Glossary of Acronyms and Terms [Summary of Acronyms and Terms](index=5&type=section&id=Glossary%20of%20Acronyms%20and%20Terms_summary) This section provides a list of common acronyms and terms used in HarborOne Bancorp, Inc.'s financial reporting to aid in understanding the document - The glossary defines key terms such as ACL (Allowance for Credit Losses), ASU (Accounting Standards Update), Bank (HarborOne Bank), Company (HarborOne Bancorp, Inc.), CRE (Commercial real estate), EPS (Earnings Per Share), ESOP (Employee Stock Ownership Plan), FASB (Federal Accounting Standards Board), FDIC (Federal Deposit Insurance Corporation), FHLB (Federal Home Loan Bank), GAAP (Accounting principles generally accepted in the United States of America), MSRs (Mortgage servicing rights), ROU (Right-of-use), SBA (U.S. Small Business Administration), and SEC (U.S. Securities and Exchange Commission)[9](index=9&type=chunk) PART I. FINANCIAL INFORMATION [ITEM 1. Financial Statements](index=3&type=section&id=ITEM%201.%20Financial%20Statements) This section presents the unaudited interim consolidated financial statements of HarborOne Bancorp, Inc. for the period ended March 31, 2025, including balance sheets, income statements, comprehensive income statements, changes in stockholders' equity, and cash flow statements, along with detailed notes on significant accounting policies and financial instrument specifics [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) The Consolidated Balance Sheets show a slight decrease in total assets and liabilities from December 31, 2024, to March 31, 2025, with notable changes in loans, allowance for credit losses, deposits, and borrowings Balance Sheet Summary | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Total assets | $5,700,330 | $5,753,133 | $(52,803) | -0.92% | | Loans, net | $4,771,710 | $4,796,398 | $(24,688) | -0.51% | | Allowance for credit losses on loans | $(49,323) | $(56,101) | $6,778 | -12.08% | | Total deposits | $4,618,721 | $4,550,753 | $67,968 | 1.49% | | Borrowings | $399,547 | $516,555 | $(117,008) | -22.65% | | Total stockholders' equity | $575,967 | $575,011 | $956 | 0.17% | [Consolidated Statements of Income](index=8&type=section&id=Consolidated%20Statements%20of%20Income) Net income for the three months ended March 31, 2025, decreased compared to the same period in 2024, primarily due to a higher provision for credit losses and lower noninterest income, despite an increase in net interest and dividend income Income Statement Summary | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | % Change | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :------- | | Total interest and dividend income | $64,439 | $66,904 | $(2,465) | -3.68% | | Total interest expense | $32,970 | $36,322 | $(3,352) | -9.23% | | Net interest and dividend income | $31,469 | $30,582 | $887 | 2.90% | | Provision for credit (benefits) losses | $1,385 | $(168) | $1,553 | -924.40% | | Total noninterest income | $9,891 | $10,741 | $(850) | -7.91% | | Total noninterest expense | $32,850 | $31,750 | $1,100 | 3.46% | | Net income | $5,500 | $7,300 | $(1,800) | -24.66% | | Basic Earnings per common share | $0.14 | $0.17 | $(0.03) | -17.65% | | Diluted Earnings per common share | $0.14 | $0.17 | $(0.03) | -17.65% | [Consolidated Statements of Comprehensive Income (Loss)](index=9&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Comprehensive income significantly increased for the three months ended March 31, 2025, primarily driven by an unrealized gain on securities available for sale, offsetting a decrease in net income Comprehensive Income Summary | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | % Change | | :--------------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :------- | | Net income | $5,500 | $7,300 | $(1,800) | -24.66% | | Net change in unrealized losses on derivatives in cashflow hedging instruments (net-of-tax) | $(708) | $(369) | $(339) | 91.87% | | Unrealized holding gains (losses) on securities available for sale (net-of-tax) | $4,939 | $(4,592) | $9,531 | -207.56% | | Total other comprehensive income (loss) | $4,231 | $(4,982) | $9,213 | -184.92% | | Comprehensive income | $9,731 | $2,318 | $7,413 | 319.80% | [Consolidated Statements of Changes in Stockholders' Equity](index=10&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Stockholders' equity saw a modest increase from December 31, 2024, to March 31, 2025, driven by comprehensive income and ESOP share releases, partially offset by dividends and treasury stock purchases Stockholders' Equity Changes | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :----------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | | Total stockholders' equity | $575,967 | $575,011 | $956 | | Comprehensive income | $9,731 | N/A | N/A | | Dividends declared ($0.09 per share) | $(3,651) | N/A | N/A | | Treasury stock purchased | $(6,378) | N/A | N/A | [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flows increased significantly, while investing activities shifted from a net use to a net provision of cash, and financing activities resulted in a net use of cash for the three months ended March 31, 2025, compared to the prior year Cash Flow Summary | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | | :--------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | | Net cash provided by operating activities | $23,362 | $14,974 | $8,388 | | Net cash provided by (used in) investing activities | $33,194 | $(33,148) | $66,342 | | Net cash (used in) provided by financing activities | $(57,135) | $184,265 | $(241,400) | | Net change in cash and cash equivalents | $(579) | $166,091 | $(166,670) | | Cash and cash equivalents at end of period | $230,492 | $393,441 | $(162,949) | [Notes to Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures on the Company's accounting policies, financial instruments, and other significant financial information, including the recently announced merger, debt securities, loans, deposits, borrowings, derivatives, and regulatory capital requirements [Note 1. Summary of Significant Accounting Policies](index=13&type=section&id=Note%201.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the basis of presentation for the unaudited interim consolidated financial statements, the Company's nature of operations, and details the recently announced merger agreement with Eastern Bankshares, Inc., including the consideration and closing conditions - On **April 24, 2025**, HarborOne Bancorp, Inc. entered into a Merger Agreement with Eastern Bankshares, Inc. and Eastern Bank. Eastern will acquire HarborOne Bancorp, Inc. and HarborOne Bank[26](index=26&type=chunk) - HarborOne shareholders will receive, at their election, either **0.765 shares** of Eastern common stock or **$12.00** in cash per share, subject to allocation procedures ensuring **75%-85%** stock consideration[26](index=26&type=chunk) - The merger is subject to regulatory and shareholder approvals and is anticipated to close in **Q4 2025**, with a potential deferral option for Eastern until **February 20, 2026**[28](index=28&type=chunk) - The Company provides financial services through **30 full-service branches** in Massachusetts and Rhode Island, and its HarborOne Mortgage subsidiary operates in multiple states[29](index=29&type=chunk) [Note 2. Debt Securities](index=15&type=section&id=Note%202.%20Debt%20Securities) The Company's debt securities portfolio, comprising available-for-sale and held-to-maturity categories, primarily consists of U.S. government and agency obligations. While there are significant gross unrealized losses, mainly due to interest rate changes, management does not believe these represent credit loss impairments due to government guarantees and no intent to sell before recovery Debt Securities Portfolio | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------------------------------- | :----------------------------- | :------------------------------- | | Total securities available for sale (Fair Value) | $265,644 | $263,904 | | Total securities held to maturity (Amortized Cost) | $19,211 | $19,627 | | Gross Unrealized Losses (Available for Sale) | $59,092 | $65,264 | | Gross Unrealized Losses (Held to Maturity) | $144 | $342 | - As of **March 31, 2025**, **101 out of 112 debt securities** were in an unrealized loss position, primarily due to changes in interest rates, not credit quality, for U.S. government-sponsored enterprises and agencies[38](index=38&type=chunk) - No Allowance for Credit Losses (ACL) was recorded for debt securities as management expects to recover the entire amortized cost basis and does not intend to sell these securities before maturity[40](index=40&type=chunk)[41](index=41&type=chunk) [Note 3. Loans Held for Sale](index=18&type=section&id=Note%203.%20Loans%20Held%20for%20Sale) Loans held for sale decreased significantly from December 31, 2024, to March 31, 2025, reflecting reduced loan production. The Company uses the fair value option for these loans to match changes with hedging contracts, and no loans were past due Loans Held for Sale Data | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :---------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Loans held for sale, fair value | $19,304 | $36,768 | $(17,464) | -47.50% | | Loans held for sale, contractual principal outstanding | $18,837 | $36,205 | $(17,368) | -47.97% | | Fair value less unpaid principal balance | $467 | $563 | $(96) | -17.05% | - The Company elected the fair value option for mortgage loans held for sale to better match changes in fair value with forward sale commitment contracts used for economic hedging[42](index=42&type=chunk) - There were no loans held for sale that were greater than **90 days** past due at **March 31, 2025**, or **December 31, 2024**[43](index=43&type=chunk) [Note 4. Loans and Allowance for Credit Losses](index=19&type=section&id=Note%204.