HarborOne Bancorp, Inc. (the “Company”) (NASDAQ: HONE), the holding company for HarborOne Bank (the “Bank”), announced 2016 fourth quarter net income of $2.9 million or $0.09 per share as compared to $3.6 million, or $0.11 per share in the prior quarter and net income of $1.5 million in the same quarter last year.

Net income for the full year was $5.9 million as compared to $5.8 million in the prior year. Merrimack Mortgage Company, LLC (“Merrimack”), the Bank’s mortgage company subsidiary, was acquired on July 1, 2015. The 2016 full year results include a pre-tax contribution of $4.8 million to fund the HarborOne Foundation (the “Foundation”). Excluding this contribution expense, net income would have been $8.8 million.

James Blake, President and CEO, stated, “We focused our efforts on prudent growth in 2016, with our successful IPO providing capital to execute our strategy, primarily through commercial real estate and commercial loan originations. We are well positioned to continue this momentum into the new year as we evaluate further opportunities to grow our customer base and look forward to celebrating our 100th year in 2017.”

Net Interest Income
The Company’s net interest income was $16.6 million for the quarter ended December 31, 2016, up $653,000, or 4.1% from $15.9 million for the quarter ended September 30, 2016 and up $2.7 million, or 19.2%, from $13.9 million for the quarter ended December 31, 2015. The interest rate spread and net interest margin on a tax-equivalent basis were 2.77% and 2.92%, respectively, for the quarter ended December 31, 2016 compared to 2.78% and 2.93%, respectively, for the quarter ended September 30, 2016 and 2.62% and 2.72%, respectively, for the quarter ended December 31, 2015. The increase in spread and margin over the fourth quarter 2015 were primarily due to commercial real estate loan growth and lower funding costs.

Total interest and dividend income was $20.0 million for the quarter ended December 31, 2016, up $887,000, or 4.6%, from the quarter ended September 30, 2016 and up $2.6 million, or 15.0%, from the quarter ended December 31, 2015. The increase over the prior year quarter is primarily due to growth in the Company’s average loan balances to $2.055 billion from $1.797 billion and increases in the yield on loans to 3.65% from 3.55%. Total interest expense increased to $3.5 million for the quarter ended December 31, 2016, up $234,000, or 7.2%, from the quarter ended September 30, 2016 and down $57,000, or 1.6%, from the quarter ended December 31, 2015. The increase from the prior quarter is primarily due to an increase in average interest-bearing liabilities and an increase in the deposit interest rate partially offset by a decrease in FHLB borrowing interest rate. The decrease from the prior year quarter is primarily due to the decreased cost of the FHLB borrowings. The Company’s yield on interest-earning assets on a tax-equivalent basis increased to 3.54% for the quarter ended December 31, 2016 from 3.53% for the quarter ended September 30, 2016 and 3.42% for the quarter ended December 31, 2015, while the cost of funds was 0.77% for the quarter ended December 31, 2016 compared to 0.75% for the quarter ended September 30, 2016 and 0.80% for the quarter ended December 31, 2015.

Noninterest Income
Noninterest income decreased to $19.3 million for the quarter ended December 31, 2016, down $1.6 million, or 7.6%, from the quarter ended September 30, 2016 and up $6.3 million, or 48.7% from the quarter ended December 31, 2015. The 2016 low interest rate environment has encouraged robust residential mortgage origination activity with some seasonal slowdown in the fourth quarter. Mortgage banking income was $15.4 million for the quarter ended December 31, 2016, down $1.5 million, or 8.8%, from $16.9 million for the quarter ended September 30, 2016 and up $6.1 million, or 66.4%, from $9.2 million for the quarter ended December 31, 2015 as a result of increased mortgage loan origination and sales volume. The fair value of mortgage servicing rights increased $3.0 million in the fourth quarter of 2016 compared to increases of $351,000 in the third quarter of 2016 and $536,000 in the fourth quarter of 2015 as interest rates increased at the end of the 2016.

