HarborOne Bancorp, Inc. Announces 2021 Third Quarter Earnings

HarborOne Bancorp, Inc. (the “Company” or “HarborOne”) (NASDAQ:HONE), the holding company for HarborOne Bank (the “Bank”), announced net income of $12.3 million, or $0.24 per diluted share, for the third quarter of 2021, compared to $14.3 million, or $0.27 per diluted share, for the preceding quarter and $11.9 million, or $0.22 per diluted share, for the same period last year. For the nine months ended September 30, 2021, net income was $45.9 million, or $0.88 per diluted share, compared to $27.2 million, or $0.50 per diluted share, for the same period last year.

Selected Third Quarter Financial Highlights:

• Commercial loan growth of $52.8 million, or 2.6%, excluding U.S. Small Business Administration Paycheck Protection Program (“PPP”) loans.
• Recorded a reversal of provision of $1.6 million, reflecting continued positive pandemic and economic trends.
• Second share repurchase program completed at an average cost of $14.09 per share, third share repurchase program approved.
• Cost of funds continue to decline, decreasing 4 basis points.

“We continue to make steady progress against our plan despite market challenges including an ultra-competitive rate environment, tight labor market, and the ongoing impact of COVID-19. I’m incredibly proud of our team for continuing to deliver in these tough times,” said Jim Blake, CEO. “We’re very excited with our recently announced expansion into Brighton, Brookline, and Cambridge as we continue to make investments in building out our greater Boston footprint. We look forward to the opportunities this expansion will provide for our customers and the business,” added Joe Casey, President and COO.

Net Interest Income
The Company’s net interest and dividend income was $32.8 million for the quarter ended September 30, 2021, up $273,000, or 0.8%, from $32.5 million for the quarter ended June 30, 2021 and up $1.6 million, or 5.2%, from $31.2 million for the quarter ended September 30, 2020. The tax equivalent interest rate spread and net interest margin were 2.97% and 3.08%, respectively, for the quarter ended September 30, 2021, compared to 2.93% and 3.06%, respectively, for the quarter ended June 30, 2021, and 2.87% and 3.09%, respectively, for the quarter ended September 30, 2020. Net interest margin and the tax equivalent interest rate spread continue to be impacted by low interest rates, elevated loan prepayments, and the recognition of deferred fees on PPP loan forgiveness. The continued favorable repricing of deposits was partially offset by the decrease in the yield on interest-earning assets. Additionally, effective September 30, 2021, $20.0 million in Federal Home Loan Bank of Boston (“FHLB”) borrowings with an average cost of 3.5% were prepaid, with a penalty of $1.1 million included in noninterest expense. Although interest rates may begin to rise moving into 2022, the positive impact of the recognition of deferred loan fees on PPP loan forgiveness will diminish, resulting in continued margin pressure.

The quarter-over-quarter increase in net interest and dividend income included a decrease of $79,000, or 0.2%, in total interest and dividend income and a decrease of $352,000, or 10.5%, in total interest expense. The decrease in total interest and dividend income primarily reflected a $31.0 million decrease in average interest-earning assets and a 2-basis point decrease in the yield on average interest-earning assets. The yield on loans was 3.91% for the quarter ended September 30, 2021, down from 4.00% for the quarter ended June 30, 2021, as new loan originations have lower interest rates. The yield on loans continues to be impacted by the recognition of deferred fees due to PPP loan forgiveness, accretion income and prepayment penalties, although the recent uptick in rates is expected to lessen the impact from these yield adjustments in the future. The three months ended September 30, 2021 and June 30, 2021 include the recognition of deferred fees on PPP loans in the amount of $1.9 million and $1.3 million, respectively. Most of the remaining $2.1 million in deferred PPP loan fees are expected to be recognized in the fourth quarter of 2021 as the loans are forgiven. Interest on loans in the third quarter included $675,000 in accretion income from the fair value discount on loans acquired in connection with the merger with Coastway Bancorp, Inc. and $436,000 in prepayment penalties on commercial loans. Accretion income and prepayment penalties in the preceding quarter were $1.0 million and $244,000, respectively.

The quarter-over-quarter decrease in total interest expense primarily reflected a decrease in interest rates, resulting in a 4-basis point decrease in the cost of interest-bearing deposits. The mix of deposits continues to shift as customers move to more liquid options. The average balance of certificate of deposit accounts decreased quarter over quarter by $19.4 million, while the average balance of non-certificate accounts increased $49.0 million from the preceding quarter. Average FHLB advances decreased $12.4 million, and the cost of those funds decreased 17 basis points, resulting in a decrease of $100,000 in interest expense on FHLB borrowings.

The increase in net interest and dividend income from the prior year quarter reflected a decrease of $2.9 million, or 48.9%, in total interest expense, partially offset by a $1.2 million, or 3.3%, decrease in total interest and dividend income. The decreases reflect rate and volume changes in both interest-bearing assets and liabilities. The cost of interest-bearing liabilities decreased 41 basis points while the average balance increased $110.2 million. The yield on interest-earning assets decreased 31 basis points while the average balance increased $212.6 million.

Noninterest Income
Total noninterest income increased $307,000, or 1.4%, to $22.0 million for the quarter ended September 30, 2021, from $21.7 million for the quarter ended June 30, 2021. Mortgage loan demand remained strong; although refinancing activity continued to slow, purchase originations increased. Mortgage loan closings of $604.9 million resulted in a gain on loan sales of $12.8 million for the quarter ended September 30, 2021, as compared to $638.8 million in mortgage closings and $14.3 million in gain on sales for the preceding quarter. The locked residential mortgage pipeline decreased $125.9 million and negatively impacted the fair value of the derivative mortgage commitments recorded through the gain on loan sales. The change in the fair value of derivatives included in mortgage banking income was a negative $833,000 for the three months ended September 30, 2021 as compared to a negative $5.3 million for the three months ended June 30, 2021.

The net impact to mortgage servicing rights values was a decrease of $992,000 and $2.6 million for the three months ended September 30, 2021 and June 30, 2021, respectively. The change in the fair value of mortgage servicing rights positively impacted mortgage banking income; however, it was offset by the impact of residential mortgage loan payoffs. The fair value of the mortgage servicing rights increased $621,000 for the three months ended September 30, 2021, as compared to a $1.1 million decrease for the three months ended June 30, 2021. The 10-year Treasury Constant Maturity rate increased 7 basis points in the third quarter of 2021 and decreased 29 basis points in the second quarter of 2021. The change in the fair value of the mortgage servicing rights is generally consistent with the change in the 10-year Treasury Constant Maturity rate. As interest rates rise and prepayment speeds slow, mortgage servicing rights values tend to increase; conversely, as interest rates fall and prepayment speeds quicken mortgage servicing rights values tend to decrease. The negative impact on mortgage servicing rights when rates fall in the future may be muted, as mortgage servicing rights originated during the second half of 2020 were at historically low rates. Residential mortgage loan payoffs resulted in a decrease of mortgage servicing rights values in the amount of $1.6 million and $1.5 million for the three months ended September 30, 2021 and June 30, 2021, respectively.