%20Loans%20and%20Allowance%20for%20Credit%20Losses) Total loans decreased slightly, with commercial construction and residential real estate loans declining, while commercial and industrial loans increased. The Allowance for Credit Losses (ACL) on loans decreased, primarily due to charge-offs and specific reserve adjustments, with non-accrual loans showing mixed trends across categories Loan Portfolio Composition | Loan Category | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Commercial real estate | $2,272,480 | $2,280,309 | $(7,829) | -0.34% | | Commercial construction | $216,013 | $252,691 | $(36,678) | -14.52% | | Commercial and industrial | $627,480 | $594,453 | $33,027 | 5.56% | | One- to four-family | $1,487,942 | $1,506,571 | $(18,629) | -1.24% | | Total loans before basis adjustment | $4,820,466 | $4,852,419 | $(31,953) | -0.66% | | Allowance for credit losses on loans | $(49,323) | $(56,101) | $6,778 | -12.08% | Allowance for Credit Losses Activity | ACL Activity | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Balance at beginning of period | $56,101 | $47,972 | | Charge-offs | $(8,716) | $(277) | | Recoveries | $47 | $152 | | Provision | $1,891 | $338 | | Balance at end of period | $49,323 | $48,185 | Non-accrual Loans by Category | Non-accrual Loans | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Commercial real estate | $8,610 | $16,836 | | Commercial and industrial | $10,538 | $2,204 | | One- to four-family | $10,764 | $9,545 | | Total non-accrual loans | $30,902 | $29,463 | - The Company uses a **ten-grade** internal loan rating system for commercial loans, with ratings **1-6** as 'pass', **7** as 'special mention', **8** as 'substandard', **9** as 'doubtful', and **10** as 'uncollectible'[56](index=56&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk) [Note 5. Mortgage Loan Servicing](index=27&type=section&id=Note%205.%20Mortgage%20Loan%20Servicing) Mortgage Servicing Rights (MSRs) decreased from December 31, 2024, to March 31, 2025, primarily due to a negative fair value mark and reductions from loan payoffs, despite new originations. Fair value is determined using independent third-party valuations based on prepayment speeds, discount rates, and default rates Mortgage Servicing Rights (MSRs) Data | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Unpaid principal balance of mortgage loans serviced for others | $3,310,000 | $3,360,000 | | Total MSRs, at fair value | $42,620 | $44,500 | | Prepayment speed | 7.90% | 7.67% | | Discount rate | 9.92% | 9.97% | | Default rate | 1.85% | 1.83% | - Changes in MSR fair value for the three months ended **March 31, 2025**, included additions of **$53,000**, reductions from loan payoffs of **$782,000**, and a negative fair value mark of **$1,151,000**[65](index=65&type=chunk) [Note 6. Goodwill and Other Intangible Assets](index=27&type=section&id=Note%206.%20Goodwill%20and%20Other%20Intangible%20Assets) Goodwill remained stable at $59.0 million, with no impairment identified as of March 31, 2025, following a qualitative assessment triggered by the merger agreement. Other intangible assets also showed no impairment Goodwill and Intangible Assets | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------- | :----------------------------- | :------------------------------- | | Goodwill | $59,042 | $59,042 | | Other intangible assets | $568 | $757 | - Management considered the merger agreement a triggering event under ASC 350 and performed an interim qualitative assessment, concluding that impairment was **not more likely than not** at **March 31, 2025**[68](index=68&type=chunk) [Note 7. Deposits](index=28&type=section&id=Note%207.%20Deposits) Total deposits increased from December 31, 2024, to March 31, 2025, driven by growth in non-certificate accounts, particularly NOW and money market accounts, while brokered and municipal deposits decreased. A significant portion of certificate accounts mature within one year Deposit Composition by Type | Deposit Type | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | NOW and demand deposit accounts | $1,043,930 | $988,984 | $54,946 | 5.56% | | Money market deposit accounts | $1,200,600 | $1,195,209 | $5,391 | 0.45% | | Total non-certificate accounts | $3,152,666 | $3,079,425 | $73,241 | 2.38% | | Brokered deposits | $389,860 | $401,484 | $(11,624) | -2.90% | | Total deposits | $4,618,721 | $4,550,753 | $67,968 | 1.49% | | Municipal deposits | $478,900 | $519,500 | $(40,600) | -7.82% | | Reciprocal deposits | $399,100 | $376,300 | $22,800 | 6.06% | Certificate Account Maturity Profile | Certificate Account Maturity | Amount (in thousands) | Weighted Average Rate | | :--------------------------- | :-------------------- | :-------------------- | | Within 1 year | $1,287,399 | 4.32% | | Over 1 year to 2 years | $172,747 | 4.30% | | Total certificate deposits | $1,466,055 | 4.31% | [Note 8. Borrowings](index=30&type=section&id=Note%208.%20Borrowings) Total borrowings decreased significantly from December 31, 2024, to March 31, 2025, primarily due to a reduction in FHLB advances. The Bank maintains substantial available borrowing capacity with the FHLB and Federal Reserve Discount Window, secured by loans and securities Borrowings Summary | Borrowing Type | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Total Borrowings | $399,547 | $516,555 | $(117,008) | -22.65% | | Short-term FHLB advances | $155,000 | $212,000 | $(57,000) | -26.89% | | Long-term FHLB advances | $244,547 | $304,555 | $(60,008) | -19.70% | | Weighted average rate (short-term) | 4.53% | 4.50% | 0.03% | 0.67% | | Weighted average rate (long-term) | 4.17% | 4.21% | -0.04% | -0.95% | - As of **March 31, 2025**, the Company had **$762.0 million** of available borrowing capacity with the FHLB and **$629.4 million** at the FRBB, secured by pledged loans and securities[76](index=76&type=chunk)[77](index=77&type=chunk) [Note 9. Other Commitments and Contingencies](index=31&type=section&id=Note%209.%20Other%20Commitments%20and%20Contingencies) The Allowance for Credit Losses (ACL) on unfunded commitments decreased from December 31, 2024, to March 31, 2025. The Company also has significant off-balance sheet loan commitments, primarily for residential real estate, home equity lines, and revolving lines of credit Commitments and Contingencies | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | ACL on unfunded commitments | $3,000 | $3,506 | $(506) | -14.43% | | Commitments to grant residential real estate loans | $50,920 | $38,929 | $11,991 | 30.80% | | Unadvanced funds on home equity lines of credit | $285,840 | $281,890 | $3,950 | 1.40% | | Unadvanced funds on revolving lines of credit | $242,041 | $270,735 | $(28,694) | -10.60% | | Unadvanced funds on construction loans | $142,615 | $166,726 | $(24,111) | -14.46% | - The Company's exposure to credit loss from off-balance sheet instruments is represented by the contractual amount of these commitments, and the same credit policies are used as for on-balance sheet instruments[81](index=81&type=chunk) [Note 10. Derivatives](index=32&type=section&id=Note%2010.%20Derivatives) The Company uses various derivative instruments, including interest rate swaps for fair value and cashflow hedging, and non-designated derivatives like loan commitments, forward loan sale commitments, and interest rate futures, to manage interest rate risk and customer financing needs. The fair value of total derivatives decreased from December 31, 2024, to March 31, 2025 Derivative Instruments Summary | Derivative Type | Notional Amount (March 31, 2025, in thousands) | Fair Value Assets (March 31, 2025, in thousands) | Fair Value Liabilities (March 31, 2025, in thousands) | | :----------------------------------- | :--------------------------------------------- | :----------------------------------------------- | :------------------------------------------------ | | Fair value hedge - interest rate swaps | $100,000 | $0 | $455 | | Cashflow hedge - interest rate swaps | $100,000 | $76 | $0 | | Derivative loan commitments | $41,938 | $540 | $54 | | Forward loan sale commitments | $28,500 | $9 | $63 | | Interest rate swaps (non-designated) | $980,343 | $18,850 | $18,850 | | Interest Rate Futures | $31,600 | $595 | $0 | | Total derivatives (Fair Value) | N/A | $20,070 | $19,422 | - For the three months ended **March 31, 2025**, derivatives designated as fair value hedges resulted in a net gain of **$5,000**, while non-designated derivatives generated a net gain of **$304,000**[99](index=99&type=chunk) - The Company uses interest rate swaps as fair value hedges for fixed-rate residential mortgages and as cashflow hedges for brokered deposits to manage interest rate risk[84](index=84&type=chunk)[87](index=87&type=chunk) [Note 11. Operating Lease ROU Assets and Liabilities](index=38&type=section&id=Note%2011.%20Operating%20Lease%20ROU%20Assets%20and%20Liabilities) Operating lease Right-of-Use (ROU) assets and liabilities decreased slightly from December 31, 2024, to March 31, 2025. The weighted-average remaining lease term is approximately 15.8 years, with a weighted-average discount rate of 2.16% Operating Lease Data | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Operating lease ROU assets | $20,400 | $20,900 | | Operating lease liabilities | $22,100 | $22,700 | | Weighted-average discount rate | 2.16% | 2.15% | | Weighted-average remaining lease term (years) | 15.81 | 15.85 | | Total lease payments (future minimum) | $26,795 | N/A | | Total lease expense (3 months ended March 31, 2025) | $727 | N/A | [Note 12. Minimum Regulatory Capital Requirements](index=39&type=section&id=Note%2012.%20Minimum%20Regulatory%20Capital%20Requirements) Both HarborOne Bancorp, Inc. and HarborOne Bank exceeded all minimum regulatory capital requirements, including the capital conservation buffer, and were considered 'well capitalized' as of March 31, 2025. Regulatory capital ratios were not impacted by unrealized losses on available-for-sale investment securities HarborOne Bancorp, Inc. Regulatory Capital Ratios | Capital Ratio (HarborOne Bancorp, Inc.) | Actual Ratio (March 31, 2025) | Minimum Required for Capital Adequacy | Minimum for 'Well Capitalized' | | :--------------------------------------- | :---------------------------- | :------------------------------------ | :---------------------------- | | Common equity Tier 1 capital to risk-weighted assets | 11.9% | 4.5% | N/A | | Tier 1 capital to risk-weighted assets | 11.9% | 6.0% | N/A | | Total capital to risk-weighted assets | 13.0% | 8.0% | N/A | | Tier 1 capital to average assets | 9.8% | 4.0% | N/A | HarborOne Bank Regulatory Capital Ratios | Capital Ratio (HarborOne Bank) | Actual Ratio (March 31, 2025) | Minimum Required for Capital Adequacy | Minimum for 'Well Capitalized' | | :--------------------------------------- | :---------------------------- | :------------------------------------ | :---------------------------- | | Common equity Tier 1 capital to risk-weighted assets | 11.1% | 4.5% | 6.5% | | Tier 1 capital to risk-weighted assets | 11.1% | 6.0% | 8.0% | | Total capital to risk-weighted assets | 12.2% | 8.0% | 10.0% | | Tier 1 capital to average assets | 9.2% | 4.0% | 5.0% | - Both the Company and the Bank exceeded the minimum capital requirements, including the currently applicable capital conservation buffer of **2.5%**, at **March 31, 2025**[109](index=109&type=chunk) [Note 13. Comprehensive (Loss) Income](index=41&type=section&id=Note%2013.