Noninterest Expense
Noninterest expenses were $29.4 million for the quarter ended December 31, 2016, a decrease of $246,000, or 0.8%, from the quarter ended September 30, 2016 and an increase of $4.9 million, or 20.1%, from the quarter ended December 31, 2015. Compensation and benefits expense was $18.6 million for the quarter ended December 31, 2016 down $286,000, or 1.5%, from $18.9 million for the quarter ended September 30, 2016 and up $3.3 million, or 21.4%, from $15.3 million for the quarter ended December 31, 2015. The 2016 quarter over the 2015 quarter increase primarily reflects increased commission expense consistent with the mortgage origination volume, employee stock option plan (“ESOP”) expense related to the establishment of the ESOP as part of the stock offering and increased compensation and incentive expenses related to Merrimack and commercial lending staff. Loan expense was $2.7 million for the quarter ended December 31, 2016, down $606,000, or 18.3%, from $3.3 million for the quarter ended September 30, 2016 and up $1.2 million, or 75.4%, from $1.5 million for the quarter ended December 31, 2015. The increase over the prior year quarter is due to the increased mortgage loan origination volume which decreased slightly in the fourth quarter compared to the third quarter of 2016.

Asset Quality
The Company’s provision for loan losses was $1.5 million for the quarter ended December 31, 2016, $1.7 million for the quarter ended September 30, 2016 and $15,000 for the quarter ended December 31, 2015. The increase in 2016 is primarily due to commercial loan growth. Changes in the provision for loan losses are also 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 $17.0 million or 0.85% of total loans at December 31, 2016, compared to $15.8 million, or 0.82% of total loans, at September 30, 2016 and $13.7 million, or 0.79% of total loans, at December 31, 2015. Net charge-offs totaled $320,000 for the quarter ended December 31, 2016, or 0.06% of average loans outstanding on an annualized basis, compared to $317,000 and 0.07% for the quarter ended September 30, 2016 and $318,000 and 0.07% for the quarter ended December 31, 2015.

Nonperforming assets were $22.9 million at December 31, 2016 compared to $26.0 million at September 30, 2016 and $31.8 million at December 31, 2015. Nonperforming assets as a percentage of total assets were 0.94% at December 31, 2016, 1.11% at September 30, 2016 and 1.47% at December 31, 2015. The reductions reflect the Company’s continued efforts to minimize nonperforming assets through diligent collection efforts and prudent workout arrangements.

Balance Sheet
Total assets increased $101.2 million, or 4.3%, to $2.448 billion at December 31, 2016 from $2.347 billion at September 30, 2016. Net loans increased $76.9 million, or 4.0%, to $1.982 billion at December 31, 2016 from $1.905 billion at September 30, 2016. The net increase in loans for the three months ended December 31, 2016 was primarily due to increases of $44.9 million in commercial real estate loans, $18.0 million in construction loans, $11.8 million in commercial and industrial loans and $7.2 in consumer loans, partially offset by a decrease of $3.5 million in residential real estate loans. Mortgage loans held for sale decreased $27.6 million, or 24.2%, to $86.4 million at December 31, 2016 from $114.1 million at September 30, 2016 due to the seasonal decrease in residential mortgage originations. Cash and cash equivalents increased $30.9 million, or 160.8%, to $50.2 million at December 31, 2016 from $19.3 million at September 30, 2016.

Total deposits increased $69.8 million, or 4.0%, to $1.805 billion at December 31, 2016 from $1.735 billion at September 30, 2016. Compared to the prior quarter brokered deposits increased $33.8 million, term certificate accounts increased $30.2 million and non-certificate accounts increased $5.8 million. Borrowings increased $30.0 million, or 12.2%, to $275.1 million at December 31, 2016 from $245.1 million at September 30, 2016, due to an increase in FHLB short-term borrowings in anticipation of January 2017 commercial loan closings.

Total stockholders’ equity was $329.4 million at December 31, 2016 compared to $327.9 million at September 30, 2016 and $190.7 million at December 31, 2015. The increase from 2015 reflects the Company’s mutual to stock conversion that was completed on June 29, 2016. As part of the conversion, the Company established an ESOP which acquired 8% of the shares issued in the conversion, including shares contributed to the Foundation. The $11.3 million related to the ESOP is shown as a reduction to stockholders’ equity on the consolidated balance sheet. The tangible common equity to tangible assets ratio decreased to 12.97% at December 31, 2016 from 13.47% at September 30, 2016. At December 31, 2016, the Company and the Bank exceed all regulatory capital requirements.

