HarborOne Bancorp, Inc. [HONE] Filings

10-Q 1 hone-20240630x10q.htm 10-Q

Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-38955

HarborOne Bancorp, Inc.

(Exact name of registrant as specified in its charter)


Massachusetts		81-1607465
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

770 Oak Street, Brockton, Massachusetts	02301
(Address of principal executive offices)	(Zip Code)

(508) 895-1000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act


Title of each Class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.01 par value	HONE	The NASDAQ Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer ☐

Accelerated filer ☒

Non-accelerated filer ☐

Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of July 31, 2024, there were 44,408,490 shares of the Registrant’s common stock, par value $0.01 per share, outstanding.

Table of Contents

Index

		PAGE
	Glossary of Acronyms and Terms	1

PART I.	FINANCIAL INFORMATION

ITEM 1.	Financial Statements

	Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023 (unaudited)	2
	Consolidated Statements of Income for the Three and Six Months Ended June 30, 2024 and 2023 (unaudited)	3
	Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2024 and 2023 (unaudited)	4
	Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, 2024 and 2023 (unaudited)	5
	Consolidated Statements of Cash Flows for the Three and Six Months Ended June 30, 2024 and 2023 (unaudited)	7
	Notes to Consolidated Financial Statements (unaudited)
	Note 1. Summary of Significant Accounting Policies	9
	Note 2. Debt Securities	10
	Note 3. Loans Held for Sale	13
	Note 4. Loans and Allowance for Credit Losses	14
	Note 5. Mortgage Loan Servicing	21
	Note 6. Goodwill and Other Intangible Assets	21
	Note 7. Deposits	22
	Note 8. Borrowings	23
	Note 9. Other Commitments and Contingencies	24
	Note 10. Derivatives	25
	Note 11. Operating Lease ROU Assets and Liabilities	29
	Note 12. Minimum Regulatory Capital Requirements	31
	Note 13. Comprehensive (Loss) Income	33
	Note 14. Fair Value of Assets and Liabilities	34
	Note 15. Earnings Per Share	39
	Note 16. Revenue Recognition	40
	Note 17. Segment Reporting	40

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	43
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	65
ITEM 4.	Controls and Procedures	65

PART II.	OTHER INFORMATION

ITEM 1.	Legal Proceedings	66
ITEM 1A.	Risk Factors	66
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	67
ITEM 3.	Defaults Upon Senior Securities	67
ITEM 4.	Mine Safety Disclosures	67
ITEM 5.	Other Information	67
ITEM 6.	Exhibits	68

EXHIBIT INDEX		68

SIGNATURE		69

Table of Contents

Glossary of Acronyms and Terms

The following is a list of common acronyms and terms used regularly in our financial reporting:




ACL	Allowance for Credit Losses
ASU	Accounting Standards Update
Bank	HarborOne Bank
BIC	Borrower-in-custody
BOLI	Bank-owned life insurance
BTFP	Bank Term Funding Program
Company	HarborOne Bancorp, Inc.
DCF	Discounted cash flow
DIF	Massachusetts Depositors Insurance Fund
EPS	Earnings Per Share
ESOP	Employee Stock Ownership Plan
EVE	Equity at risk
Exchange Act	Securities Exchange Act of 1934, as amended
FASB	Federal Accounting Standards Board
FDIC	Federal Deposit Insurance Corporation
Federal Reserve	Board of Governors of the Federal Reserve System
FHLB	Federal Home Loan Bank
FRBB	Federal Reserve Bank of Boston
GAAP	Accounting principles generally accepted in the United States of America
HarborOne Mortgage	HarborOne Mortgage, LLC
Management	Company's management
MSRs	Mortgage servicing rights
PPP	Paycheck Protection Program
ROU	Right-of-use
SBA	U.S. Small Business Administration
SEC	U.S. Securities and Exchange Commission
SOFR	Secured Overnight Financing Rate
TDRs	Troubled debt restructurings
Treasury	U.S. Department of the Treasury

Table of Contents

HarborOne Bancorp, Inc.