Deposit account fees increased $112,000, or 2.5%, to $4.7 million for the quarter ended September 30, 2021, from $4.5 million for the quarter ended June 30, 2021.

Total noninterest income decreased $22.4 million, or 50.5%, as compared to the quarter ended September 30, 2020, primarily due to a $22.5 million, or 59.0%, decrease in mortgage banking income, driven by the decrease in loan closings and narrowing gain-on-sale margins in 2021. The decrease in mortgage banking income was offset by a $1.2 million increase in deposit account fees as deposit fees were reinstated in 2021.

Noninterest Expense
Total noninterest expenses were $39.3 million for the quarter ended September 30, 2021, an increase of $676,000, or 1.8%, from the quarter ended June 30, 2021, primarily driven by the $1.1 million prepayment penalty on Federal Home Loan Bank borrowings, partially offset by a $386,000 decrease in compensation and benefits and a $73,000 decrease in loan expense. Both decreases reflect the decrease in residential mortgage loan closings at HarborOne Mortgage, LLC (“HarborOne Mortgage”). During the third quarter, HarborOne Mortgage closed its New Jersey office, as management continues to respond to declining mortgage origination volume with strategic expense reduction.

Total noninterest expenses decreased $6.4 million, or 14.1%, from the quarter ended September 30, 2020. Compensation and benefits decreased $5.1 million and loan expenses decreased $1.8 million, consistent with the decrease in residential mortgage loan closings.

Income Tax Provision
The effective tax rate was 28.6% for the quarter ended September 30, 2021, compared to 28.3% for the quarter ended June 30, 2021 and 27.7% for the quarter ended September 30, 2020.

Provision for Loan Losses and Asset Quality
The Company recorded a reversal of provision for loan losses of $1.6 million for the quarter ended September 30, 2021, compared to a reversal of provision of $4.3 million for the quarter ended June 30, 2021 and a provision for loan losses of $13.5 million for the quarter ended September 30, 2020. The allowance for loan losses was $48.0 million, or 1.39% of total loans at September 30, 2021, compared to $51.3 million, or 1.50% of total loans at June 30, 2021 and $49.2 million, or 1.40% of total loans at September 30, 2020. 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 provision for loan losses for the quarter ended September 30, 2021 included adjustments for our quarterly analysis of our historical and peer loss experience rates, commercial and residential loan growth, and a $5.0 million specific reserve on one commercial real estate credit. These items, combined with adjustments for positive economic and pandemic trends of $4.8 million, resulted in a $1.6 million negative provision. The provision for loan losses for the quarter ended June 30, 2021 included adjustments based on our quarterly analysis of our historical and peer loss experience rates, commercial real estate loan growth, an increase of general reserve allocation on jumbo residential mortgage loans and a $1.5 million specific reserve on one commercial credit. Positive economic and pandemic trends also resulted in a $6.4 million negative provision for COVID-19. The provision for loan losses for the quarter ended September 30, 2020 included adjustments for our quarterly analysis of our historical and peer loss experience rates, commercial real estate loan growth, and a $10.7 million provision directly related to the estimate of inherent losses resulting from the impact of the COVID-19 pandemic.

In estimating the provision for the COVID-19 pandemic, management considered economic factors, including unemployment rates and the interest rate environment, the volume and dollar amount of requests for payment deferrals, and the loan risk profile of each loan type. Positive economic trends, vaccination rates, and COVID-19 cases, low delinquency levels, and status of deferred loans resulted in management reducing the provision related to the COVID-19 pandemic in the third quarter of 2021 with a reversal of provision of $4.8 million. Similar trends resulted in management reducing provisions related to the COVID-19 pandemic in the second quarter of 2021 with a reversal of provision of $6.4 million.

Management continues to evaluate our loan portfolio, particularly the commercial loan portfolio, in light of current economic conditions, the mitigating effects of government stimulus, and loan modification efforts designed to limit the long-term impacts of the COVID-19 pandemic. Our commercial loan portfolio is diversified across many sectors and is largely secured by commercial real estate loans, which make up 73.5% of the total commercial loan portfolio. Management initially identified six sectors as the most susceptible to increased credit risk as a result of the COVID-19 pandemic: retail, office space, hotels, health and social services, restaurants, and recreation. In the second quarter of 2021, as part of ongoing monitoring of the at-risk sectors, management determined that the health and social services sector no longer presents an additional risk from the impact of the COVID-19 pandemic as borrowers in this sector have returned to pre-pandemic revenue and profitability levels. Health and social services operations supported by first-round PPP loans have a 100% forgiveness rate. Further, over the last eight quarters, the sector has experienced a positive migration in obligor risk ratings and no watch or substandard credits, and delinquency in the sector is currently zero. The total loan portfolio of the remaining five commercial sectors identified as at risk totaled $751.0 million at September 30, 2021, which represents 35.1% of the commercial loan portfolio. The five currently identified at-risk sectors include $630.4 million in commercial real estate loans, $75.8 million in commercial and industrial loans, and $44.8 million in commercial construction loans. Non-performing loans included in the at-risk sectors amounted to $18.3 million at September 30, 2021, of which $9.1 million was included in the hotels sector and $8.8 million was included in the office sector.

As of September 30, 2021, the retail sector was $266.8 million, or 12.5% of total commercial loans, and included $219.3 million in commercial real estate loans, $28.9 million in commercial and industrial loans, and $18.6 million in commercial construction loans. There are no active deferrals for loans in this sector or PPP loans. We originated $6.0 million loans during the third quarter that are within the retail sector.

As of September 30, 2021, the office space sector was $214.2 million, or 10.0% of total commercial loans, and included $199.3 million in commercial real estate loans, $14.0 million in commercial and industrial loans, and $854,000 in commercial construction loans. There are no active deferrals for loans and one expired deferral, in the amount of $515,000 is delinquent and on nonaccrual. No PPP loans were originated in this sector. We originated $1.4 million loans during the third quarter that are within the office space sector and there were $4.5 million in advances on existing loans. The Bank is the lead bank in a commercial real estate credit secured by office space that was downgraded and placed on nonaccrual during the third quarter of 2021. The Bank’s portion of this credit has a recorded net book value of $8.8 million, and a specific reserve of $5.0 million was recorded.

As of September 30, 2021, the hotel sector was $193.7 million, or 9.1% of total commercial loans, and included $182.6 million in commercial real estate loans, $2.0 million in commercial and industrial loans, and $9.0 million in commercial construction loans. PPP loans included in the sector totaled $31,000. Active deferrals for loans in this sector had outstanding principal balances of $7.7 million, and one loan with an outstanding principal balance of $242,000 had an expired deferral period and is greater than 30 days delinquent. At September 30, 2021, nonperforming loans included in the hotel sector amount to $9.1 million. The non-accrual loan amounted to $9.1 million with a deferral period that expired in the third quarter of 2021, however it was determined in the fourth quarter of 2020 that weaknesses in the borrower’s credit warranted a downgrade to substandard and nonaccrual status. A specific reserve of $1.8 million has been allocated to this loan. The Bank is receiving payments of interest only on its pro rata share of the loan in accordance with a forbearance agreement, in part through a non-revolving line of credit provided solely by the lead bank. The Bank sold a nonperforming loan that was included in the hotel sector in the third quarter of 2021. The loan had a $3.3 million net book value at the time of sale and total a charge-offs on the credit amounted to $1.3 million, $157,000 of which was taken in the third quarter of 2021.