About HarborOne Bancorp, Inc.
HarborOne Bancorp, Inc. is the holding company for HarborOne Bank, the largest co-operative bank in New England. HarborOne Bank serves the financial needs of consumers, businesses, and municipalities throughout 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 34 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; 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 Company’s Registration Statement on Form S-1 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 tangible common equity to tangible assets ratio, 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)

 
(Dollars in thousands) December 31,
2016		 September 30,
2016		 June 30,
2016		 March 31,
2016		 December 31,
2015
 
Assets
 
Cash and due from banks $   16,464 $   15,706 $   18,773 $   15,268 $   18,153
Short-term investments     33,751         3,549         11,365         98,991         22,499  
Total cash and cash equivalents 50,215 19,255 30,138 114,259 40,652
 
Securities available for sale, at fair value 136,469 115,397 121,957 120,905 128,541
Securities held to maturity, at amortized cost 47,877 49,213 50,504 62,461 63,579
Federal Home Loan Bank stock, at cost 15,749 15,255 13,078 17,480 18,735
Mortgage loans held for sale, at fair value 86,443 114,054 99,697 67,592 63,797
Loans:
Residential real estate 770,935 774,404 773,169 777,034 810,343
Commercial real estate 495,801 450,945 377,386 300,880 265,482
Construction     58,443         40,438         31,414         41,227         35,830  
Total mortgage loans on real estate 1,325,179 1,265,787 1,181,969 1,119,141 1,111,655
Commercial 100,501 88,718 82,333 78,666 70,472
Consumer     563,104         555,874         560,144         544,078         548,944  
Loans 1,988,784 1,910,379 1,824,446 1,741,885 1,731,071
Less: Allowance for loan losses (16,968 ) (15,832 ) (14,439 ) (13,696 ) (13,700 )
Net deferred loan costs     9,931         10,336         10,893         11,357         12,017  
Net loans 1,981,747 1,904,883 1,820,900 1,739,546 1,729,388
Mortgage servicing rights, at fair value 20,333 15,534 12,688 12,330 12,958
Goodwill and other intangible assets 13,585 13,607 13,630 13,651 13,674
Other assets     95,892         99,935         104,166         96,544         91,818  
Total assets $   2,448,310     $   2,347,133     $   2,266,758     $   2,244,768     $   2,163,142  
 
Liabilities and Stockholders' Equity
 
Deposits:
NOW and demand deposit accounts $ 365,869 $ 358,628 $ 339,379 $ 331,709 $ 320,717
Regular savings and club accounts 316,947 317,198 316,195 312,362 295,533
Money market deposit accounts 595,211 596,377 620,974 651,503 612,370
Brokered deposits 54,045 20,236 — — —
Term certificate accounts     472,681         442,472         433,685         456,136         462,592  
Total deposits 1,804,753 1,734,911 1,710,234 1,751,711 1,691,212
Short-term borrowed funds 80,000 50,000 — — —
Long-term borrowed funds 195,119 195,120 195,096 269,597 249,598
Other liabilities and accrued expenses     39,054         39,188         37,137         31,578         31,644  
Total liabilities     2,118,926         2,019,219         1,942,467         2,052,887         1,972,454  
 
Common stock 321 321 321 — —
Additional paid-in capital 144,420 144,175 144,107 — —
Unearned compensation - ESOP (11,278 ) (11,575 ) (11,872 ) — —
Retained earnings 197,211 194,275 190,723 191,404 191,280
Accumulated other comprehensive income (loss)     (1,290 )       718         1,011         477         (592 )
Total stockholders' equity     329,384         327,914         324,290         191,881         190,688  
 
Total liabilities and stockholders' equity $   2,448,310     $   2,347,133     $   2,266,758     $   2,244,768     $   2,163,142  
 
 

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

           
Quarters Ended
(Dollars in thousands, except per share amounts) December 31,
2016		 September 30,
2016		 June 30,
2016		 March 31,
2016		 December 31,
2015
 