%20Comprehensive%20(Loss)%20Income) Accumulated other comprehensive (loss) income improved significantly for the three months ended March 31, 2025, primarily due to a substantial increase in available-for-sale securities, partially offset by a net loss in cash flow hedges Accumulated Other Comprehensive Income Components | Component of OCI | Balance at Dec 31, 2024 (in thousands) | Net Current-Period OCI (3 months ended Mar 31, 2025, net of tax) | Balance at Mar 31, 2025 (in thousands) | | :----------------------------------- | :------------------------------------- | :------------------------------------------------------------- | :------------------------------------ | | Postretirement Benefit | $(46) | $0 | $(46) | | Available-for-Sale Securities | $(50,620) | $4,939 | $(45,681) | | Cash Flow Hedge | $771 | $(708) | $63 | | Total Accumulated Other Comprehensive (Loss) Income | $(49,895) | $4,231 | $(45,664) | [Note 14. Fair Value of Assets and Liabilities](index=41&type=section&id=Note%2014.%20Fair%20Value%20of%20Assets%20and%20Liabilities) The Company measures various assets and liabilities at fair value on a recurring basis, primarily using Level 2 inputs for securities, loans held for sale, MSRs, and most derivatives. Collateral-dependent impaired loans are measured on a non-recurring basis using Level 3 inputs. Total assets measured at fair value on a recurring basis decreased from December 31, 2024, to March 31, 2025 - Fair value measurements are categorized into Level 1 (quoted prices in active markets), Level 2 (significant observable inputs), and Level 3 (significant unobservable inputs)[117](index=117&type=chunk) Recurring Fair Value Measurements | Asset/Liability Measured at Fair Value (Recurring) | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------------------------- | :----------------------------- | :------------------------------- | | Securities available for sale | $265,644 | $263,904 | | Loans held for sale | $19,304 | $36,768 | | Mortgage servicing rights | $42,620 | $44,500 | | Derivatives (Assets) | $20,070 | $24,929 | | Derivatives (Liabilities) | $19,422 | $23,546 | | Total Assets Measured at Fair Value (Recurring) | $347,638 | $370,101 | - Collateral-dependent individually analyzed loans are measured at fair value on a non-recurring basis, primarily using Level 3 inputs based on appraisals of underlying collateral, adjusted for estimated liquidation expenses[120](index=120&type=chunk)[137](index=137&type=chunk) [Note 15. Earnings Per Share](index=49&type=section&id=Note%2015.%20Earnings%20Per%20Share) Basic and diluted Earnings Per Share (EPS) decreased for the three months ended March 31, 2025, compared to the prior year, reflecting lower net income and a decrease in weighted average shares outstanding EPS Calculation | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--------------------------------------------------- | :-------------------------------- | :-------------------------------- | | Net income available to common stockholders (in thousands) | $5,500 | $7,300 | | Weighted average number of common shares outstanding (Basic) | 40,344,922 | 41,912,421 | | Weighted average number of common shares outstanding (Diluted) | 40,605,799 | 42,127,037 | | Basic EPS | $0.14 | $0.17 | | Diluted EPS | $0.14 | $0.17 | [Note 16. Revenue Recognition](index=49&type=section&id=Note%2016.%20Revenue%20Recognition) The Company recognizes revenue from contracts with customers based on the consideration specified in the contract, satisfying performance obligations either at a point in time or over time. Transactional revenues, such as card interchange fees, ATM fees, and loan fees, are recognized immediately upon transaction or service completion - Revenue from contracts with customers is measured based on consideration specified in the contract and excludes amounts collected on behalf of third parties[142](index=142&type=chunk) - Performance obligations are generally satisfied as services are rendered, either at a point in time (e.g., card interchange fees, ATM fees, wire transfer fees, overdraft fees, loan fees) or over time[143](index=143&type=chunk)[145](index=145&type=chunk) [Note 17. Segment Reporting](index=51&type=section&id=Note%2017.%20Segment%20Reporting) The Company operates in two reportable segments: HarborOne Bank and HarborOne Mortgage. HarborOne Bank's net income decreased, while HarborOne Mortgage recorded a net loss for the three months ended March 31, 2025, compared to the prior year, reflecting differing operational dynamics - The Company's reportable segments are HarborOne Bank and HarborOne Mortgage, distinguished by products and services offered[147](index=147&type=chunk) Segment Performance (Net Income/Loss) | Segment Performance (Net Income/Loss, in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (in thousands) | % Change | | :-------------------------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------- | :------- | | HarborOne Bank | $6,234 | $7,163 | $(929) | -12.97% | | HarborOne Mortgage | $(491) | $223 | $(714) | -320.18% | | Consolidated Net Income | $5,500 | $7,300 | $(1,800) | -24.66% | - HarborOne Bank's revenue primarily comes from interest on loans and investment securities and deposit account service charges, while HarborOne Mortgage's revenue is from interest on loans and fees from residential mortgage origination, sale, and servicing[147](index=147&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=53&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition at March 31, 2025, and results of operations for the three months ended March 31, 2025 and 2024, including discussions on critical accounting policies, recent events (the merger), asset quality, market risk management, liquidity, and capital resources [Forward-Looking Statements](index=53&type=section&id=Forward-Looking%20Statements) This section contains cautionary statements regarding forward-looking information, highlighting that actual results may differ materially due to various factors including economic conditions, interest rate changes, market turbulence, and risks associated with the pending merger - Forward-looking statements are subject to significant risks and uncertainties, including changes in economic conditions, customer behavior, interest rates, loan default rates, and the impact of the pending merger[153](index=153&type=chunk) - Factors that could cause actual results to differ include failure to complete the Merger, unexpected delays, inability to satisfy closing conditions, and regulatory approvals imposing adverse conditions[153](index=153&type=chunk) [Critical Accounting Policies and Estimates](index=55&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Management identifies Allowance for Credit Losses, Goodwill, and Deferred Tax Assets as the most critical accounting policies, requiring significant judgment and estimates that are susceptible to material changes based on evolving facts and circumstances - The Company's most critical accounting policies are related to Allowance for Credit Losses, Goodwill, and Deferred Tax Assets[161](index=161&type=chunk) - Estimates associated with these policies are susceptible to material changes due to factors such as changes in interest rates, economic performance, and borrower financial condition[156](index=156&type=chunk) [Recent Events](index=55&type=section&id=Recent%20Events) The Company announced a merger agreement with Eastern Bankshares, Inc. on April 24, 2025, where Eastern will acquire HarborOne. Shareholders will receive a mix of stock and cash, with the merger expected to close in the fourth quarter of 2025, subject to regulatory and shareholder approvals - On **April 24, 2025**, HarborOne Bancorp, Inc. entered into a Merger Agreement with Eastern Bankshares, Inc. and Eastern Bank[158](index=158&type=chunk) - Shareholders will receive either **0.765 shares** of Eastern common stock or **$12.00** in cash per share, subject to allocation procedures[158](index=158&type=chunk) - The merger is anticipated to close during the **fourth quarter of 2025**, contingent on regulatory and shareholder approvals[159](index=159&type=chunk) [Comparison of Financial Condition at March 31, 2025 and December 31, 2024](index=55&type=section&id=Comparison%20of%20Financial%20Condition%20at%20March%2031,%202025%20and%20December%2031,%202024) Total assets decreased by 0.9% to $5.70 billion, primarily driven by decreases in loans and loans held for sale. Deposits increased by 1.5%, while borrowings significantly decreased by 22.6%. Stockholders' equity saw a slight increase, and the tangible common equity to tangible assets ratio improved Financial Condition Comparison | Metric | March 31, 2025 (in millions) | December 31, 2024 (in millions) | Change (in millions) | % Change | | :-------------------------------- | :----------------------------- | :------------------------------- | :------------------- | :------- | | Total Assets | $5,700.3 | $5,753.1 | $(52.8) | -0.9% | | Loans Held for Sale | $19.3 | $36.8 | $(17.5) | -47.5% | | Net Loans | $4,771.7 | $4,796.4 | $(24.7) | -0.5% | | Investment Securities Available for Sale | $265.6 | $263.9 | $1.7 | 0.7% | | Mortgage Servicing Rights | $42.6 | $44.5 | $(1.9) | -4.3% | | Total Deposits | $4,618.7 | $4,550.8 | $67.9 | 1.5% | | Borrowings | $399.5 | $516.6 | $(117.1) | -22.7% | | Total Stockholders' Equity | $576.0 | $575.0 | $1.0 | 0.2% | | Tangible Common Equity to Tangible Assets Ratio | 9.15% | 9.05% | 0.10% | 1.1% | - Commercial real estate and construction loans decreased by **$44.5 million**, while commercial and industrial loans increased by **$33.0 million**[165](index=165&type=chunk) - Total deposits increased by **$68.0 million**, driven by a **$120.1 million** increase in consumer and business deposits, partially offset by decreases in municipal and brokered deposits[172](index=172&type=chunk) [Comparison of Results of Operations for the Three Months Ended March 31, 2025 and 2024](index=59&type=section&id=Comparison%20of%20Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031,%202025%20and%202024) Consolidated