars in thousands)
Interest-earning assets:
Loans (1) $ 2,165,806 $ 83,853 3.87 % $ 1,931,271 $ 69,867 3.62 %
Investment securities (2) 207,071 5,574 2.69 173,131 4,423 2.55
Other interest-earning assets   81,082   1,160 1.43   46,448   777 1.66
Total interest-earning assets 2,453,959   90,587 3.69 2,150,850   75,067 3.49
Noninterest-earning assets   127,548   127,721
Total assets $ 2,581,507 $ 2,278,571
Interest-bearing liabilities:
Savings accounts $ 357,777 644 0.18 $ 314,304 548 0.17
NOW accounts 126,093 79 0.06 120,661 76 0.06
Money market accounts 662,482 3,843 0.58 622,032 2,804 0.45
Certificates of deposit 466,535 5,545 1.19 449,607 5,188 1.15
Brokered deposit   75,050   851 1.13   10,114   94 0.93
Total interest-bearing deposits 1,687,937 10,962 0.65 1,516,718 8,710 0.57
FHLB advances   278,663   4,974 1.78   248,678   5,051 2.03
Total interest-bearing liabilities 1,966,600   15,936 0.81 1,765,396   13,761 0.78
Noninterest-bearing liabilities:
Noninterest-bearing deposits 249,035 221,212
Other noninterest-bearing liabilities   30,179   29,855
Total liabilities 2,245,814 2,016,463
Total equity   335,693   262,108
Total liabilities and equity $ 2,581,507 $ 2,278,571
Tax equivalent net interest income 74,651 61,306
Tax equivalent interest rate spread (3) 2.88 % 2.71 %
Less: tax equivalent adjustment   303   311
Net interest income as reported $ 74,348 $ 60,995
Net interest-earning assets (4) $ 487,359 $ 385,454
Net interest margin (5) 3.03 % 2.84 %
Tax equivalent effect 0.01 0.01
Net interest margin on a fully tax equivalent basis 3.04 % 2.85 %
Average interest-earning assets to average interest-bearing liabilities 124.78 % 121.83 %
 
Supplemental information:
Total deposits, including demand deposits $ 1,936,972 $ 10,962 $ 1,737,930 $ 8,710
Cost of total deposits 0.57 % 0.50 %
Total funding liabilities, including demand deposits $ 2,215,635 $ 15,936 $ 1,986,608 $ 13,761
Cost of total funding liabilities 0.72 % 0.69 %

(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 35% for all periods presented. The yield on investments before tax equivalent adjustments was 2.55% and 2.38% for the years ended December 31, 2017 and 2016, respectively.
(3) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest bearing liabilities.
(4) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
(5) Net interest margin represents net interest income divided by average total interest-earning assets.

                     

HarborOne Bancorp, Inc.

Average Balances and Yield Trend

(Unaudited)

 
Average Balances - Trend - Quarters Ended
December 31, 2017 September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016
(In thousands)
Interest-earning assets:
Loans (1) $ 2,230,303 $ 2,190,303 $ 2,129,280 $ 2,111,768 $ 2,055,444
Investment securities (2) 214,127 206,761 209,691 197,525 168,485
Other interest-earning assets   73,014   102,589   81,370   67,428   38,912
Total interest-earning assets 2,517,444 2,499,653 2,420,341 2,376,721 2,262,841
Noninterest-earning assets   127,374   128,966   129,281   124,148   126,899
Total assets $ 2,644,818 $ 2,628,619 $ 2,549,622 $ 2,500,869 $ 2,389,740
Interest-bearing liabilities:
Savings accounts $ 353,350 $ 402,470 $ 351,948 $ 326,731 $ 319,166
NOW accounts 126,661 125,636 128,794 123,340 124,134
Money market accounts 716,862 646,873 654,127 627,073 602,263
Certificates of deposit 464,139 463,077 469,249 469,774 458,491
Brokered deposit   74,783   82,976   76,555   65,698   39,689
Total interest-bearing deposits 1,735,795 1,721,032 1,680,673 1,612,616 1,543,743
FHLB advances   280,092   287,858   254,832   291,896   257,568
Total interest-bearing liabilities 2,015,887 2,008,890 1,935,505 1,904,512 1,801,311
Noninterest-bearing liabilities:
Noninterest-bearing deposits 256,522 251,579 250,654 237,056 227,918
Other noninterest-bearing liabilities   31,459   30,815   29,432   28,981   31,055
Total liabilities 2,303,868 2,291,284 2,215,591 2,170,549 2,060,284
Total equity   340,950   337,335   334,031   330,320   329,456
Total liabilities and equity $ 2,644,818 $ 2,628,619 $ 2,549,622 $ 2,500,869 $ 2,389,740
 