As of September 30, 2021, the restaurant sector amounted to $57.9 million, or 2.7% of total commercial loans, including $313,000 in PPP loans. There were no active deferrals in this sector and expired deferrals are paying as expected. The recreation sector amounted to $18.5 million, or 0.9% of total commercial loans, including $3,000 in PPP loans. There are no active deferrals for loans in this sector and expired deferrals are paying as expected.

We provided access to the PPP to both our existing customers and new customers, to ensure small businesses in the communities we serve have access to this important lifeline for their businesses. No PPP loans were originated in the third quarter and forgiveness was processed on $50.9 million loans. We have processed forgiveness on approximately 98% of PPP loans executed in 2020, with a success rate above 99%, and we have processed forgiveness on approximately 50% of the PPP loans executed in 2021. As of September 30, 2021, outstanding PPP loans amounted to $54.3 million and there was $2.1 million in deferred processing fee income. We expect to complete the forgiveness process on most of the remaining PPP loans by year end.

We are also working with commercial loan customers that may need payment deferrals or other accommodations to keep their loans out of default through the COVID-19 pandemic. As of September 30, 2021, we have two active payment deferrals on commercial loans with a total principal balance of $7.7 million, or 0.4% of total commercial loans, both of which are loans included in an at-risk sector. As of September 30, 2021, 96.8% of the commercial deferrals have expired and the borrower is making payments as agreed, 0.3% of the commercial deferrals have expired and the borrower is delinquent, and 2.9% are in active deferral period. The active commercial deferrals are scheduled to expire during 2021. We are no longer providing deferrals under the Coronavirus Aid Relief and Economic Security Act but continue to consider accommodations in the normal course of business.

The residential loan and consumer loan portfolios have not experienced significant credit quality deterioration as of September 30, 2021; however, the continuing impact and uncertain nature of the COVID-19 pandemic may result in increases in delinquencies, charge-offs and loan modifications in these portfolios through the remainder of 2021. As of September 30, 2021, we had one active payment deferrals on residential mortgage loans with a total principal balance of $177, 000. As of September 30, 2021, 97.8% of the deferrals have expired and are paying as agreed, 1.8% have expired and are delinquent and 0.5% are in active deferral periods. We have no active payment deferrals on consumer loans and 98.4% of the consumer loan deferrals have expired and are paying as agreed. Requests for additional extensions on residential mortgage loans and consumer loans were not significant as of September 30, 2021.

Net charges-offs totaled $1.7 million for the quarter ended September 30, 2021, or 0.19% of average loans outstanding on an annualized basis. During the third quarter, there was a $1.5 million charge-off on a single credit previously reserved for in the second quarter of 2021. Net recoveries totaled $175,000, or 0.02% of average loans outstanding on an annualized basis, for the quarter ended June 30, 2021 and net charge-offs totaled $338,000, or 0.04% of average loans outstanding on an annualized basis, for the quarter ended September 30, 2020.

Credit quality performance has remained strong with total nonperforming assets of $36.5 million at September 30, 2021, compared to $32.7 million at June 30, 2021 and $41.0 million at September 30, 2020. Nonperforming assets as a percentage of total assets were 0.80% at September 30, 2021, 0.71% at June 30, 2021, and 0.93% at September 30, 2020. During the third quarter of 2021, a nonperforming commercial real estate loan with a $3.3 million net book value was sold and a charge-off of $157,000 was recorded. As noted above, a commercial real estate credit secured by office space was downgraded and placed on nonaccrual. The Bank’s 56% portion has a recorded net book value of $8.8 million and a specific reserve of $5.0 million was recorded in the third quarter.

Balance Sheet
Total assets decreased $49.3 million, or 1.1%, to $4.57 billion at September 30, 2021 from $4.62 billion at June 30, 2021. The decrease primarily reflects a decrease of $97.3 million in short-term investments and a $26.8 million decrease in loans held for sale, partially offset by increases of $41.3 million in net loans and $36.7 million in securities available for sale. Short-term investments were used to pay down FHLB borrowings and purchase securities available for sale.

Net loans increased $41.3 million, or 1.2%, to $3.41 billion at September 30, 2021 from $3.37 billion at June 30, 2021. The net increase in loans for the three months ended September 30, 2021 was primarily due to increases in residential mortgage loans of $64.3 million commercial construction loans of $45.1 million and commercial real estate loans of $11.4 million, partially offset by decreases in commercial and industrial loans of $52.7 million and consumer loans of $30.2 million. The decrease in commercial and industrial loans is primarily due to forgiveness of PPP loans during the quarter. Excluding the change in PPP loans, total commercial loans increased $52.8 million, primarily due to an increase in commercial construction loans. The allowance for loan losses was $48.0 million at September 30, 2021 and $51.3 million at June 30, 2021, the change primarily reflecting a negative $1.6 million provision for loan losses and $1.7 million in net loan charge-offs recorded in the third quarter.

Total deposits was $3.69 billion at September 30, 2021 and June 30, 2021. Compared to the prior quarter, non-certificate accounts increased $28.8 million and term certificate accounts decreased $22.7 million. FHLB borrowings decreased $31.8 million, or 36.3%, to $55.7 million at September 30, 2021 from $87.5 million at June 30, 2021. During the third quarter FHLB borrowings of $20.0 million were prepaid resulting in a $1.1 million prepayment penalty.

As previously announced, the Bank has agreed to acquire the leases to four East Boston Savings Bank branches being divested as part of the acquisition of East Boston Savings Bank by Rockland Trust Company. The transaction is subject to a number of contingencies and is expected to close by the end of the year. The Bank also agreed to acquire the branches’ furniture, fixtures, and equipment, and expects to add approximately 19 new employees to staff the branches. The new branches are located in Brighton, Cambridge, and Brookline, Massachusetts. The average leased space is approximately 1300 square feet and the leases generally have initial terms of 10 years with one or more year option terms. The initial terms expire in 6-10 years. The Bank also transferred a former branch property into assets held for sale at a carrying value of $881,000.

Total stockholders’ equity was $680.0 million at September 30, 2021, compared to $705.5 million at June 30, 2021 and $694.1 million at September 30, 2020. During the third quarter, the Company announced and completed a share repurchase program adopted April 16, 2021, repurchasing 2,790,903 shares of the Company’s common stock at an average cost of $14.09 per share. The Company adopted a third share repurchase program on September 17, 2021 to repurchase up to 2,668,159 shares of the Company’s common stock, or approximately 5% of the Company’s outstanding shares. The Company has not repurchased any shares under the third share repurchase program as of September 30, 2021. The tangible common equity to tangible assets ratio was 13.50% at September 30, 2021, 13.91% at June 30, 2021, and 14.23% at September 30, 2020. At September 30, 2021, the Company and the Bank had strong capital positions and exceeded all regulatory capital requirements.