net income decreased by 24.7% to $5.5 million. Net interest and dividend income on a tax equivalent basis increased by 3.6% to $31.9 million, driven by rate decreases on interest-bearing liabilities outpacing the decrease in asset yields. The net interest margin improved by 14 basis points to 2.39% Results of Operations Comparison | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | % Change | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :------- | | Consolidated Net Income | $5,500 | $7,300 | $(1,800) | -24.7% | | Tax Equivalent Net Interest and Dividend Income | $31,930 | $30,831 | $1,099 | 3.6% | | Net Interest Margin (Fully Tax Equivalent) | 2.39% | 2.25% | 0.14% | 6.2% | | Interest and Dividend Income (Tax Equivalent) | $64,900 | $67,153 | $(2,253) | -3.4% | | Interest Expense | $32,970 | $36,322 | $(3,352) | -9.2% | | Income Tax Provision | $1,625 | $2,441 | $(816) | -33.4% | | Effective Tax Rate | 22.8% | 25.1% | -2.3% | -9.2% | - Interest expense on borrowings decreased by **$4.1 million** (**43.5%**) due to a decrease in average balance and a **58-basis-point** decrease in cost[188](index=188&type=chunk) - Interest expense on deposits increased by **$744,000**, reflecting a **$168.6 million** increase in average balance of interest-bearing deposits, despite a **3-basis-point** decrease in cost[188](index=188&type=chunk) [Segments](index=63&type=section&id=Segments) HarborOne Bank's net income decreased by 13.0% to $6.2 million, primarily due to increased provision for credit losses and noninterest expense. HarborOne Mortgage recorded a net loss of $491,000, a significant decline from a net income of $223,000 in the prior year, largely impacted by a negative change in MSR fair value Segment Performance (Net Income/Loss) | Segment | Net Income (Loss) (in thousands) - Q1 2025 | Net Income (Loss) (in thousands) - Q1 2024 | Change (in thousands) | % Change | | :----------------- | :--------------------------------------- | :--------------------------------------- | :-------------------- | :------- | | HarborOne Bank | $6,234 | $7,163 | $(929) | -13.0% | | HarborOne Mortgage | $(491) | $223 | $(714) | -320.2% | - HarborOne Bank's noninterest income increased by **$89,000**, driven by a **$135,000** increase in interchange fees due to accrued annual VISA incentives[197](index=197&type=chunk) - HarborOne Mortgage's total noninterest income decreased by **$886,000**, primarily due to a **$1.3 million** negative change in mortgage servicing rights fair value, partially offset by a **$703,000** increase in gain on sale of mortgage loans[203](index=203&type=chunk) - HarborOne Mortgage's loan production increased to **$114.1 million** in **Q1 2025** from **$102.1 million** in **Q1 2024**, with purchase loans representing **84.9%** of total production[204](index=204&type=chunk)[205](index=205&type=chunk) [Asset Quality](index=69&type=section&id=Asset%20Quality) Credit quality remained strong, with total nonperforming assets increasing slightly to $30.9 million, representing 0.54% of total assets. The Allowance for Credit Losses (ACL) on loans decreased to $49.3 million, or 1.02% of total loans, primarily due to a specific reserve allocation and subsequent charge-off of a commercial real estate loan Asset Quality Metrics | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Total non-accrual loans | $30,902 | $29,463 | $1,439 | 4.88% | | Total nonperforming assets | $30,908 | $29,473 | $1,435 | 4.87% | | Allowance for credit losses on loans | $49,323 | $56,101 | $(6,778) | -12.08% | | ACL to total loans | 1.02% | 1.16% | -0.14% | -12.07% | | Total nonperforming assets to total assets | 0.54% | 0.51% | 0.03% | 5.88% | | Net charge-offs (3 months ended March 31, 2025) | $8,669 | N/A | N/A | N/A | | Annualized net charge-off rate (3 months ended March 31, 2025) | 0.72% | N/A | N/A | N/A | - A **$3.6 million** specific reserve allocation was recorded for a classified commercial real estate loan, which, combined with an existing **$4.7 million** reserve, resulted in an **$8.3 million** charge-off in **Q1 2025**[213](index=213&type=chunk)[226](index=226&type=chunk) - The commercial real estate and construction portfolio composition shows **Flex/Industrial (22.6%)**, **Multifamily (18.5%)**, and **Hotels (12.5%)** as the largest segments, with the office sector having a significant doubtful nonaccrual loan[216](index=216&type=chunk) [Management of Market Risk](index=74&type=section&id=Management%20of%20Market%20Risk) The Company's primary market risk is interest-rate risk, managed through an Asset/Liability Committee using income simulation and Economic Value of Equity (EVE) analysis. As of March 31, 2025, the income simulation projected a decrease in net interest income for rising rates and an increase for falling rates over two years, while EVE showed sensitivity to both upward and downward rate shifts - The Company's primary market risk is interest-rate risk, managed through an Asset/Liability Committee (ALCO) using income simulation and Economic Value of Equity (EVE) analysis[227](index=227&type=chunk)[228](index=228&type=chunk)[231](index=231&type=chunk) Net Interest Income Sensitivity Analysis | Changes in Interest Rates (basis points) | Change in Net Interest Income (% change from year one base) - March 31, 2025 (Year One) | | :--------------------------------------- | :------------------------------------------------------------------------------------ | | +300 | (11.5)% | | +200 | (7.6)% | | +100 | (3.7)% | | -100 | 2.9% | | -200 | 4.2% | | -300 | 5.2% | | -400 | 6.0% | Economic Value of Equity (EVE) Sensitivity Analysis | Changes in Interest Rates (basis points) | Estimated Increase (Decrease) in EVE (March 31, 2025, in thousands) | Percent Change in EVE | | :--------------------------------------- | :---------------------------------------------------------------- | :-------------------- | | +400 | $(224,775) | (36.3)% | | +300 | $(156,742) | (25.3)% | | +200 | $(96,632) | (15.6)% | | +100 | $(39,651) | (6.4)% | | -100 | $24,492 | 4.0% | | -200 | $(10,621) | (1.7)% | | -300 | $(60,940) | (9.9)% | | -400 | $(136,055) | (22.0)% | [Liquidity Management and Capital Resources](index=77&type=section&id=Liquidity%20Management%20and%20Capital%20Resources) The Company maintains a strong liquidity position with $230.5 million in cash and cash equivalents, supplemented by significant borrowing capacity from the FHLB ($762.0 million) and FRBB ($629.4 million). Core deposits are a stable funding source, and the Company believes it can meet contractual obligations, with both the Company and the Bank being 'well capitalized' - The Company had **$230.5 million** in cash and cash equivalents at **March 31, 2025**[238](index=238&type=chunk) - Available borrowing capacity included **$762.0 million** from the FHLB and **$629.4 million** from the FRBB, secured by pledged loans and securities[238](index=238&type=chunk) - Core deposits are defined as deposits other than certificates of deposits and historically provide a long-term, stable, and relatively lower-cost source of funding[239](index=239&type=chunk) - Both the Company and the Bank exceeded all regulatory capital requirements and were considered **'well capitalized'** at **March 31, 2025**[242](index=242&type=chunk) [Non-GAAP Financial Measures and Reconciliation to GAAP](index=79&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliation%20to%20GAAP) This section provides a reconciliation of the non-GAAP tangible-common-equity-to-tangible-assets ratio, which is used by regulators and market analysts to evaluate financial condition. The ratio improved to 9.15% at March 31, 2025, from 8.92% at March 31, 2024 - The tangible-common-equity-to-tangible-assets ratio is a non-GAAP financial measure utilized by regulators and market analysts[246](index=246&type=chunk) Tangible Common Equity Reconciliation | Metric | March 31, 2025 (in thousands) | March 31, 2024 (in thousands) | | :--------------------------------------- | :----------------------------- | :----------------------------- | | Total stockholders' equity | $575,967 | $577,683 | | Less: Goodwill | $59,042 | $59,042 | | Less: Other intangible assets | $568 | $1,326 | | Tangible common equity | $516,357 | $517,315 | | Total assets | $5,700,330 | $5,862,222 | | Less: Goodwill | $59,042 | $59,042 | | Less: Other intangible assets | $568 | $1,326 | | Tangible assets | $5,640,720 | $5,801,854 | | Tangible common equity / tangible assets | 9.15% | 8.92% | [ITEM 3. Quantitative and Qualitative Disclosures about Market Risk](index=58&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This item refers to the 'Management of Market Risk' section within Item 2, which details the Company's exposure to interest-rate risk and its management strategies, including income simulation and economic value of equity analysis - The information required by this Item is included in Part I, Item 2 of this Quarterly Report on Form 10-Q under the heading 'Management of Market Risk'[250](index=250&type=chunk) [ITEM 4. Controls and Procedures](index=58&type=section&id=ITEM%204.%20Controls%20and%20Procedures) The Company's management, including the principal executive and financial officers, concluded that disclosure controls and procedures were effective as of March 31, 2025. There were no material changes to internal control over financial reporting during the quarter - The Company's disclosure controls and procedures were evaluated and deemed effective as of **March 31, 2025**, ensuring timely and accurate reporting[250](index=250&type=chunk) - No material changes occurred in the Company's internal controls over financial reporting during the quarter ended **March 31, 2025**[251](index=251&type=chunk) PART II. OTHER INFORMATION [ITEM 1. Legal Proceedings](index=59&type=section&id=ITEM%201.%20Legal%20Proceedings) The Company is not involved in any material pending legal proceedings beyond routine matters in the ordinary course of business, and no outcomes are expected to materially affect its financial condition or results of operations - The Company is not involved in any material pending legal proceedings as a plaintiff or defendant, other than routine legal proceedings occurring in the ordinary course of business[254](index=254&type=chunk) - No legal proceedings are expected to materially impact the Company's financial condition or results of operations[254](index=254&type=chunk) [ITEM 1A. Risk Factors](index=59&type=section&id=ITEM%201A.