Annualized Yield Trend - Quarters Ended
December 31, 2017 September 30, 2017 June 30, 2017 March 31, 2017 December 31, 2016
Interest-earning assets:
Loans (1) 3.94 % 3.95 % 3.82 % 3.78 % 3.65 %
Investment securities (2) 2.71 % 2.70 % 2.69 % 2.65 % 2.55 %
Other interest-earning assets 1.60 % 1.14 % 1.58 % 1.52 % 1.71 %
Total interest-earning assets 3.76 % 3.73 % 3.64 % 3.62 % 3.54 %
 
Interest-bearing liabilities:
Savings accounts 0.18 % 0.19 % 0.17 % 0.19 % 0.18 %
NOW accounts 0.06 % 0.06 % 0.06 % 0.06 % 0.06 %
Money market accounts 0.71 % 0.59 % 0.50 % 0.49 % 0.46 %
Certificates of deposit 1.23 % 1.18 % 1.17 % 1.17 % 1.16 %
Brokered deposit 1.28 % 1.17 % 1.08 % 0.98 % 0.92 %
Total interest-bearing deposits 0.72 % 0.65 % 0.61 % 0.61 % 0.59 %
FHLB advances 1.74 % 1.84 % 1.78 % 1.79 % 1.87 %
Total interest-bearing liabilities 0.86 % 0.82 % 0.77 % 0.79 % 0.77 %

(1) Includes loans held for sale, nonaccruing loan balances and interest received on such loans.
(2) Includes securities available for sale and securities held to maturity.

                               

HarborOne Bancorp, Inc.

Selected Financial Highlights

(Unaudited)

 
Quarters Ended

December 31,

September 30, June 30, March 31, December 31,
Performance Ratios (annualized): 2017 2017 2017 2017 2016
 
Return on average assets (ROAA) 0.24 % 0.43 % 0.50 % 0.44 % 0.49 %
 
Return on average equity (ROAE) 1.87 % 3.37 % 3.85 % 3.31 % 3.56 %
 
Efficiency ratio (1) 88.34 % 83.83 % 82.60 % 84.41 % 81.87 %

(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
December 31,     September 30,     June 30,     March 31,     December 31,
Asset Quality 2017 2017 2017 2017 2016
(Dollars in thousands)
 
Total nonperforming assets $ 18,617 $ 20,627 $ 22,522 $ 23,471 $ 22,946
 
Nonperforming assets to total assets 0.69 % 0.78 % 0.86 % 0.91 % 0.94 %
 
Allowance for loan losses to total loans 0.84 % 0.84 % 0.82 % 0.82 % 0.85 %
 
Net charge offs $ 204 $ 169 $ 173 $ 349 $ 320
 
Annualized net charge offs/average loans 0.04 % 0.03 % 0.03 % 0.07 % 0.06 %
 
Allowance for loan losses to nonperforming loans 103.55 % 91.47 % 80.04 % 78.17 % 80.12 %
      December 31,     September 30,     June 30,     March 31,     December 31,
Capital and Share Related 2017 2017 2017 2017 2016
 
Common stock outstanding 32,647,395 32,662,295 32,120,880 32,120,880 32,120,880
 
Book value per share $ 10.52 $ 10.43 $ 10.48 $ 10.36 $ 10.25
 
Tangible book value per share (1) $ 10.11 $ 10.01 $ 10.06 $ 9.94 $ 9.83
 
Tangible common equity / tangible assets (2) 12.35 % 12.36 % 12.34 % 12.50 % 12.97 %

(1) This non-GAAP ratio is total stockholders' equity less goodwill and other intangible assets divided by common stock outstanding.
(2) This non-GAAP ratio is total stockholders' equity less goodwill and other intangible assets to total assets less goodwill and other intangible assets.