About HarborOne Bancorp, Inc.
HarborOne Bancorp, Inc. is the holding company for HarborOne Bank, a Massachusetts-chartered savings bank. HarborOne Bank serves the financial needs of consumers, businesses, and municipalities throughout Eastern Massachusetts and Rhode Island through a network of 27 full-service branches located in Massachusetts and Rhode Island, and a commercial lending office in each of Boston, Massachusetts and Providence, Rhode Island. The Bank also provides a range of educational services through “HarborOne U,” with classes on small business, financial literacy and personal enrichment at two campuses located adjacent to our Brockton and Mansfield locations. HarborOne Mortgage, LLC, a subsidiary of HarborOne Bank, is a full-service mortgage lender with more than 30 offices in Massachusetts, Rhode Island, New Hampshire, and Maine, and is licensed to lend in six 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. We may also make forward-looking statements in other documents we file with the Securities and Exchange Commission (“SEC”), in our annual reports to shareholders, in press releases and other written materials, and in oral statements made by our officers, directors or employees. Such statements may be identified by words such as “believes,” “will,” “would,” “expects,” “project,” “may,” “could,” “developments,” “strategic,” “launching,” “opportunities,” “anticipates,” “estimates,” “intends,” “plans,” “targets” and similar expressions. These statements are based upon the current beliefs and expectations of the Company’s management and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements as a result of numerous factors. Factors that could cause such differences to exist include, but are not limited to, the negative impacts and disruptions of the COVID-19 pandemic and the measures taken to contain its spread on our employees, customers, business operations, credit quality, financial position, liquidity and results of operations; changes in general business and economic conditions on a national basis and in the local markets in which the Company operates, including changes that adversely affect borrowers’ ability to service and repay the Company’s loans; changes in customer behavior; turbulence in the capital and debt markets and the impact of such conditions on the Company’s business activities; changes in interest rates; increases in loan default and charge-off rates; decreases in the value of securities in the Company’s investment portfolio; fluctuations in real estate values; the possibility that future credit losses may be higher than currently expected due to changes in economic assumptions, customer behavior or adverse economic developments; the adequacy of loan loss reserves; decreases in deposit levels necessitating increased borrowing to fund loans and investments; competitive pressures from other financial institutions; acquisitions may not produce results at levels or within time frames originally anticipated; operational risks including, but not limited to, cybersecurity incidents, fraud, natural disasters, and future pandemics; changes in regulation; reputational risk relating to the Company’s participation in the Paycheck Protection Program and other pandemic-related legislative and regulatory initiatives and programs; changes in accounting standards and practices; the risk that goodwill and intangibles recorded in the Company’s financial statements will become impaired; demand for loans in the Company’s market area; the Company’s ability to attract and maintain deposits; risks related to the implementation of acquisitions, dispositions, and restructurings; the risk that the Company may not be successful in the implementation of its business strategy; changes in assumptions used in making such forward-looking statements and the risk factors described in the Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as filed with the SEC, which are available at the SEC’s website, www.sec.gov. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, HarborOne’s actual results could differ materially from those discussed. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. The Company disclaims any obligation to publicly update or revise any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes, except as required by law.

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

HarborOne Bancorp, Inc.
Consolidated Balance Sheet Trend
(Unaudited)
		September 30,				June 30,				March 31,				December 31,				September 30,
(in thousands)		2021				2021				2021				2020				2020
Assets
Cash and due from banks		$	42,589			$	41,328			$	37,074			$	31,777			$	29,180
Short-term investments			277,050				374,319				281,451				174,093				108,338
Total cash and cash equivalents			319,639				415,647				318,525				205,870				137,518
Securities available for sale, at fair value			390,552				353,848				304,168				276,498				280,308
Federal Home Loan Bank stock, at cost			6,828				7,241				7,572				8,738				11,631
Asset held for sale			881				—				—				—				—
Loans held for sale, at fair value			77,052				103,886				210,494				208,612				190,373
Loans:
Commercial real estate			1,573,284				1,561,873				1,559,056				1,551,265				1,380,071
Commercial construction			152,685				107,585				112,187				99,331				211,953
Commercial and industrial			414,814				467,479				499,728				464,393				480,129
Total commercial loans			2,140,783				2,136,937				2,170,971				2,114,989				2,072,153
Residential real estate			1,160,689				1,096,370				1,062,229				1,105,823				1,130,935
Consumer			156,272				186,430				228,279				273,830				312,743
Loans			3,457,744				3,419,737				3,461,479				3,494,642				3,515,831
Less: Allowance for loan losses			(47,988	)			(51,273	)			(55,384	)			(55,395	)			(49,223	)
Net loans			3,409,756				3,368,464				3,406,095				3,439,247				3,466,608
Mortgage servicing rights, at fair value			36,540				35,955				33,939				24,833				20,159
Goodwill			69,802				69,802				69,802				69,802				69,802
Other intangible assets			3,399				3,723				4,047				4,370				4,694
Other assets			252,645				257,856				251,316				245,645				247,226
Total assets		$	4,567,094			$	4,616,422			$	4,605,958			$	4,483,615			$	4,428,319
Liabilities and Stockholders' Equity
Deposits:
Demand deposit accounts		$	756,917			$	800,118			$	777,959			$	689,672			$	650,336
NOW accounts			300,577				250,099				224,869				218,584				202,020
Regular savings and club accounts			1,144,595				1,123,123				1,113,450				998,994				912,017
Money market deposit accounts			832,441				832,006				861,867				866,661				815,644
Term certificate accounts			659,850				682,594				696,438				732,298				785,871
Total deposits			3,694,380				3,687,940				3,674,583				3,506,209				3,365,888
Short-term borrowed funds			—				—				—				35,000				95,000
Long-term borrowed funds			55,720				87,479				97,488				114,097				141,106
Subordinated debt			34,128				34,096				34,064				34,033				34,002
Other liabilities and accrued expenses			102,834				101,436				101,750				97,962				98,220
Total liabilities			3,887,062				3,910,951				3,907,885				3,787,301				3,734,216
Common stock			585				585				585				584				584
Additional paid-in capital			468,526				467,194				465,832				464,176				463,531
Unearned compensation - ESOP			(29,921	)			(30,380	)			(30,840	)			(31,299	)			(31,759	)
Retained earnings			315,683				305,831				294,116				277,312				261,304
Treasury stock			(73,723	)			(38,588	)			(31,460	)			(16,644	)			(1,333	)
Accumulated other comprehensive income (loss)			(1,118	)			829				(160	)			2,185				1,776
Total stockholders' equity			680,032				705,471				698,073				696,314				694,103
Total liabilities and stockholders' equity		$	4,567,094			$	4,616,422			$	4,605,958			$	4,483,615			$	4,428,319