%20Risk%20Factors) This section updates and supplements risk factors, primarily focusing on those related to the pending merger with Eastern Bankshares, Inc. Key risks include business disruptions, management distraction, restrictions on business conduct, uncertainty of stock consideration value, and potential failure to complete the merger or realize anticipated benefits - The pendency of the Merger could adversely affect the Company's business, results of operations, and financial condition by causing disruptions, creating uncertainty, and impacting relationships with customers, suppliers, and employees[256](index=256&type=chunk) - Restrictions on business conduct prior to the Merger's consummation, as stipulated in the Merger Agreement, may hinder the Company's ability to respond to competitive pressures or pursue new opportunities[257](index=257&type=chunk) - Shareholders cannot be certain of the market value of the Stock Consideration due to potential fluctuations in Eastern common stock price, and failure to complete the Merger could negatively impact the Company's stock price and future financial results[258](index=258&type=chunk)[262](index=262&type=chunk) - The Merger is subject to governmental and shareholder approvals, which may cause delays or impose conditions, and Eastern may face difficulties in successfully integrating the Company's operations, potentially failing to realize expected benefits and cost savings[260](index=260&type=chunk)[261](index=261&type=chunk)[265](index=265&type=chunk)[268](index=268&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=62&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company repurchased 513,855 shares of its common stock for $5.9 million during the first quarter of 2025 under a previously announced program. However, the share repurchase program was suspended on April 24, 2025, following the entry into the Merger Agreement Share Repurchase Activity | Period | Total number of shares purchased | Average price paid per share | | :-------------------------- | :----------------------------- | :--------------------------- | | January 1 to January 31, 2025 | 162,130 | $11.97 | | February 1 to February 28, 2025 | 165,500 | $11.88 | | March 1 to March 31, 2025 | 186,225 | $10.92 | | Total (Q1 2025) | 513,855 | $11.56 | - The Company suspended its share repurchase program on **April 24, 2025**, after entering into the Merger Agreement[272](index=272&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=62&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) The Company reported no defaults upon senior securities during the period - There were no defaults upon senior securities[273](index=273&type=chunk) [ITEM 4. Mine Safety Disclosures](index=62&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - Mine Safety Disclosures are not applicable to the Company[274](index=274&type=chunk) [ITEM 5. Other Information](index=62&type=section&id=ITEM%205.%20Other%20Information) This section confirms no unregistered sales of equity securities, no use of proceeds from such sales, and no directors or executive officers had Rule 10b5-1 trading arrangements during the quarter ended March 31, 2025 - No unregistered sales of equity securities occurred during the quarter[276](index=276&type=chunk) - No directors or executive officers had Rule 10b5-1 trading arrangements during the quarter ended **March 31, 2025**[275](index=275&type=chunk) [ITEM 6. Exhibits](index=63&type=section&id=ITEM%206.%20Exhibits) This item lists the exhibits included in or incorporated by reference into the Quarterly Report on Form 10-Q, including the Merger Agreement, CEO and CFO certifications, and interactive data files - Exhibits include the Agreement and Plan of Merger (Exhibit 2.1), CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1), and Interactive Data Files (Exhibit 101, 104)[279](index=279&type=chunk)

Financial Performance - HarborOne's Q1 2025 net income was $55 million, with diluted earnings per share of $014[7] - The net interest margin was 239%, up 3 basis points quarter-over-quarter[7] - Client deposits increased by $796 million, or 19%, quarter-over-quarter[7] - The company repurchased 513,855 shares, totaling $59 million in Q1 2025[7] Balance Sheet & Loan Portfolio - Total assets were $57 billion[6] - Total loans amounted to $48 billion[6] - Total deposits reached $46 billion[6] - Commercial & Industrial loans grew $330 million, or 56%, quarter-over-quarter[25] Asset Quality - Non-Performing Assets (NPA) to Assets ratio was 054%[27] - A charge-off of $83 million was taken on one credit in the office category during Q1 25[47] Merger with Eastern Bank - The merger is expected to result in approximately 16% EPS accretion[89, 108] - The deal value is approximately $490 million[106] - Cost savings are projected to be around $55 million, representing about 40% of HarborOne's operating non-interest expenses[106, 118]

Company Performance - HarborOne Bancorp reported quarterly earnings of $0.14 per share, missing the Zacks Consensus Estimate of $0.17 per share, and down from $0.17 per share a year ago, representing an earnings surprise of -17.65% [1] - The company posted revenues of $41.36 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 5.88%, and slightly up from year-ago revenues of $41.32 million [2] - Over the last four quarters, HarborOne Bancorp has surpassed consensus EPS estimates two times and topped consensus revenue estimates two times [2] Stock Performance - HarborOne Bancorp shares have declined approximately 15.9% since the beginning of the year, compared to the S&P 500's decline of -8.6% [3] - The current consensus EPS estimate for the coming quarter is $0.20 on $44.9 million in revenues, and $0.83 on $181.29 million in revenues for the current fiscal year [7] Industry Outlook - The Zacks Industry Rank for Banks - Northeast is currently in the top 22% of over 250 Zacks industries, indicating a favorable outlook for the industry [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that industry performance can materially impact individual stock performance [5][8]

[Executive Summary & Financial Highlights](index=1&type=section&id=1.%20Executive%20Summary%20%26%20Financial%20Highlights) HarborOne Bancorp reported a significant Q1 2025 net income decrease, despite strong commercial loan growth and improved deposit costs [Overall Performance](index=1&type=section&id=1.1%20Overall%20Performance) HarborOne Bancorp reported Q1 2025 net income of $5.5 million ($0.14 diluted EPS), a 38.1% decrease from Q4 2024's $8.9 million Net Income and Diluted EPS Overview | Metric | Q1 2025 | Q4 2024 | Change (QoQ) | Change (%) | | :------------------- | :------ | :------ | :----------- | :--------- | | Net Income | $5.5M | $8.9M | -$3.4M | -38.1% | | Diluted EPS | $0.14 | $0.21 | -$0.07 | -33.3% | [Key Financial Highlights](index=1&type=section&id=1.2%20Key%20Financial%20Highlights) The company achieved strong commercial and industrial loan growth, reduced commercial real estate balances, lowered loan delinquencies, and improved deposit costs and residential mortgage closings - Commercial and industrial loan growth: **$33 million**[2](index=2&type=chunk) - Cost of deposits (excluding brokered deposits) decreased by **15 basis points**[2](index=2&type=chunk) - Residential mortgage loan closings increased **11.8% year-over-year**[2](index=2&type=chunk) [Detailed Financial Performance](index=1&type=section&id=2.%20Detailed%20Financial%20Performance) This section analyzes net interest income, noninterest income, and noninterest expense, detailing factors influencing each component's performance [Net Interest Income](index=1&type=section&id=2.1%20Net%20Interest%20Income) Net interest and dividend income slightly declined to $31.5 million, but net interest margin improved by 3 basis points to 2.39%, driven by lower borrowing costs and average borrowings Net Interest Income and Margin Trend | Metric | Q1 2025 (USD) | Q4 2024 (USD) | Change (QoQ) (USD) | | :-------------------------- | :------ | :------ | :----------- | | Net Interest & Dividend Income | $31.5M | $31.8M | -$0.358M | | Net Interest Margin | 2.39% | 2.36% | +3 bps | - Borrowing costs improved **6 basis points**, and average borrowings declined **$20.0 million**[3](index=3&type=chunk) [Noninterest Income](index=1&type=section&id=2.2%20Noninterest%20Income) Total noninterest income decreased by $3.8 million (27.7%) to $9.9 million, primarily due to a $2.9 million decline in mortgage banking income from lower loan sales gains and MSR valuation Noninterest Income Components | Metric | Q1 2025 (USD) | Q4 2024 (USD) | Change (QoQ) (USD) | Change (%) | | :------------------- | :------ | :------ | :----------- | :--------- | | Total Noninterest Income | $9.9M | $13.7M | -$3.8M | -27.7% | | Mortgage Banking Income | $3.452M | $6.364M | -$2.912M | -45.8% | - HarborOne Mortgage realized a **$2.7 million** gain on loan sales from mortgage closings of **$114.1 million** in Q1 2025, down from **$4.0 million** from **$179.1 million** in Q4 2024[5](index=5&type=chunk) - The mortgage servicing rights (MSR) valuation decreased **$1.2 million** compared to an increase of **$2.3 million** for Q4 2024, with a Q1 MSR valuation loss of **$1.1 million** offset by a **$561,000** economic hedging gain[5](index=5&type=chunk) [Noninterest Expense](index=2&type=section&id=2.3%20Noninterest%20Expense) Total noninterest expense remained flat at $32.9 million, with variances driven by decreased deposit account fees and seasonal increases in occupancy and equipment expense Total Noninterest Expense Trend | Metric | Q1 2025 (USD) | Q4 2024 (USD) | Change (QoQ) (USD) | | :------------------ | :------ | :------ | :----------- | | Total Noninterest Expense | $32.9M | $32.9M | Flat | - Deposit account fees decreased **$871,000**, primarily due to a **$493,000** decrease in debit card interchange fees from a Q4 annual VISA volume incentive catch-up adjustment and a **$181,000** seasonal decrease[5](index=5&type=chunk) - Occupancy and equipment expense increased **$150,000** primarily due to seasonal increases for snow removal and heating costs[5](index=5&type=chunk) [Balance Sheet Overview](index=2&type=section&id=3.