Consolidated Balance Sheets (unaudited)


	June 30,		December 31,
(in thousands, except share data)	2024		2023

Assets
Cash and due from banks	$	48,097	$	38,876
Short-term investments		186,965		188,474
Total cash and cash equivalents		235,062		227,350

Securities available for sale, at fair value		269,078		290,151
Securities held to maturity, at amortized cost (fair value of $19,121 at June 30, 2024 and $19,262 at December 31, 2023)		19,725		19,796
Federal Home Loan Bank stock, at cost		25,311		27,098
Asset held for sale		—		348
Loans held for sale, at fair value		41,814		19,686
Loans		4,839,232		4,750,311
Less: Allowance for credit losses on loans		(49,139)		(47,972)
Net loans		4,790,093		4,702,339
Accrued interest receivable		19,276		18,169
Mortgage servicing rights, at fair value		46,209		46,111
Property and equipment, net		47,190		48,749
Retirement plan annuities		15,456		15,170
Bank-owned life insurance		96,179		94,675
Goodwill		59,042		59,042
Intangible assets		1,136		1,515
Other assets		121,464		97,697
Total assets	$	5,787,035	$	5,667,896

Liabilities and Stockholders' Equity
Deposits:
Demand deposit accounts	$	689,800	$	659,973
NOW accounts		308,016		305,825
Regular savings and club accounts		989,720		1,265,315
Money market deposit accounts		1,100,215		966,201
Term certificate accounts		985,293		863,457
Brokered deposits		385,253		326,638
Total deposits		4,458,297		4,387,409
Borrowings		619,372		568,462
Mortgagors' escrow accounts		9,632		8,872
Accrued interest payable		8,262		5,251
Other liabilities and accrued expenses		114,143		114,143
Total liabilities		5,209,706		5,084,137

Commitments and contingencies (Notes 7, 12 and 13)

Common stock, $0.01 par value; 150,000,000 shares authorized; 60,511,658 and 60,255,288 shares issued; 44,459,490 and 45,401,224 shares outstanding at June 30, 2024 and December 31, 2023, respectively		598		598
Additional paid-in capital		487,980		486,502
Retained earnings		367,584		359,656
Treasury stock, at cost, 16,052,168 and 14,854,064 shares at June 30, 2024 and December 31, 2023, respectively		(205,944)		(193,590)
Accumulated other comprehensive loss		(48,023)		(43,622)
Unearned compensation - ESOP		(24,866)		(25,785)
Total stockholders' equity		577,329		583,759
Total liabilities and stockholders' equity	$	5,787,035	$	5,667,896

The accompanying notes are an integral part of these unaudited interim Consolidated Financial Statements.

Table of Contents

HarborOne Bancorp, Inc.

Consolidated Statements of Income (unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except share data)	2024		2023		2024		2023


Interest and dividend income:
Interest and fees on loans	$	61,512	$	55,504	$	121,449	$	108,275
Interest on loans held for sale		347		326		590		612
Interest on taxable securities		2,121		2,035		4,186		4,114
Other interest and dividend income		3,971		2,935		8,630		3,738
Total interest and dividend income		67,951		60,800		134,855		116,739

Interest expense:
Interest on deposits		27,272		20,062		54,171		35,975
Interest on borrowings		9,329		8,114		18,752		13,219
Interest on subordinated debentures		—		524		—		1,047
Total interest expense		36,601		28,700		72,923		50,241

Net interest and dividend income		31,350		32,100		61,932		66,498
Provision for credit losses		615		3,283		447		5,149

Net interest and dividend income, after provision for credit losses		30,735		28,817		61,485		61,349

Noninterest income:
Mortgage banking income:
Gain on sale of mortgage loans		3,143		3,300		5,156		5,524
Changes in mortgage servicing rights fair value		(1,098)		436		(1,044)		(1,256)
Other		2,356		2,312		4,632		4,528
Total mortgage banking income		4,401		6,048		8,744		8,796
Deposit account fees		5,223		5,012		10,206		9,745
Income on retirement plan annuities		141		128		286		247
Gain on sale of asset held for sale		1,809		—		1,809		—
Loss on sale of securities		(1,041)		—		(1,041)		—
Bank-owned life insurance income		758		511		1,504		1,011
Other income		628		963		1,152		1,553
Total noninterest income		11,919		12,662		22,660		21,352