Interest and dividend income:
Interest and fees on loans $   18,092 $   17,144 $   16,293 $   15,643 $   15,460
Interest on loans held for sale 788 866 581 460 615
Interest on securities 1,002 988 1,023 1,099 1,179
Other interest and dividend income     167       164       209         237         186
Total interest and dividend income     20,049       19,162       18,106         17,439         17,440
 
Interest expense:
Interest on deposits 2,283 2,092 2,165 2,170 2,201
Interest on borrowed funds     1,211       1,168       1,289         1,383         1,350
Total interest expense     3,494       3,260       3,454         3,553         3,551
 
Net interest and dividend income 16,555 15,902 14,652 13,886 13,889
 
Provision for loan losses     1,456       1,710       801         205         15
 
Net interest income, after provision for loan losses     15,099       14,192       13,851         13,681         13,874
 
Noninterest income:

Mortgage banking income:

Changes in mortgage servicing rights fair value 2,970 351 (2,163 ) (2,288 ) 536
Other     12,404       16,513       13,837         9,376         8,702
Total mortgage banking income 15,374 16,864 11,674 7,088 9,238
 
Deposit account fees 2,979 3,010 2,928 2,747 2,934
Income on retirement plan annuities 111 111 108 106 108
Gain on sale of consumer loans — — 29 50 —
Gain on sale and call of securities, net — — 41 242 —
Bank-owned life insurance income 263 275 274 276 264
Other income     557       609       834         553         426
Total noninterest income     19,284       20,869       15,888         11,062         12,970
 
Noninterest expenses:
Compensation and benefits 18,616 18,902 16,407 15,518 15,332
Occupancy and equipment 2,516 2,458 2,463 2,784 2,315
Data processing expenses 1,557 1,450 1,446 1,414 1,362
Loan expense 2,710 3,316 2,128 1,592 1,545
Marketing 835 592 607 565 575
Professional fees 822 709 602 577 653
Deposit insurance 208 437 418 403 430
Prepayment penalties on Federal Home Loan Bank — — 400 — 280
Charitable foundation contributions — — 4,820 — —
Other expenses     2,099       1,745       1,878         1,704         1,949

Total noninterest expenses

    29,363       29,609       31,169         24,557         24,441
 
Income (loss) before income taxes 5,020 5,452 (1,430 ) 186 2,403
 
Income tax provision (benefit)     2,084       1,900       (749 )       62         860
 
Net income (loss) $   2,936   $   3,552   $   (681 )   $   124     $   1,543
 
Earnings per common share:
Basic and diluted $ 0.09 $ 0.11 N/A N/A N/A
 
Weighted average shares outstanding:
Basic and diluted 30,973,588 30,943,808 N/A N/A N/A
 
 

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

         
For the Years Ended December 31,
(Dollars in thousands)

2016

2015

$Change % Change
 
Interest and dividend income:
Interest and fees on loans $   67,172 $   59,988 $   7,184 12.0 %
Interest on loans held for sale 2,695 1,425 1,270 89.1 %
Interest on securities 4,112 4,802 (690 ) (14.4 )%
Other interest and dividend income     777       585       192   32.8 %
Total interest and dividend income     74,756       66,800       7,956   11.9 %
 
Interest expense:
Interest on deposits 8,710 8,700 10 0.1 %
Interest on borrowed funds     5,051       5,875       (824 ) (14.0 )%
Total interest expense     13,761       14,575       (814 ) (5.6 )%
 
Net interest and dividend income 60,995 52,225 8,770 16.8 %
 
Provision for loan losses     4,172       1,257       2,915   231.9 %
 

Net interest income, after provision for loan losses

    56,823       50,968       5,855   11.5 %
 
Noninterest income:
Mortgage banking income:
Changes in mortgage servicing rights fair value (1,130 ) (480 ) (650 ) (135.4 )%
Other     52,129       20,710       31,419   151.7 %

Total mortgage banking income

50,999 20,230 30,769 152.1 %
 
Deposit account fees 11,664 11,194 470 4.2 %
Income on retirement plan annuities 436 595 (159 ) (26.7 )%
Gain on sale of consumer loans 79 136 (57 ) (41.9 )%
Gain on sale and call of securities, net 283 295 (12 ) (4.1 )%
Bank-owned life insurance income 1,088 1,156 (68 ) (5.9 )%
Other income     2,554       1,767       787   44.5 %