%20Balance%20Sheet%20Overview) This section provides an overview of the company's assets, liabilities, and stockholders' equity, detailing key changes and their drivers [Assets](index=2&type=section&id=3.1%20Assets) Total assets decreased by $52.8 million (0.9%) to $5.70 billion, primarily due to a $31.5 million decline in total loans, despite commercial and industrial loan growth Asset Composition and Changes | Metric | March 31, 2025 (USD) | December 31, 2024 (USD) | Change (QoQ) (USD) | Change (%) | | :------------------------------------ | :------------------- | :---------------------- | :----------------- | :--------- | | Total Assets | $5.70B | $5.75B | -$52.8M | -0.9% | | Total Loans | $4.82B | $4.85B | -$31.5M | -0.7% | | Commercial Real Estate & Construction Loans | | | -$44.5M | | | Commercial & Industrial Loans | | | +$33.0M | | - Available-for-sale securities increased **$1.7 million** to **$265.6 million**, and the unrealized loss on these securities decreased to **$58.8 million** from **$65.2 million**[5](index=5&type=chunk) [Liabilities](index=2&type=section&id=3.2%20Liabilities) Total deposits increased by $68.0 million to $4.62 billion, driven by non-certificate accounts, while brokered deposits decreased and borrowed funds significantly declined by $117.0 million Liabilities Composition and Changes | Metric | March 31, 2025 (USD) | December 31, 2024 (USD) | Change (QoQ) (USD) | | :------------------------------------ | :------------------- | :---------------------- | :----------------- | | Total Deposits | $4.62B | $4.55B | +$68.0M | | Non-certificate Accounts | | | +$73.2M | | Brokered Deposits | | | -$11.6M | | Borrowed Funds | $399.5M | $516.6M | -$117.0M | - As of March 31, 2025, FDIC-insured deposits were approximately **74%** of total deposits[5](index=5&type=chunk) - The Bank had **$1.42 billion** in available borrowing capacity across multiple relationships[10](index=10&type=chunk) [Stockholders' Equity](index=3&type=section&id=3.3%20Stockholders'%20Equity) Total stockholders' equity increased modestly by 0.2% to $576.0 million, supported by net income and fair value changes, with tangible common equity to tangible assets ratio improving to 9.15% Stockholders' Equity and Per Share Metrics | Metric | March 31, 2025 (Value) | December 31, 2024 (Value) | Change (QoQ) (Value) | Change (%) | | :-------------------------------- | :------------- | :---------------- | :----------- | :--------- | | Total Stockholders' Equity | $576.0M | $575.0M | +$1.0M | +0.2% | | Tangible Common Equity to Tangible Assets Ratio | 9.15% | 9.05% | +10 bps | | | Book Value Per Share | $13.27 | $13.15 | +$0.12 | | | Tangible Book Value Per Share | $11.90 | $11.78 | +$0.12 | | [Asset Quality and Allowance for Credit Losses](index=3&type=section&id=4.%20Asset%20Quality%20and%20Allowance%20for%20Credit%20Losses) The Company recorded a $1.4 million provision for credit losses in Q1 2025, resulting in $8.7 million in net charge-offs, with ACL on loans decreasing to $49.3 million (1.02% of total loans) and nonperforming assets increasing to $30.9 million (0.54% of total assets) Asset Quality Metrics | Metric | Q1 2025 (Value) | Q4 2024 (Value) | Change (QoQ) (Value) | | :------------------------------------ | :------ | :------ | :----------- | | Provision for Credit Losses | $1.4M | $1.9M | -$0.5M | | Net Charge-offs | $8.7M | $0.058M | +$8.642M | | Net Charge-offs (% of avg. loans) | 0.72% | 0.00% | +0.72% | | ACL on Loans | $49.3M | $56.1M | -$6.8M | | ACL on Loans (% of total loans) | 1.02% | 1.16% | -14 bps | | Total Nonperforming Assets | $30.9M | $29.5M | +$1.4M | | Total Nonperforming Assets (% of total assets) | 0.54% | 0.51% | +3 bps | - Total criticized and classified commercial loans increased to **$187.1 million** from **$178.6 million**, reflecting the addition of three new credits in the special mention category due to pressure on commercial real estate values[8](index=8&type=chunk) - Non-performing commercial real estate loans decreased **$7.8 million** due to the charge-off, while non-performing commercial and industrial loans increased **$8.3 million**, primarily from a single healthcare credit[8](index=8&type=chunk) [Company Information](index=3&type=section&id=5.%20Company%20Information) HarborOne Bancorp, Inc. is the holding company for HarborOne Bank, a Massachusetts-chartered trust company, providing comprehensive financial services across Eastern Massachusetts and Rhode Island through 30 banking centers and its mortgage subsidiary - HarborOne Bancorp, Inc. is the holding company for HarborOne Bank, a Massachusetts-chartered trust company[9](index=9&type=chunk) - Serves Eastern Massachusetts and Rhode Island through **30 full-service banking centers** and commercial lending offices[9](index=9&type=chunk) - Provides educational resources via "HarborOne U" and mortgage lending services through HarborOne Mortgage, LLC[9](index=9&type=chunk) [Legal & Non-GAAP Disclosures](index=4&type=section&id=6.%20Legal%20%26%20Non-GAAP%20Disclosures) This section outlines the company's forward-looking statement disclaimer and explains the use and limitations of non-GAAP financial measures in its reporting [Forward-Looking Statements](index=4&type=section&id=6.1%20Forward-Looking%20Statements) This section contains a standard disclaimer regarding forward-looking statements, emphasizing that actual results may differ materially from expectations due to various risks and uncertainties, with no obligation to update - Statements are based on current beliefs and expectations, subject to significant risks and uncertainties[11](index=11&type=chunk) - Factors causing differences include changes in general business and economic conditions, interest rates, customer behavior, market turbulence, loan default rates, real estate values, cybersecurity incidents, and regulatory changes[11](index=11&type=chunk) - The Company disclaims any obligation to publicly update or revise any forward-looking statements, except as required by law[11](index=11&type=chunk) [Use of Non-GAAP Measures](index=4&type=section&id=6.2%20Use%20of%20Non-GAAP%20Measures) The report utilizes non-GAAP financial measures like "core net income" and "tangible common equity" for performance evaluation by management and analysts, but these are not substitutes for GAAP results - Non-GAAP measures like "core net income," "core earnings per common share," and "tangible common equity" are used by management, regulators, and market analysts[12](index=12&type=chunk) - Core net income and other core measures exclude items management does not consider indicative of ongoing financial performance, such as gain or loss on asset sales and release of uncertain tax position reserves[14](index=14&type=chunk) - These disclosures should not be viewed as a substitute for GAAP results and may not be comparable to non-GAAP measures presented by other companies[15](index=15&type=chunk) [Financial Tables](index=6&type=section&id=7.%20Financial%20Tables) This section provides a comprehensive collection of detailed financial tables, including selected highlights, balance sheet trends, income statements, asset quality, average balances, and segment-specific data [Selected Financial Highlights](index=6&type=section&id=7.1%20Selected%20Financial%20Highlights) This table provides a comprehensive overview of key financial metrics for HarborOne Bancorp across five quarters, covering earnings, per-share data, profitability, balance sheet, asset quality, and capital adequacy Selected Financial Highlights Overview | Metric | March 31, 2025 (Value) | | :------------------------------------ | :------------- | | Net interest and dividend income | $31,469 | | Noninterest income | $9,891 | | Net income (loss) | $5,500 | | Earnings per share, diluted | $0.14 | | Return on average assets | 0.39 % | | Net interest margin on a fully tax equivalent basis | 2.39 % | | Total assets | $5,700,330 | | Total loans | $4,821,033 | | Total deposits | $4,618,721 | | Nonperforming assets | $30,908 | | Tangible common equity / tangible assets | 9.15 % | [Consolidated Balance Sheet Trend](index=7&type=section&id=7.2%20Consolidated%20Balance%20Sheet%20Trend) This table presents a detailed trend of the consolidated balance sheet, showing assets, liabilities, and stockholders' equity over five quarters, highlighting changes in loan categories, deposit types, and capital components Consolidated Balance Sheet Trend Data | Item | March 31, 2025 (in thousands USD) | December 31, 2024 (in thousands USD) | | :------------------------------------ | :---------------------------- | :----------------------------- | | Total assets | $5,700,330 | $5,753,133 | | Total loans | $4,821,033 | $4,852,499 | | Total deposits | $4,618,721 | $4,550,753 | | Borrowings | $399,547 | $516,555 | | Total stockholders' equity | $575,967 | $575,011 | [Consolidated Statements of Net Income - Trend](index=8&type=section&id=7.3%20Consolidated%20Statements%20of%20Net%20Income%20-%20Trend) This table details the consolidated statements of net income over five quarters, breaking down interest and dividend income, interest expense, noninterest income, noninterest expenses, net income, and earnings per share Consolidated Statements of Net Income Trend Data | Item | March 31, 2025 (in thousands USD) | December 31, 2024 (in thousands USD) | | :------------------------------------ | :---------------------------- | :----------------------------- | | Total interest and dividend income | $64,439 | $67,519 | | Total interest expense | $32,970 | $35,692 | | Net interest and dividend income | $31,469 | $31,827 | | Total noninterest income | $9,891 | $13,689 | | Total noninterest expenses | $32,850 | $32,873 | | Net income | $5,500 | $8,887 | | Diluted earnings per common share | $0.14 | $0.21 | [Asset Quality](index=9&type=section&id=7.4%20Asset%20Quality) This table provides a detailed breakdown of asset quality metrics, including non-performing assets, allowance for credit losses, net charge-offs, and delinquency rates across loan categories for five quarters Asset Quality Metrics Trend | Item | March 31, 2025 (Value) | December 31, 2024 (Value) | | :------------------------------------ | :------------- | :---------------- | | Total nonperforming assets | $30,908 | $29,473 | | Total nonperforming loans to total loans | 0.64 % | 0.61 % | | Allowance for credit losses on loans | $49,323 | $56,101 | | Net charge-offs | $(8,669) | $(58) | | Annualized net charge-offs/average loans | 0.72 % | 0.00 % | | Total delinquent loans | $29,821 | $37,427 | [Average Balances and Yield Trend](index=10&type=section&id=7.5%20Average%20Balances%20and%20Yield%20Trend) This table presents average balances, interest income/expense, and corresponding yields/costs