HarborOne Bancorp, Inc.
Consolidated Statements of Net Income - Trend
(Unaudited)
		Quarters Ended
		September 30,				June 30,				March 31,			December 31,				September 30,
(in thousands, except share data)		2021				2021				2021			2020				2020
Interest and dividend income:
Interest and fees on loans		$	33,680			$	34,106			$	33,860		$	35,274			$	34,496
Interest on loans held for sale			665				852				1,324			1,267				1,060
Interest on securities			1,293				793				585			1,064				1,317
Other interest and dividend income			170				136				78			115				175
Total interest and dividend income			35,808				35,887				35,847			37,720				37,048
Interest expense:
Interest on deposits			2,050				2,302				2,720			3,775				4,520
Interest on FHLB borrowings			431				531				552			671				835
Interest on subordinated debentures			524				524				523			524				524
Total interest expense			3,005				3,357				3,795			4,970				5,879
Net interest and dividend income			32,803				32,530				32,052			32,750				31,169
Provision (credit) for loan losses			(1,627	)			(4,286	)			91			7,608				13,454
Net interest and dividend income, after provision for loan losses			34,430				36,816				31,961			25,142				17,715
Noninterest income:
Mortgage banking income:
Gain on sale of mortgage loans			12,756				14,262				24,802			28,274				34,055
Changes in mortgage servicing rights fair value			(992	)			(2,552	)			3,409			(1,041	)			(193	)
Other			3,882				4,075				4,515			4,522				4,259
Total mortgage banking income			15,646				15,785				32,726			31,755				38,121
Deposit account fees			4,658				4,546				3,852			3,667				3,451
Income on retirement plan annuities			108				106				104			106				104
Gain on sale and call of securities, net			241				—				—			—				—
Bank-owned life insurance income			515				508				493			550				560
Other income			842				758				634			949				2,203
Total noninterest income			22,010				21,703				37,809			37,027				44,439
Noninterest expenses:
Compensation and benefits			24,760				25,146				27,454			27,122				29,839
Occupancy and equipment			4,765				4,702				5,256			4,545				4,581
Data processing			2,205				2,362				2,343			2,235				2,119
Loan expense			1,323				1,250				2,435			2,689				3,167
Marketing			880				831				813			640				817
Professional fees			1,362				1,487				1,583			1,252				1,458
Deposit insurance			341				332				320			320				310
Prepayment penalties on Federal Home Loan Bank advances			1,095				—				—			—				—
Other expenses			2,543				2,488				2,598			2,483				3,409
Total noninterest expenses			39,274				38,598				42,802			41,286				45,700
Income before income taxes			17,166				19,921				26,968			20,883				16,454
Income tax provision			4,907				5,645				7,576			3,283				4,561
Net income		$	12,259			$	14,276			$	19,392		$	17,600			$	11,893
Earnings per common share:
Basic		$	0.25			$	0.28			$	0.37		$	0.33			$	0.22
Diluted		$	0.24			$	0.27			$	0.37		$	0.33			$	0.22
Weighted average shares outstanding:
Basic			49,801,123				51,778,293				52,537,409			53,947,868				54,465,339
Diluted			50,663,415				52,650,071				53,000,830			53,973,737				54,465,339

HarborOne Bancorp, Inc.
Consolidated Statements of Net Income
(Unaudited)
		For the Nine Months Ended September 30,
(dollars in thousands, except share data)		2021				2020				$ Change				% Change
Interest and dividend income:
Interest and fees on loans		$	101,646			$	102,491			$	(845	)		(0.8	)%
Interest on loans held for sale			2,841				2,625				216			8.2
Interest on securities			2,671				4,549				(1,878	)		(41.3	)
Other interest and dividend income			384				1,173				(789	)		(67.3	)
Total interest and dividend income			107,542				110,838				(3,296	)		(3.0	)
Interest expense:
Interest on deposits			7,072				19,018				(11,946	)		(62.8	)
Interest on FHLB borrowings			1,514				2,933				(1,419	)		(48.4	)
Interest on subordinated debentures			1,571				1,571				—			0.0
Total interest expense			10,157				23,522				(13,365	)		(56.8	)
Net interest and dividend income			97,385				87,316				10,069			11.5
Provision (credit) for loan losses			(5,822	)			27,207				(33,029	)		(121.4	)
Net interest and dividend income, after provision for loan losses			103,207				60,109				43,098			71.7
Noninterest income:
Mortgage banking income:
Gain on sale of mortgage loans			51,820				77,195				(25,375	)		(32.9	)
Changes in mortgage servicing rights fair value			(135	)			(5,691	)			5,556			97.6
Other			12,472				10,962				1,510			13.8
Total mortgage banking income			64,157				82,466				(18,309	)		(22.2	)
Deposit account fees			13,056				10,351				2,705			26.1
Income on retirement plan annuities			318				308				10			3.2
Gain on sale and call of securities, net			241				2,533				(2,292	)		(90.5	)
Bank-owned life insurance income			1,516				1,665				(149	)		(8.9	)
Other income			2,234				4,642				(2,408	)		(51.9	)
Total noninterest income			81,522				101,965				(20,443	)		(20.0	)
Noninterest expenses:
Compensation and benefits			77,360				78,493				(1,133	)		(1.4	)
Occupancy and equipment			14,723				13,296				1,427			10.7
Data processing			6,910				6,576				334			5.1
Loan expense			5,008				7,433				(2,425	)		(32.6	)
Marketing			2,524				2,750				(226	)		(8.2	)
Professional fees			4,432				4,204				228			5.4
Deposit insurance			993				860				133			15.5
Prepayment penalties on Federal Home Loan Bank advances			1,095				—				1,095			100.0
Other expenses			7,629				11,336				(3,707	)		(32.7	)
Total noninterest expenses			120,674				124,948				(4,274	)		(3.4	)
Income before income taxes			64,055				37,126				26,929			72.5
Income tax provision			18,128				9,934				8,194			82.5
Net income		$	45,927			$	27,192			$	18,735			68.9	%
Earnings per common share:
Basic		$	0.89			$	0.50
Diluted		$	0.88			$	0.50
Weighted average shares outstanding:
Basic			51,362,252				54,436,090
Diluted			52,094,749				54,436,090