Total noninterest income

    67,103       35,373       31,730   89.7 %
 
Noninterest expenses:
Compensation and benefits 69,443 45,746 23,697 51.8 %
Occupancy and equipment 10,221 9,246 975 10.5 %
Data processing expenses 5,867 5,392 475 8.8 %
Loan expense 9,746 3,949 5,797 146.8 %
Marketing 2,599 1,924 675 35.1 %
Professional fees 2,710 2,181 529 24.3 %
Deposit insurance 1,466 1,716 (250 ) (14.6 )%
Prepayment penalties on Federal Home Loan Bank 400 980 (580 ) (59.2 )%
Charitable foundation contributions 4,820 — 4,820 - %
Other expenses     7,426       6,880       546   7.9 %

Total noninterest expenses

    114,698       78,014       36,684   47.0 %
 
Income before income taxes 9,228 8,327 901 10.8 %
 
Income tax provision     3,297       2,559       738   28.8 %
 
Net income $   5,931   $   5,768   $   163   2.8 %
 
 

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

   

 

     
Quarters Ended
December 31, 2016 September 30, 2016 December 31, 2015
Average
Outstanding
Balance		 Interest Yield/
Cost (6)		 Average
Outstanding
Balance		 Interest Yield/
Cost (6)		 Average
Outstanding
Balance		 Interest Yield/
Cost (6)
(Dollars in thousands)
Interest-earning assets:

Loans(1)

 $   2,055,444 $   18,880 3.65 % $   1,983,249 $   18,010 3.61 % $   1,796,749 $   16,075 3.55 %
Investment securities (2) 183,819 1,215 2.63 181,112 1,223 2.69 213,540 1,422 2.64
Other interest-earning assets     23,578     31 0.52     3,734     6 0.61     23,478     22 0.37
Total interest-earning assets 2,262,841     20,126 3.54 2,168,095     19,239 3.53 2,033,767     17,519 3.42
Noninterest-earning assets     126,899     130,498     117,676
Total assets $   2,389,740 $   2,298,593 $   2,151,443
Interest-bearing liabilities:
Savings accounts $ 319,166 $ 142 0.18 % $ 319,202 $ 139 0.17 % $ 292,203 $ 127 0.17 %
NOW accounts 124,134 19 0.06 120,704 19 0.06 113,971 17 0.06
Money market accounts 602,263 692 0.46 612,761 685 0.44 622,937 698 0.44
Certificates of deposit 458,491 1,339 1.16 434,519 1,246 1.14 468,762 1,359 1.15
Brokered deposit     39,689     91 0.92     549     3 2.17     —     — —
Total interest-bearing deposits 1,543,743 2,283 0.59 1,487,735 2,092 0.56 1,497,873 2,201 0.58
FHLB advances     257,568     1,211 1.87     232,587     1,168 2.00     254,497     1,350 2.10
Total interest-bearing liabilities 1,801,311     3,494 0.77 1,720,322     3,260 0.75 1,752,370     3,551 0.80
Noninterest-bearing liabilities:
Noninterest-bearing deposits 227,918 217,930 182,813
Other noninterest-bearing liabilities     31,055     32,888     23,174
Total liabilities 2,060,284 1,971,140 1,958,357
Total equity     329,456     327,453     193,086
Total liabilities and equity $   2,389,740 $   2,298,593 $   2,151,443
Tax equivalent net interest income 16,632 15,979 13,968
Tax equivalent interest rate spread (3) 2.77 % 2.78 % 2.62 %
Less: tax equivalent adjustment     77     77     79
Net interest income as reported $   16,555 $   15,902 $   13,889
Net interest-earning assets (4) $   461,530 $   447,773 $   281,397
Net interest margin (5) 2.91 % 2.92 % 2.71 %
Tax equivalent effect 0.01   0.01   0.01  
Net interest margin on a fully tax equivalent basis 2.92 % 2.93 % 2.72 %
Average interest-earning assets to average interest-bearing liabilities 126.62 % 126.03 % 116.06 %
 