Noninterest expense:
Compensation and benefits		18,976		18,220		36,612		36,019
Occupancy and equipment		4,636		4,633		9,417		9,673
Data processing		2,375		2,403		4,854		4,749
Loan expenses		461		417		832		730
Marketing		1,368		925		2,184		2,106
Deposit expenses		739		326		1,429		860
Postage and printing		401		425		839		882
Professional fees		1,236		1,114		2,693		2,615
Foreclosed and repossessed assets		1		5		5		(12)
Deposit insurance		993		1,176		2,157		1,686
Other expenses		1,958		2,081		3,872		3,926
Total noninterest expense		33,144		31,725		64,894		63,234

Income before income taxes		9,510		9,754		19,251		19,467

Income tax provision		2,214		2,275		4,655		4,691

Net income	$	7,296	$	7,479	$	14,596	$	14,776

Earnings per common share:
Basic	$	0.18	$	0.17	$	0.35	$	0.34
Diluted	$	0.18	$	0.17	$	0.35	$	0.33
Weighted average shares outstanding:
Basic		41,293,787		43,063,507		41,603,104		43,955,411
Diluted		41,370,289		43,133,455		41,748,663		44,203,893

The accompanying notes are an integral part of these unaudited interim Consolidated Financial Statements.

Table of Contents

HarborOne Bancorp, Inc.

Consolidated Statements of Comprehensive Income (Loss) (unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2024		2023		2024		2023


Net income	$	7,296	$	7,479	$	14,596	$	14,776
Other comprehensive income:

Unrealized gain/loss on cashflow hedge:
Unrealized holding gains		268		1,577		986		1,407
Reclassification adjustment for net gains included in net income		(1,264)		(1,134)		(2,499)		(2,152)
Net change in unrealized (losses) gains on derivatives in cashflow hedging instruments		(996)		443		(1,513)		(745)
Related tax effect		285		(124)		433		210
Net-of-tax amount		(711)		319		(1,080)		(535)

Unrealized gain/loss on securities available for sale:
Unrealized holding gains (losses)		650		(5,366)		(4,290)		1,723
Reclassification adjustment for realized losses		1,041		—		1,041		—
Net unrealized gains (losses)		1,691		(5,366)		(3,249)		1,723
Related tax effect		(378)		1,205		(30)		(358)
Net-of-tax amount		1,313		(4,161)		(3,279)		1,365

Postretirement benefit:
Adjustment of accumulated obligation for postretirement benefits		1		1		—		1
Reclassification adjustment for gains recognized in net periodic benefit cost		(22)		(39)		(42)		(39)
Net gains		(21)		(38)		(42)		(38)

Total other comprehensive income (loss)		581		(3,880)		(4,401)		792

Comprehensive income	$	7,877	$	3,599	$	10,195	$	15,568

The accompanying notes are an integral part of these unaudited interim Consolidated Financial Statements.

Table of Contents

HarborOne Bancorp, Inc.

Consolidated Statements of Changes in Stockholders’ Equity (unaudited)

Accumulated

Common Stock

Additional

Treasury

Other

Unearned

Total

Outstanding

Paid-in

Retained

Stock,

Comprehensive

Compensation

Stockholders'

(in thousands, except share data)

Shares

Amount

Capital

Earnings

at Cost

Income (Loss)

- ESOP

Equity

Balance at March 31, 2023

47,063,087

HarborOne Bancorp, Inc. [HONE] Filings
10-Q	[2024-08-06]
10-Q	[2024-05-07]
10-K	[2024-03-07]
10-Q	[2023-11-07]
10-Q	[2023-08-08]
10-Q	[2023-05-09]
10-K	[2023-03-10]
10-Q	[2022-11-08]
10-Q	[2022-08-08]
10-Q	[2022-05-10]
10-K	[2022-03-11]
10-Q	[2021-11-04]
10-Q	[2021-08-05]
10-Q	[2021-05-07]
10-K	[2021-03-12]
10-Q	[2020-11-06]
10-Q	[2020-08-07]
10-Q	[2020-05-08]
10-K	[2020-03-13]
10-Q	[2019-11-07]
S-1	[2019-03-11]