HarborOne Bancorp, Inc.
Average Balances / Yields
(Unaudited)
		Quarters Ended
		September 30, 2021								June 30, 2021								September 30, 2020
		Average								Average								Average
		Outstanding						Yield/		Outstanding						Yield/		Outstanding						Yield/
		Balance			Interest			Cost (6)		Balance			Interest			Cost (6)		Balance			Interest			Cost (6)
		(dollars in thousands)
Interest-earning assets:
Investment securities (1)		$	358,927		$	1,293		1.43	%	$	325,205		$	793		0.98	%	$	269,477		$	1,319		1.95	%
Other interest-earning assets			372,892			170		0.18			397,979			136		0.14			121,384			175		0.57
Loans held for sale			84,399			665		3.13			115,240			852		2.97			139,418			1,060		3.02
Loans
Commercial loans (2)			2,121,432			22,394		4.19			2,152,105			22,079		4.11			2,017,492			19,066		3.76
Residential real estate loans (2)			1,121,898			9,352		3.31			1,064,481			9,747		3.67			1,135,947			11,833		4.14
Consumer loans (2)			170,366			1,934		4.50			205,856			2,280		4.44			333,623			3,597		4.29
Total loans			3,413,696			33,680		3.91			3,422,442			34,106		4.00			3,487,062			34,496		3.94
Total interest-earning assets			4,229,914			35,808		3.36			4,260,866			35,887		3.38			4,017,341			37,050		3.67
Noninterest-earning assets			347,060								339,438								333,444
Total assets		$	4,576,974							$	4,600,304							$	4,350,785
Interest-bearing liabilities:
Savings accounts		$	1,136,131			365		0.13		$	1,118,494			461		0.17		$	897,751			589		0.26
NOW accounts			283,725			45		0.06			231,075			41		0.07			199,982			39		0.08
Money market accounts			832,340			392		0.19			853,586			417		0.20			825,732			745		0.36
Certificates of deposit			570,570			1,087		0.76			589,964			1,229		0.84			684,002			2,895		1.68
Brokered deposits			100,000			161		0.64			100,000			154		0.62			139,887			252		0.72
Total interest-bearing deposits			2,922,766			2,050		0.28			2,893,119			2,302		0.32			2,747,354			4,520		0.65
FHLB advances			84,438			431		2.03			96,823			531		2.20			149,750			835		2.22
Subordinated debentures			34,111			524		6.09			34,080			524		6.17			33,983			524		6.13
Total borrowings			118,549			955		3.20			130,903			1,055		3.23			183,733			1,359		2.94
Total interest-bearing liabilities			3,041,315			3,005		0.39			3,024,022			3,357		0.45			2,931,087			5,879		0.80
Noninterest-bearing liabilities:
Noninterest-bearing deposits			756,927								784,521								641,353
Other noninterest-bearing liabilities			90,366								88,577								89,319
Total liabilities			3,888,608								3,897,120								3,661,759
Total stockholders' equity			688,366								703,184								689,026
Total liabilities and stockholders' equity		$	4,576,974							$	4,600,304							$	4,350,785
Tax equivalent net interest income						32,803								32,530								31,171
Tax equivalent interest rate spread (3)								2.97	%							2.93	%							2.87	%
Less: tax equivalent adjustment						—								—								2
Net interest income as reported					$	32,803							$	32,530							$	31,169
Net interest-earning assets (4)		$	1,188,599							$	1,236,844							$	1,086,254
Net interest margin (5)								3.08	%							3.06	%							3.09	%
Tax equivalent effect								—								—								—
Net interest margin on a fully tax equivalent basis								3.08	%							3.06	%							3.09	%
Average interest-earning assets to average interest-bearing liabilities			139.08	%							140.90	%							137.06	%
Supplemental information:
Total deposits, including demand deposits		$	3,679,693		$	2,050				$	3,677,640		$	2,302				$	3,388,707		$	4,520
Cost of total deposits								0.22	%							0.25	%							0.53	%
Total funding liabilities, including demand deposits		$	3,798,242		$	3,005				$	3,808,543		$	3,357				$	3,572,440		$	5,879
Cost of total funding liabilities								0.31	%							0.35	%							0.65	%

(1) Includes securities available for sale.  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 quarter ended September 30, 2020 was 1.95%.

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

(3) Tax equivalent interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(4) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.

(5) Net interest margin represents net interest income divided by average total interest-earning assets.

(6) Annualized.

HarborOne Bancorp, Inc.
Average Balances / Yields
(Unaudited)
		Nine Months Ended
		September 30, 2021								September 30, 2020
		Average								Average
		Outstanding						Yield/		Outstanding						Yield/
		Balance			Interest			Cost		Balance			Interest			Cost
		(dollars in thousands)
Interest-earning assets:
Investment securities (1)		$	318,817		$	2,671		1.12	%	$	261,740		$	4,571		2.33	%
Other interest-earning assets			317,837			384		0.16			176,745			1,173		0.89
Loans held for sale			130,622			2,841		2.91			106,790			2,625		3.28
Loans
Commercial loans (2)			2,144,726			65,253		4.07			1,846,462			55,385		4.01
Residential real estate loans (2)			1,090,361			29,439		3.61			1,120,065			35,188		4.20
Consumer loans (2)			209,443			6,954		4.44			373,809			11,918		4.26
Total loans			3,444,530			101,646		3.95			3,340,336			102,491		4.10
Total interest-earning assets			4,211,806			107,542		3.41			3,885,611			110,860		3.81
Noninterest-earning assets			338,980								327,385
Total assets		$	4,550,786							$	4,212,996
Interest-bearing liabilities:
Savings accounts		$	1,104,765			1,363		0.16		$	809,106			2,721		0.45
NOW accounts			242,623			123		0.07			182,146			103		0.08
Money market accounts			849,041			1,369		0.22			829,263			4,535		0.73
Certificates of deposit			589,404			3,760		0.85			736,355			10,724		1.95
Brokered deposits			100,000			457		0.61			99,739			935		1.25
Total interest-bearing deposits			2,885,833			7,072		0.33			2,656,609			19,018		0.96
FHLB advances			94,482			1,514		2.14			216,333			2,933		1.81
Subordinated debentures			34,080			1,571		6.16			33,951			1,571		6.18
Total borrowings			128,562			3,085		3.21			250,284			4,504		2.40
Total interest-bearing liabilities			3,014,395			10,157		0.45			2,906,893			23,522		1.08
Noninterest-bearing liabilities:
Noninterest-bearing deposits			749,426								549,233
Other noninterest-bearing liabilities			90,763								76,660
Total liabilities			3,854,584								3,532,786
Total stockholders' equity			696,202								680,210
Total liabilities and stockholders' equity		$	4,550,786							$	4,212,996
Tax equivalent net interest income						97,385								87,338
Tax equivalent interest rate spread (3)								2.96	%							2.73	%
Less: tax equivalent adjustment						—								22
Net interest income as reported					$	97,385							$	87,316
Net interest-earning assets (4)		$	1,197,411							$	978,718
Net interest margin (5)								3.09	%							3.00	%
Tax equivalent effect								—								—
Net interest margin on a fully tax equivalent basis								3.09	%							3.00	%
Average interest-earning assets to average interest-bearing liabilities			139.72	%							133.67	%
Supplemental information:
Total deposits, including demand deposits		$	3,635,259		$	7,072				$	3,205,842		$	19,018
Cost of total deposits								0.26	%							0.79	%
Total funding liabilities, including demand deposits		$	3,763,821		$	10,157				$	3,456,126		$	23,522
Cost of total funding liabilities								0.36	%							0.91	%

(1) 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 2.32% for the six months ended September 30, 2020.

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

(3) Tax equivalent interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(4) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.

(5) Net interest margin represents net interest income divided by average total interest-earning assets.