(1) Includes loans held for sale, nonaccruing loan balances and interest received on such loans.
(2) Includes securities available for sale, securities held to maturity and FHLB stock. Interest income from tax exempt securities is computed on a taxable 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 2.46%, 2.52%, and 2.49%, 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, 2016 December 31, 2015
Average
Outstanding
Balance		 Interest Yield/
Cost		 Average
Outstanding
Balance		 Interest Yield/
Cost
(Dollars in thousands)
Interest-earning assets:

Loans(1)

 $   1,931,271 $   69,867 3.62 % $   1,746,346 $   61,413 3.52 %

Investment securities (2)

 189,472 5,045 2.66 229,296 5,606 2.44
Other interest-earning assets     30,107     155 0.52     35,478     98 0.28
Total interest-earning assets 2,150,850     75,067 3.49 2,011,120     67,117 3.34
Noninterest-earning assets     127,721     110,501
Total assets $   2,278,571 $   2,121,621
Interest-bearing liabilities:
Savings accounts $ 314,304 548 0.17 $ 286,381 492 0.17
NOW accounts 120,661 76 0.06 109,674 69 0.06
Money market accounts 622,032 2,804 0.45 559,745 2,417 0.43
Certificates of deposit 449,607 5,188 1.15 491,235 5,722 1.16
Brokered deposit     10,114     94 0.93     —     — —
Total interest-bearing deposits 1,516,718 8,710 0.57 1,447,035 8,700 0.60
FHLB advances     248,678     5,051 2.03     296,016     5,875 1.98
Total interest-bearing liabilities 1,765,396     13,761 0.78 1,743,051     14,575 0.84
Noninterest-bearing liabilities:
Noninterest-bearing deposits 221,212 167,517
Other noninterest-bearing liabilities     29,855     21,596
Total liabilities 2,016,463 1,932,164
Total equity     262,108     189,457
Total liabilities and equity $   2,278,571 $   2,121,621
Tax equivalent net interest income 61,306 52,542
Tax equivalent interest rate spread (3) 2.71 % 2.50 %
Less: tax equivalent adjustment     311     317
Net interest income as reported $   60,995 $   52,225
Net interest-earning assets (4) $   385,454   $   268,069
Net interest margin (5) 2.84 % 2.60 %
Tax equivalent effect 0.01   0.01  
Net interest margin on a fully tax equivalent basis 2.85 % 2.61 %
Average interest-earning assets to average interest-bearing liabilities 121.83 % 115.38 %
 

(1) Includes loans held for sale, nonaccruing loan balances and interest received on such loans.
(2) Includes securities available for sale, securities held to maturity and FHLB stock. Interest income from tax exempt securities is computed on a taxable equivalent basis using a tax rate of 35% for all periods presented. The yield on investments before tax equivalent adjustments was 2.50% and 2.31% for the years ended December 31, 2016 and 2015, 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, 2016 September 30, 2016 June 30, 2016 March 31, 2016 December 31, 2015
(In thousands)
Interest-earning assets:
Loans (1) $   2,055,444 $   1,983,249 $   1,881,488 $   1,803,000 $   1,796,749
Investment securities (2) 183,819 181,112 191,162 201,950 213,540
Other interest-earning assets     23,578       3,734       33,826       59,649       23,478  
Total interest-earning assets 2,262,841 2,168,095 2,106,476 2,064,599 2,033,767
Noninterest-earning assets     126,899       130,498       131,104     122,326     117,676  
Total assets $   2,389,740   $   2,298,593   $   2,237,580   $   2,186,925   $   2,151,443  
Interest-bearing liabilities:
Savings accounts $ 319,166 $ 319,202 $ 317,180 $ 301,557 $ 292,203
NOW accounts 124,134 120,704 120,702 116,866 113,971
Money market accounts 602,263 612,761 642,758 630,664 622,937
Certificates of deposit 458,491 434,519 446,848 458,636 468,762
Brokered deposit     39,689       549       —       —       —  
Total interest-bearing deposits 1,543,743 1,487,735 1,527,488 1,507,723 1,497,873
FHLB advances     257,568       232,587       239,245       265,392       254,497  
Total interest-bearing liabilities 1,801,311 1,720,322 1,766,733 1,773,115 1,752,370
Noninterest-bearing liabilities:
Noninterest-bearing deposits 227,918 217,930 244,651 191,942 182,813
Other noninterest-bearing liabilities     31,055       32,888       28,887       29,114       23,174  
Total liabilities 2,060,284 1,971,140 2,040,271 1,994,171 1,958,357
Total equity     329,456       327,453       197,309       192,754       193,086  
Total liabilities and equity $   2,389,740   $   2,298,593   $   2,237,580   $   2,186,925   $   2,151,443  
 