for interest-earning assets and interest-bearing liabilities, along with key profitability ratios like net interest margin Average Balances and Yield Trend Data | Item | March 31, 2025 (Value) | December 31, 2024 (Value) | | :------------------------------------ | :------------- | :---------------- | | Total interest-earning assets (Avg. Bal.) | $5,415,953 | $5,453,514 | | Total interest and dividend income | $64,900 | $67,977 | | Yield on total interest-earning assets | 4.86 % | 4.96 % | | Total interest-bearing liabilities (Avg. Bal.) | $4,343,777 | $4,365,402 | | Total interest expense | $32,970 | $35,692 | | Cost of total interest-bearing liabilities | 3.08 % | 3.25 % | | Net interest margin on a fully tax equivalent basis | 2.39 % | 2.36 % | | Cost of total deposits | 2.48 % | 2.62 % | [Segments Key Financial Data - HarborOne Bank](index=11&type=section&id=7.6%20Segments%20Key%20Financial%20Data%20-%20HarborOne%20Bank) This table provides key financial data for the HarborOne Bank segment, including net interest and dividend income, provision for credit losses, noninterest income and expenses, net income, and efficiency ratios over five quarters HarborOne Bank Segment Financial Data | Item | March 31, 2025 (in thousands USD) | December 31, 2024 (in thousands USD) | | :------------------------------------ | :---------------------------- | :----------------------------- | | Net interest and dividend income | $31,315 | $31,681 | | Provision (benefit) for credit losses | $1,385 | $1,927 | | Total noninterest income | $6,392 | $7,385 | | Total noninterest expenses | $28,185 | $27,400 | | Net income | $6,234 | $7,724 | | Tax equivalent efficiency ratio (non-GAAP) | 73.35 % | 68.84 % | [Segments Key Financial Data - HarborOne Mortgage](index=12&type=section&id=7.7%20Segments%20Key%20Financial%20Data%20-%20HarborOne%20Mortgage) This table details the financial performance of the HarborOne Mortgage segment, including net interest and dividend income, mortgage banking income, noninterest expenses, net income/loss, closed loan volume, and gain on sale margin for five quarters HarborOne Mortgage Segment Financial Data | Item | March 31, 2025 (in thousands USD) | December 31, 2024 (in thousands USD) | | :------------------------------------ | :---------------------------- | :----------------------------- | | Net interest and dividend income | $149 | $140 | | Total mortgage banking income | $3,628 | $6,163 | | Total noninterest expenses | $4,504 | $5,490 | | Net income (loss) | $(491) | $1,133 | | Closed loan volume | $114,136 | $179,077 | | Gain on sale margin | 2.38 % | 2.21 % | [Non-GAAP Reconciliation](index=13&type=section&id=7.8%20Non-GAAP%20Reconciliation) This section reconciles GAAP financial measures to non-GAAP counterparts like core net income and tangible common equity, providing adjusted views of financial performance and position by excluding specific items Non-GAAP Financial Measures Reconciliation | Item | March 31, 2025 (Value) | December 31, 2024 (Value) | | :------------------------------------ | :------------- | :---------------- | | Net income, as presented (GAAP) | $5,500 | $8,887 | | Core Net Income (non-GAAP) | $5,500 | $8,341 | | Diluted EPS (GAAP) | $0.14 | $0.21 | | Core Diluted EPS (non-GAAP) | $0.14 | $0.20 | | Efficiency ratio (non-GAAP) | 78.97 % | 71.81 % | | Tangible common equity (non-GAAP) | $516,357 | $515,212 | | Tangible book value per share (non-GAAP) | $11.90 | $11.78 | | Tangible common equity/tangible assets (non-GAAP) | 9.15 % | 9.05 % |

Financial Performance - Net interest and dividend income for 2024 was $125,652,000, a decrease of 1.3% from $127,271,000 in 2023[227] - Total revenue for 2024 was $172,569,000, slightly up from $169,125,000 in 2023, indicating a growth of 1.4%[227] - Noninterest income increased to $46,917,000 in 2024, up 12.4% from $41,854,000 in 2023[227] - Net income for 2024 was $27,407,000, representing a significant increase of 70.5% compared to $16,077,000 in 2023[227] - Earnings per share (diluted) rose to $0.66 in 2024, compared to $0.37 in 2023, marking an increase of 78.4%[227] Asset and Loan Growth - Total assets increased to $5,753,133,000 in 2024, up from $5,667,896,000 in 2023, reflecting a growth of 1.5%[227] - Total loans reached $4,852,499,000 in 2024, a slight increase from $4,750,311,000 in 2023, representing a growth of 2.2%[227] - Net loans reached $4.80 billion, an increase of $94.1 million, or 2.0%, from $4.70 billion at December 31, 2023[252] - Total loans reached $4,824,206 thousand, with commercial loans contributing $3,100,344 thousand and a yield of 5.60%[1] Credit Quality and Allowance for Credit Losses - The allowance for credit losses (ACL) was $56,101,000 in 2024, up from $47,972,000 in 2023, indicating a rise of 17.7%[227] - Non-performing loans to total loans ratio increased to 0.61% in 2024 from 0.37% in 2023, showing a deterioration in asset quality[227] - The provision for credit losses increased to $8.3 million in 2024 from $5.7 million in 2023[270] - The ACL on unfunded commitments is Management's estimate of expected credit losses over the expected contractual term[424] Deposits and Funding - Total deposits increased by $163.3 million, or 3.7%, to $4.55 billion as of December 31, 2024, compared to $4.39 billion in 2023[262] - Noninterest-bearing deposits rose by $30.7 million, or 4.6%, while regular savings accounts decreased by $370.1 million, or 29.2%[262] - Brokered deposits increased by $74.8 million, or 22.9%, to $401.5 million as of December 31, 2024[263] - Total borrowings from the FHLB decreased by $51.9 million to $516.6 million at December 31, 2024[268] Noninterest Income and Expenses - Total noninterest income increased by $1.2 million, or 4.4%, to $27.5 million for the year ended December 31, 2024, driven by gains in interchange fees and other deposit account fees[288] - Total noninterest expense increased by $2.1 million, or 1.9%, to $109.4 million for the year ended December 31, 2024, with significant increases in deposit expenses and deposit insurance[291] - Total noninterest expense decreased to $130,035 thousand in 2024 from $138,320 thousand in 2023, a reduction of approximately 6.5%[368] Tax and Regulatory Compliance - The effective tax rate for the year ended December 31, 2024, was 20.0%, down from 36.0% in 2023, influenced by a discrete tax benefit from amended tax returns[282] - The company exceeded all regulatory capital requirements and was considered "well capitalized" under regulatory guidelines as of December 31, 2024[335] Liquidity and Capital Management - The company's liquidity position includes cash and cash equivalents of $231.1 million, with additional borrowing capacity of $656.2 million from the FHLB and $630.1 million from the FRBB[332] - The company has access to immediate liquid resources and maintains a strong liquidity position, with a focus on managing cash flow and liquidity[331] Operational Efficiency - The efficiency ratio (non-GAAP) improved to 74.91% in 2024 from 81.34% in 2023, indicating enhanced operational efficiency[344] - Total adjusted noninterest expense (non-GAAP) decreased to $129,277 million in 2024 from $137,563 million in 2023, a reduction of approximately 9.3%[344] Miscellaneous - The Company operates 30 full-service bank branches in Massachusetts and Rhode Island, with additional mortgage offices in several states, including Florida[383] - The primary deposit products include checking, money market, savings, and term certificate of deposit accounts, while the main lending products are commercial real estate, residential mortgages, and consumer loans[384]

Core Insights - HarborOne Bancorp (HONE) reported a revenue of $45.52 million for the quarter ended December 2024, reflecting a year-over-year increase of 17.9% and a surprise of +4.95% over the Zacks Consensus Estimate of $43.37 million [1] - The earnings per share (EPS) for the quarter was $0.20, compared to $0.09 in the same quarter last year, resulting in an EPS surprise of +11.11% against the consensus estimate of $0.18 [1] Financial Performance Metrics - The efficiency ratio for HarborOne Bancorp was reported at 71.8%, which is better than the four-analyst average estimate of 74.6% [4] - The net interest margin stood at 2.4%, slightly above the three-analyst average estimate of 2.3% [4] - Total noninterest income was $13.69 million, exceeding the average estimate of $11.43 million from four analysts [4] - Net interest income was reported at $31.83 million, which was below the three-analyst average estimate of $32.70 million [4] Stock Performance - Over the past month, shares of HarborOne Bancorp have returned +2%, outperforming the Zacks S&P 500 composite's +1.2% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Company Performance - HarborOne Bancorp reported quarterly earnings of $0.20 per share, exceeding the Zacks Consensus Estimate of $0.18 per share, and showing an increase from $0.09 per share a year ago, representing an earnings surprise of 11.11% [1] - The company posted revenues of $45.52 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 4.95%, compared to revenues of $38.6 million in the same quarter last year [2] - Over the last four quarters, HarborOne Bancorp has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times [2] Stock Outlook - The immediate price movement of HarborOne Bancorp's stock will depend on management's commentary during the earnings call and future earnings expectations [3] - The stock has added about 2% since the beginning of the year, while the S&P 500 has gained 2.7% [3] - The current consensus EPS estimate for the coming quarter is $0.18 on revenues of $44.48 million, and for the current fiscal year, it is $0.87 on revenues of $183.38 million [7] Industry Context - The Zacks Industry Rank for Banks - Northeast is currently in the top 6% of over 250 Zacks industries, indicating a favorable outlook for the industry [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5]