HarborOne Bancorp, Inc.
Average Balances and Yield Trend
(Unaudited)
		Average Balances - Trend - Quarters Ended
		September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020
		(in thousands)
Interest-earning assets:
Investment securities (1)		$	358,927		$	325,205		$	271,357		$	271,511		$	269,477
Other interest-earning assets			372,892			397,979			180,526			84,969			121,384
Loans held for sale			84,399			115,240			193,426			178,980			139,418
Loans
Commercial loans (2)			2,121,432			2,152,105			2,161,076			2,112,377			2,017,492
Residential real estate loans (2)			1,121,898			1,064,481			1,084,292			1,106,286			1,135,947
Consumer loans (2)			170,366			205,856			253,014			292,665			333,623
Total loans			3,413,696			3,422,442			3,498,382			3,511,328			3,487,062
Total interest-earning assets			4,229,914			4,260,866			4,143,691			4,046,788			4,017,341
Noninterest-earning assets			347,060			339,438			330,257			317,663			333,444
Total assets		$	4,576,974		$	4,600,304		$	4,473,948		$	4,364,451		$	4,350,785
Interest-bearing liabilities:
Savings accounts		$	1,136,131		$	1,118,494		$	1,058,820		$	968,766		$	897,751
NOW accounts			283,725			231,075			212,282			205,845			199,982
Money market accounts			832,340			853,586			861,518			840,674			825,732
Certificates of deposit			570,570			589,964			608,089			649,919			684,002
Brokered deposits			100,000			100,000			100,000			109,788			139,887
Total interest-bearing deposits			2,922,766			2,893,119			2,840,709			2,774,992			2,747,354
FHLB advances			84,438			96,823			102,383			119,763			149,750
Subordinated debentures			34,111			34,080			34,048			34,015			33,983
Total borrowings			118,549			130,903			136,431			153,778			183,733
Total interest-bearing liabilities			3,041,315			3,024,022			2,977,140			2,928,770			2,931,087
Noninterest-bearing liabilities:
Noninterest-bearing deposits			756,927			784,521			706,274			656,227			641,353
Other noninterest-bearing liabilities			90,366			88,577			93,380			84,387			89,319
Total liabilities			3,888,608			3,897,120			3,776,794			3,669,384			3,661,759
Total stockholders' equity			688,366			703,184			697,154			695,067			689,026
Total liabilities and stockholders' equity		$	4,576,974		$	4,600,304		$	4,473,948		$	4,364,451		$	4,350,785
		Annualized Yield Trend - Quarters Ended
		September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020			September 30, 2020
Interest-earning assets:
Investment securities (1)			1.43	%		0.98	%		0.87	%		1.56	%		1.95	%
Other interest-earning assets			0.18	%		0.14	%		0.18	%		0.54	%		0.57	%
Loans held for sale			3.13	%		2.97	%		2.78	%		2.82	%		3.02	%
Commercial loans (2)			4.19	%		4.11	%		3.90	%		3.92	%		3.76	%
Residential real estate loans (2)			3.31	%		3.67	%		3.87	%		4.04	%		4.14	%
Consumer loans (2)			4.50	%		4.44	%		4.39	%		4.36	%		4.29	%
Total loans			3.91	%		4.00	%		3.93	%		4.00	%		3.94	%
Total interest-earning assets			3.36	%		3.38	%		3.51	%		3.71	%		3.67	%
Interest-bearing liabilities:
Savings accounts			0.13	%		0.17	%		0.21	%		0.26	%		0.26	%
NOW accounts			0.06	%		0.07	%		0.07	%		0.08	%		0.08	%
Money market accounts			0.19	%		0.20	%		0.26	%		0.34	%		0.36	%
Certificates of deposit			0.76	%		0.84	%		0.96	%		1.35	%		1.68	%
Brokered deposits			0.64	%		0.62	%		0.58	%		0.72	%		0.72	%
Total interest-bearing deposits			0.28	%		0.32	%		0.39	%		0.54	%		0.65	%
FHLB advances			2.03	%		2.20	%		2.19	%		2.23	%		2.22	%
Subordinated debentures			6.09	%		6.17	%		6.23	%		6.13	%		6.13	%
Total borrowings			3.20	%		3.23	%		3.20	%		3.09	%		2.94	%
Total interest-bearing liabilities			0.39	%		0.45	%		0.52	%		0.68	%		0.80	%
(1) Includes securities available for sale and securities held to maturity.
(2) Includes nonaccruing loan balances and interest received on such loans.

HarborOne Bancorp, Inc.
Selected Financial Highlights
(Unaudited)
		Quarters Ended
		September 30,			June 30,			March 31,			December 31,			September 30,
Performance Ratios (annualized):		2021			2021			2021			2020			2020
(dollars in thousands)
Return on average assets (ROAA)			1.07	%		1.24	%		1.73	%		1.61	%		1.09	%
Return on average equity (ROAE)			7.12	%		8.12	%		11.13	%		10.13	%		6.90	%
Total noninterest expense		$	39,274		$	38,598		$	42,802		$	41,286		$	45,700
Less: Amortization of other intangible assets			324			324			324			324			447
Total adjusted noninterest expense		$	38,950		$	38,274		$	42,478		$	40,962		$	45,253
Net interest and dividend income		$	32,803		$	32,530		$	32,052		$	32,750		$	31,169
Total noninterest income			22,010			21,703			37,809			37,027			44,439
Total revenue		$	54,813		$	54,233		$	69,861		$	69,777		$	75,608
Efficiency ratio (1)			71.06	%		70.57	%		60.80	%		58.70	%		59.85	%
(1) This non-GAAP measure represents adjusted noninterest expense divided by total revenue

		At or for the Quarters Ended
		September 30,			June 30,			March 31,			December 31,			September 30,
Asset Quality		2021			2021			2021			2020			2020
(dollars in thousands)
Total nonperforming assets		$	36,514		$	32,732		$	32,886		$	34,696		$	40,925
Nonperforming assets to total assets			0.80	%		0.71	%		0.71	%		0.77	%		0.93	%
Allowance for loan losses to total loans			1.39	%		1.50	%		1.60	%		1.59	%		1.40	%
Net charge-offs		$	1,658		$	(175	)	$	102		$	1,436		$	338
Annualized net charge-offs/average loans			0.19	%		(0.02	)%		0.01	%		0.16	%		0.04	%
Allowance for loan losses to nonperforming loans			131.50	%		158.10	%		171.20	%		162.40	%		122.86	%

HarborOne Bancorp, Inc.
Selected Financial Highlights
(Unaudited)
		September 30,			June 30,			March 31,			December 31,			September 30,
Capital and Share Related		2021			2021			2021			2020			2020
(dollars in thousands, except share data)
Common stock outstanding			53,232,110			55,735,623			56,228,762			57,205,458			58,342,464
Book value per share		$	12.77		$	12.66		$	12.41		$	12.17		$	11.90
Tangible common equity:
Total stockholders' equity		$	680,032		$	705,471		$	698,073		$	696,314		$	694,103
Less: Goodwill			69,802			69,802			69,802			69,802			69,802
Less: Other intangible assets (1)			3,399			3,723			4,047			4,370			4,694
Tangible common equity		$	606,831		$	631,946		$	624,224		$	622,142		$	619,607
Tangible book value per share (2)		$	11.40		$	11.34		$	11.10		$	10.88		$	10.62
Tangible assets:
Total assets		$	4,567,094		$	4,616,422		$	4,605,958		$	4,483,615		$	4,428,319
Less: Goodwill			69,802			69,802			69,802			69,802			69,802
Less: Other intangible assets			3,399			3,723			4,047			4,370			4,694
Tangible assets		$	4,493,893		$	4,542,897		$	4,532,109		$	4,409,443		$	4,353,823
Tangible common equity / tangible assets (3)			13.50	%		13.91	%		13.77	%		14.11	%		14.23	%

(1) Other intangible assets are core deposit intangibles.