Annualized Yield Trend - Quarters Ended
December 31, 2016 September 30, 2016 June 30, 2016 March 31, 2016 December 31, 2015
Interest-earning assets:
Loans (1) 3.65 % 3.61 % 3.61 % 3.59 % 3.55 %
Investment securities (2) 2.63 % 2.69 % 2.67 % 2.67 % 2.64 %
Other interest-earning assets 0.52 % 0.61 % 0.51 % 0.51 % 0.37 %
Total interest-earning assets 3.54 % 3.53 % 3.47 % 3.41 % 3.42 %
 
Interest-bearing liabilities:
Savings accounts 0.18 % 0.17 % 0.17 % 0.17 % 0.17 %
NOW accounts 0.06 % 0.06 % 0.06 % 0.06 % 0.06 %
Money market accounts 0.46 % 0.44 % 0.45 % 0.45 % 0.44 %
Certificates of deposit 1.16 % 1.14 % 1.16 % 1.16 % 1.15 %
Brokered deposit 0.92 % 2.17 % — % — % — %
Total interest-bearing deposits 0.59 % 0.56 % 0.57 % 0.58 % 0.58 %
FHLB advances 1.87 % 2.00 % 2.17 % 2.10 % 2.10 %
Total interest-bearing liabilities 0.77 % 0.75 % 0.79 % 0.81 % 0.80 %
 

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

HarborOne Bancorp, Inc.
Selected Financial Highlights
(Unaudited)

           
Quarters Ended
Performance Ratios (annualized):     December 31,
2016		 September 30,
2016		 June 30,
2016		 March 31,
2016		 December 31,
2015
 
Return (loss) on average assets (ROAA) 0.49 % 0.62 % (0.12 )% 0.02 % 0.29 %
 
Return (loss) on average equity (ROAE) 3.56 % 4.34 % (1.38 )% 0.26 % 3.20 %
 
Efficiency ratio (1) 81.87 % 80.46 % 101.99 % 98.34 % 90.91 %
 

(1) Represents noninterest expense divided by the sum of net interest income and noninterest income

           
At or for the Quarters Ended
Asset Quality     December 31,
2016		 September 30,
2016		 June 30,
2016		 March 31,
2016		 December 31,
2015
(Dollars in thousands)
 
Total nonperforming assets $   22,946 $   25,992 $   27,770 $   29,661 $   31,774
 
Nonperforming assets to total assets 0.94 % 1.11 % 1.23 % 1.32 % 1.47 %
 
Allowance for loan losses to total loans 0.85 % 0.82 % 0.79 % 0.78 % 0.79 %
 
Net charge offs $ 320 $ 317 $ 58 $ 209 $ 318
 
Annualized net charge offs/average loans 0.06 % 0.07 % 0.01 % 0.05 % 0.07 %
 
Allowance for loan losses to nonperforming loans 80.12 % 65.92 % 55.52 % 49.56 % 46.46 %
 
           
Capital and Share Related     December 31,
2016		 September 30,
2016		 June 30,
2016		 March 31,
2016		 December 31,
2015
 
 
Common stock outstanding   32,120,880   32,120,880   32,120,880 N/A N/A
 
Book value per share $ 10.25 $ 10.21 $ 10.10 N/A N/A
 
Tangible book value per share (1) $ 9.83 $ 9.79 $ 9.67 N/A N/A
 
Tangible common equity / tangible assets (2) 12.97 % 13.47 % 13.79 % 7.99 % 8.24 %
 

(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.