Financial Performance - Net income for Q4 2024 was $8.9 million, or $0.21 per diluted share, a 126.5% increase from $3.9 million, or $0.10 per diluted share in Q3 2024[1] - Total revenue for Q4 2024 was $45,516,000, up from $38,597,000 in Q4 2023, marking an increase of 18.0%[25] - Net income for Q4 2024 was $8,887,000, compared to a loss of $7,111,000 in Q4 2023, indicating a significant turnaround[25] - Basic earnings per share increased to $0.66 for the year ended December 31, 2024, compared to $0.37 in 2023, reflecting an increase of 78.4%[29] - Net income for the year ended December 31, 2024, was $27,407 thousand, significantly higher than the $16,077 thousand reported in 2023, representing a growth of 70.5%[29] Asset Quality - Total nonperforming assets were $29.5 million, representing 0.51% of total assets, up from 0.49% in the previous quarter[10] - Nonperforming loans to total loans ratio improved to 0.61% in Q4 2024 from 0.37% in Q4 2023, indicating better asset quality[25] - The allowance for credit losses increased to $56,101,000 in Q4 2024 from $47,972,000 in Q4 2023, showing a proactive approach to managing credit risk[25] - Total delinquent loans increased to $37,427,000 in Q4 2024 from $19,603,000 in Q4 2023, reflecting challenges in loan performance[33] Income and Expenses - Noninterest income rose by $3.1 million, or 29.5%, to $13.7 million compared to $10.6 million in the previous quarter[6] - Total noninterest expenses decreased to $130,035 thousand for the year ended December 31, 2024, down from $138,320 thousand in 2023, a reduction of 6.0%[29] - Total noninterest expenses for Q4 2024 were $32,873,000, a decrease from $43,214,000 in Q4 2023, showing effective cost management[31] Deposits and Loans - Total deposits increased by $14.6 million to $4.55 billion, with brokered deposits rising by $27.8 million to support BTFP borrowing payoff[12] - Average deposits, excluding brokered deposits, increased by $62.9 million, or 6.1% annualized, on a linked-quarter basis[4] - Total loans stood at $4,852,499,000 in Q4 2024, a slight decrease from $4,879,503,000 in Q3 2024, reflecting a cautious lending strategy[25] - Total loans increased to $4,824,206 thousand in 2024, compared to $4,669,898 thousand in 2023, reflecting a growth of 3.3%[39] Capital and Equity - Total stockholders' equity decreased by 1.6% to $575.0 million, impacted by unrealized losses on available-for-sale securities and share repurchases[12] - The common equity tier 1 ratio (CET1) was reported at 11.79% in Q4 2024, slightly up from 11.99% in Q4 2023, indicating stable capital adequacy[25] - Tangible common equity (non-GAAP) was $515,212 million, down from $524,213 million in the prior quarter[49] Efficiency and Ratios - The efficiency ratio improved to 71.81% in Q4 2024 from 111.47% in Q4 2023, demonstrating enhanced operational efficiency[25] - The efficiency ratio (non-GAAP) improved to 68.84% in Q4 2024 from 73.65% in Q4 2023, indicating enhanced operational efficiency[43] - Return on average assets (GAAP) improved to 0.62% from 0.27% in the previous quarter, indicating better asset utilization[47] Interest Income - The net interest margin remained flat at 2.36% compared to the previous quarter[4] - Total interest and dividend income for Q4 2024 was $67,519,000, an increase from $64,385,000 in Q4 2023, representing a year-over-year growth of 3.3%[31] - Net interest income reported at $31,827 thousand, reflecting an increase from $29,693 thousand in the same quarter last year[35]

Financial Performance - Consolidated net income for the three months ended September 30, 2024, was $3.9 million, down from $8.4 million in the same period of 2023[199]. - The Bank's net income decreased by $4.2 million, or 46.0%, to $4.9 million for the three months ended September 30, 2024, compared to $9.1 million for the same period in 2023[217]. - For the nine months ended September 30, 2024, the Bank's net income decreased by $5.8 million, or 22.9%, to $19.6 million from $25.5 million in the prior year[218]. - Total noninterest income was $6.7 million for the three months ended September 30, 2024, compared to $6.5 million for the same period in 2023, representing an increase of $154,000 or 2.4%[221]. - Total noninterest income for the nine months ended September 30, 2024, was $13.1 million, down from $14.2 million in the prior year[232]. Asset and Loan Growth - Total assets increased by $108.1 million, or 1.9%, to $5.78 billion at September 30, 2024, from $5.67 billion at December 31, 2023[181]. - Net loans increased by $123.2 million, or 2.6%, to $4.83 billion at September 30, 2024, from $4.70 billion at December 31, 2023[185]. - Total loans reached $4,860,168 thousand, generating interest income of $64,047 thousand at an average yield of 5.24%, up from $4,706,326 thousand and $58,375 thousand at 4.92%[202]. - The total loan balance as of September 30, 2024, was $4.88 billion, compared to $4.75 billion at December 31, 2023[243]. - Total deposits increased by $148.8 million to $4.54 billion as of September 30, 2024, reflecting a 3.4% growth compared to December 31, 2023[193]. Credit Quality and Allowance for Credit Losses - The allowance for credit losses on loans increased by $6.0 million, or 12.6%, to $54.0 million at September 30, 2024[185]. - The allowance for credit losses to total loans ratio was 1.11% as of September 30, 2024, up from 1.01% at December 31, 2023[243]. - The Bank recorded a provision for credit losses of $5.9 million for the three months ended September 30, 2024, reflecting a specific reserve allocation for a single credit of $4.7 million[219]. - Net charge-offs totaled $182,000, or 0.02%, of average loans outstanding for the quarter ended September 30, 2024, compared to net recoveries of $18,000 for the same period in 2023[220]. - The total amount of loans to borrowers experiencing financial difficulty was $15.3 million as of September 30, 2024[247]. Interest Income and Expense - Interest and dividend income on a tax equivalent basis increased by $6.1 million, or 9.6%, to $69.5 million for the three months ended September 30, 2024, compared to $63.4 million for the same period in 2023[206]. - Interest expense increased by $5.0 million, or 15.8%, to $37.1 million for the three months ended September 30, 2024, from $32.1 million for the same period in 2023[208]. - Interest expense on deposits increased by $4.9 million, or 19.7%, reflecting deposit growth and a 45-basis-point increase in rates paid[208]. - The net interest margin on a full tax equivalent basis increased by 2 basis points to 2.36% for the three months ended September 30, 2024, from 2.34% for the same period in 2023[210]. - Net interest and dividend income increased by $1.0 million, or 3.2%, to $32.3 million for the three months ended September 30, 2024, compared to $31.3 million for the same period in 2023[210]. Deposits and Funding - Noninterest-bearing deposits rose by $53.4 million, or 8.1%, while regular savings deposits decreased by $339.1 million, or 26.8%[193]. - Brokered deposits increased by $47.1 million, or 14.4%, indicating a strategic move to seek additional funding[193]. - The company reported $373.7 million in brokered deposits as of September 30, 2024, to supplement core deposit fluctuations[266]. - The company has additional borrowing capacity of $830.3 million from the FHLB and $419.2 million from the FRBB based on collateral pledged[265]. - The company borrowed $175 million for a one-year term under the BTFP during the first quarter of 2024[196]. Regulatory Capital and Liquidity - Total stockholders' equity was $584.2 million, a slight increase of 0.1% from $583.8 million at December 31, 2023[197]. - The tangible-common-equity-to-tangible-assets ratio was 9.17% as of September 30, 2024, consistent with the previous year[198]. - The company exceeded all regulatory capital requirements and is considered "well capitalized" under regulatory guidelines as of September 30, 2024[269]. - As of September 30, 2024, the company has immediate liquid resources in cash and cash equivalents amounting to $224.3 million, primarily on deposit with the FRBB[265]. - The company’s liquidity risk management process aims to provide continuous access to sufficient, reasonably priced funds[264]. Noninterest Expense and Operational Efficiency - Total noninterest expense was $26.8 million for the three months ended September 30, 2024, reflecting a 1.8% increase from $26.3 million in the prior year[226]. - Compensation and benefits decreased by 2.0% to $14.9 million for the three months ended September 30, 2024, compared to $15.2 million in the prior year[226]. - Noninterest expense for the three months ended September 30, 2024, was $5.6 million, a 2% increase from $5.5 million in the prior year[238]. - The bank recorded an intersegment loss of $1.1 million for the nine months ended September 30, 2024, compared to a loss of $153,000 in the prior year[222]. - The loss on sale of securities was realized on the sale of $17.5 million of available-for-sale securities with a weighted average book yield of 2.84%[225]. Mortgage and Loan Segment Performance - The bank purchased $86.8 million of residential mortgage loans from HarborOne Mortgage during the nine months ended September 30, 2024, down from $132.4 million in the prior year[224]. - Gain on sale of mortgage loans for the three months ended September 30, 2024, was $3.8 million, a decrease of 25.6% from $5.1 million in the prior year[232]. - The bank's mortgage segment recorded a net loss of $1.1 million for the three and nine months ended September 30, 2024, compared to a net loss of $138,000 in the prior year[231]. - The change in mortgage servicing rights fair value declined by $3.3 million for the three months ended September 30, 2024, reflecting the decrease in benchmark residential rates[234]. - Conventional loans accounted for 66.1% of total loans in Q3 2024, up from 62.9% in Q3 2023[236].

Financial Performance - HarborOne Bancorp reported quarterly earnings of $0.10 per share, missing the Zacks Consensus Estimate of $0.18 per share, and down from $0.20 per share a year ago, representing an earnings surprise of -44.44% [1] - The company posted revenues of $42.46 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 2.09%, and down from $42.68 million year-over-year [1] Earnings Outlook - The current consensus EPS estimate for the coming quarter is $0.18 on revenues of $43.49 million, and for the current fiscal year, it is $0.71 on revenues of $171.05 million [4] - The estimate revisions trend for HarborOne Bancorp is currently favorable, leading to a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [4] Market Comparison - HarborOne Bancorp shares have increased by approximately 11.1% since the beginning of the year, compared to the S&P 500's gain of 21.5% [2] - The Banks - Northeast industry, to which HarborOne Bancorp belongs, is currently in the top 19% of over 250 Zacks industries, suggesting a positive outlook for the sector [5]