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

(3) This non-GAAP ratio is total stockholders' equity less goodwill and intangible assets to total assets less goodwill and intangible assets.

HarborOne Bancorp, Inc.
Segments Statements of Net Income
(Unaudited)
		HarborOne Mortgage												HarborOne Bank
		For the Quarter Ended												For the Quarter Ended
		September 30,				June 30,				September 30,				September 30,				June 30,				September 30,
		2021				2021				2020				2021				2021				2020
		(in thousands)
Net interest and dividend income		$	792			$	855			$	1,000			$	32,494			$	32,134			$	30,599
Provision for loan losses			—				—				—				(1,627	)			(4,286	)			13,454
Net interest and dividend income, after provision for loan losses			792				855				1,000				34,121				36,420				17,145
Mortgage banking income:
Gain on sale of mortgage loans			12,756				14,262				34,055				—				—				—
Intersegment gain (loss)			2,366				910				645				(1,373	)			(910	)			(645	)
Changes in mortgage servicing rights fair value			(918	)			(2,133	)			161				(74	)			(419	)			(354	)
Other			3,619				3,799				3,924				263				276				334
Total mortgage banking income (loss)			17,823				16,838				38,785				(1,184	)			(1,053	)			(665	)
Other noninterest income (loss)			25				20				(8	)			6,339				5,898				6,326
Total noninterest income			17,848				16,858				38,777				5,155				4,845				5,661
Noninterest expense			12,387				14,101				19,133				26,570				24,128				26,300
Income before income taxes			6,253				3,612				20,644				12,706				17,137				(3,494	)
Provision for income taxes			1,559				1,013				4,550				3,575				4,863				571
Net income		$	4,694			$	2,599			$	16,094			$	9,131			$	12,274			$	(4,065	)

		HarborOne Mortgage							HarborOne Bank
		For the Nine Months Ended							For the Nine Months Ended
		September 30,			September 30,				September 30,				September 30,
		2021			2020				2021				2020
		(in thousands)
Net interest and dividend income		$	2,897		$	2,020			$	95,876			$	86,248
Provision for loan losses			—			—				(5,822	)			27,207
Net interest and dividend income, after provision for loan losses			2,897			2,020				101,698				59,041
Mortgage banking income:
Gain on sale of mortgage loans			51,820			77,195				—				—
Intersegment gain (loss)			3,938			2,444				(2,945	)			(2,444	)
Changes in mortgage servicing rights fair value			72			(3,677	)			(207	)			(2,014	)
Other			11,633			9,619				839				1,031
Total mortgage banking income (loss)			67,463			85,581				(2,313	)			(3,427	)
Other noninterest income (loss)			37			(141	)			17,328				19,640
Total noninterest income			67,500			85,440				15,015				16,213
Noninterest expense			44,545			47,923				75,161				75,806
Income before income taxes			25,852			39,537				41,552				(552	)
Provision (benefit) for income taxes			6,905			8,667				11,873				2,199
Net income		$	18,947		$	30,870			$	29,679			$	(2,751	)

HarborOne Bancorp, Inc.
COVID Loans at Risk as of September 30, 2021
(Unaudited)
		At Risk Sectors
																							Percent
																	Total						at risk
																	at risk			Total			sector
		Retail			Office Space			Hotels			Restaurants			Recreation			sectors			loans			to total
		(dollars in thousands)
Commercial real estate		$	219,299		$	199,329		$	182,622		$	14,498		$	14,630		$	630,378		$	1,573,284		40.1	%
Commercial and industrial			28,858			14,009			2,022			27,073			3,835			75,797			414,814		18.3
Commercial construction			18,605			854			9,040			16,284			—			44,783			152,685		29.3
Total		$	266,762		$	214,192		$	193,684		$	57,855		$	18,465		$	750,958		$	2,140,783		35.1	%
Outstanding principal, active commercial deferrals		$	—		$	—		$	7,740		$	—		$	—		$	7,740		$	2,140,783		0.4	%
Outstanding principal, expired and delinquent commercial deferrals		$	—		$	515		$	242		$	—		$	—		$	757		$	2,140,783		0.0	%
PPP loans, net of fees		$	—		$	—		$	31		$	313		$	3		$	347		$	52,143		0.7	%
Nonaccrual loans		$	387		$	8,843		$	9,061		$	30		$	—		$	18,321		$	36,486		50.2	%

																									% Active
																									deferrals to
		Deferrals					Deferrals															Total			total
		expired &					expired &					Active					Total					outstanding			outstanding
(dollars in thousands)		paying					delinquent					deferrals					deferrals					loans			loans
		#			$		#			$		#			$		#			$
Commercial real estate		61		$	222,393		1		$	515		2		$	7,740		64		$	230,648		$	1,573,284		0.5	%
Commercial and industrial		83			37,944		2			261		—			—		85			38,205			414,814		—
Commercial construction		—			—		—			—		—			—		—			—			152,685		—
Total commercial loans		144		$	260,337		3		$	776		2		$	7,740		149		$	268,853		$	2,140,783		0.4	%
1-4 Family		125		$	34,721		3		$	452		1		$	177		129		$	35,350		$	993,726		0.0	%
Home Equity		12			772		4			184		—			—		16			956			135,146		—
Residential construction		—			—		—			—		—			—		—			—			31,817		—
Total residential real estate		137		$	35,493		7		$	636		1		$	177		145		$	36,306		$	1,160,689		0.0	%
Consumer		311		$	7,068		6		$	112		—		$	—		317		$	7,180		$	156,272		—
Total loans		592		$	302,898		16		$	1,524		3		$	7,917		611		$	312,339		$	3,457,744		0.2	%

HarborOne Bancorp, Inc.
COVID Loans at Risk as of September 30, 2021
(Unaudited)
		Active deferrals expiring by quarter
(dollars in thousands)		12/31/2021			3/31/2022			6/30/2022			9/30/2022			Total
Commercial real estate		$	7,740		$	—		$	—		$	—		$	7,740
Commercial and industrial			—			—			—			—			—
Commercial construction			—			—			—			—			—
Total commercial loans		$	7,740		$	—		$	—		$	—		$	7,740
1-4 Family		$	177		$	—		$	—		$	—		$	177
Home equity			—			—			—			—			—
Residential construction			—			—			—			—			—
Total residential real estate		$	177		$	—		$	—		$	—		$	177
Consumer		$	—		$	—		$	—		$	—		$	—
Total loans		$	7,917		$	—		$	—		$	—		$	7,917

 

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