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]

Financial Performance - Net income for Q3 2024 was $3.9 million, or $0.10 per diluted share, down from $7.3 million, or $0.18 per diluted share in Q2 2024, and $8.4 million, or $0.20 per diluted share in Q3 2023[1]. - Net income for the nine months ended September 30, 2024, was $18,520,000, a decrease of 20.1% compared to $23,188,000 in the same period of 2023[11]. - Earnings per common share (basic) for the nine months ended September 30, 2024, was $0.45, down from $0.53 in the previous year[11]. - Net income, excluding goodwill impairment charge, for September 30, 2024, was $3,924,000, a decrease from $7,296,000 in June 30, 2024[15]. - Total revenue for September 30, 2024, was $42,461,000, compared to $43,269,000 in June 30, 2024, reflecting a decline of 1.87%[15]. Loan and Deposit Growth - Loan growth was $40.3 million, or 3.3% annualized, while client deposit growth was $89.5 million, or 8.8% annualized[2]. - Total loans increased to $4,860,168 thousand, up from $4,805,284 thousand, reflecting a growth of 1.14%[12]. - Total deposits increased to $4,536,177 thousand from $4,458,297 thousand in the previous quarter, reflecting a growth of approximately 1.75%[9]. - Total deposits, including demand deposits, rose to $4,451,242 thousand, an increase from $4,329,347 thousand, representing a growth of 2.82%[12]. - Commercial loans totaled $3,141,445 thousand, up from $3,113,850 thousand in June 2024, indicating an increase of about 0.89%[9]. Income and Expenses - Total noninterest income decreased by $1.4 million, or 11.3%, to $10.6 million in Q3 2024, primarily due to a decline in mortgage banking income[3]. - Total noninterest expenses increased to $97,162,000, reflecting a 2.2% rise from $95,106,000 in the prior year[11]. - Total noninterest expense decreased by $876,000, or 2.6%, to $32.3 million in Q3 2024, driven by a reduction in marketing expenses[5]. - Total adjusted noninterest expense, excluding goodwill impairment, was $32,078,000 for September 30, 2024, compared to $32,955,000 in June 30, 2024[15]. Asset and Equity Position - Total assets decreased by $11.1 million, or 0.2%, to $5.78 billion at September 30, 2024, reflecting a decrease in cash and cash equivalents[6]. - Total stockholders' equity increased by 1.2% to $584.2 million at September 30, 2024, as unrealized losses on available-for-sale securities decreased[6]. - Total stockholders' equity increased to $584,202 thousand from $577,329 thousand in the previous quarter, reflecting a growth of approximately 1.5%[9]. - The tangible-common-equity-to-tangible-assets ratio was 9.17% at September 30, 2024, indicating a strong capital position exceeding regulatory requirements[6]. Credit Quality - Total nonperforming assets rose to $28.4 million at September 30, 2024, compared to $9.8 million at June 30, 2024, primarily due to a single $17.2 million credit[6]. - The provision for credit losses was $5.9 million in Q3 2024, with a specific reserve allocation of $4.7 million for the aforementioned credit[6]. - The allowance for credit losses on loans was $54,004 thousand, resulting in net loans of $4,825,499 thousand[9]. - Provision for credit losses rose to $6,350,000, an increase of 26.1% compared to $5,036,000 in the previous year[11]. - The allowance for credit losses on loans to total loans was 1.11% as of September 30, 2024, compared to 1.02% in June 30, 2024[16]. Efficiency and Ratios - The efficiency ratio improved to 75.55% for September 30, 2024, down from 76.16% in June 30, 2024[15]. - The efficiency ratio excluding goodwill impairment charge was not specified but is considered useful for evaluating financial condition[8]. - The ratio of interest-earning assets to interest-bearing liabilities was 124.89%, slightly up from 124.16%[12]. - Tangible common equity to tangible assets ratio was 9.17% as of September 30, 2024, compared to 9.03% in June 30, 2024[17]. Segment Performance - Net interest and dividend income for HarborOne Bank segment increased to $31,780 thousand in September 2024, up from $31,098 thousand in June 2024, representing a growth of 2.2%[18]. - Total noninterest income for HarborOne Bank segment was $6,665 thousand in September 2024, a decrease from $7,156 thousand in June 2024, reflecting a decline of 6.9%[18]. - Income before income taxes for HarborOne Bank segment was $5,790 thousand in September 2024, down from $9,848 thousand in June 2024, a decline of 41.5%[18]. - Net income for HarborOne Mortgage segment was a loss of $1,137 thousand in September 2024, compared to a loss of $191 thousand in June 2024[19]. - Closed loan volume for HarborOne Mortgage segment increased to $209,525 thousand in September 2024 from $172,994 thousand in June 2024, a growth of 21.1%[19].

Financial Position - Total assets increased by $119.1 million, or 2.1%, to $5.79 billion at June 30, 2024, from $5.67 billion at December 31, 2023[151] - Total deposits increased by $70.9 million, or 1.6%, to $4.46 billion at June 30, 2024, from $4.39 billion at December 31, 2023[158] - Total stockholders' equity decreased by 1.1% to $577.3 million at June 30, 2024, compared to $583.8 million at December 31, 2023[161] - Total assets increased to $5,806,368 thousand as of June 30, 2024, compared to $5,481,934 thousand as of June 30, 2023[168] - Total equity decreased to $579,863 thousand as of June 30, 2024, from $609,245 thousand as of June 30, 2023[168] Loan and Deposit Activity - Net loans increased by $87.8 million, or 1.9%, to $4.79 billion at June 30, 2024, from $4.70 billion at December 31, 2023[153] - Loans held for sale increased by $22.1 million to $41.8 million at June 30, 2024, reflecting increased loan production[152] - Noninterest-bearing deposits increased by $29.8 million, or 4.5%, to $689.8 million at June 30, 2024[158] - Brokered deposits increased by $58.6 million, or 17.9%, to $385.3 million at June 30, 2024[158] - The total loan balance as of June 30, 2024, was $4.84 billion, up from $4.75 billion at December 31, 2023, indicating growth in the loan portfolio[201] Income and Expenses - Consolidated net income for the three months ended June 30, 2024, was $7.3 million, slightly down from $7.5 million for the same period in 2023[163] - Interest and dividend income on a tax equivalent basis increased by $7.2 million, or 11.8%, to $68.2 million for the three months ended June 30, 2024, compared to $61.0 million for the same period in 2023[171] - Interest expense increased by $7.9 million, or 27.5%, to $36.6 million for the three months ended June 30, 2024, from $28.7 million for the same period in 2023[172] - Net interest and dividend income decreased by $707,000, or 2.2%, to $31.6 million for the three months ended June 30, 2024, compared to $32.3 million for the same period in 2023[174] - Noninterest expense increased by $1.6 million, or 6.1%, for the three months ended June 30, 2024, compared to the same period in 2023[181] Credit Quality - The allowance for credit losses on loans increased by $1.2 million, or 2.4%, to $49.1 million at June 30, 2024[153] - The provision for credit losses was $615,000 for the three months ended June 30, 2024, a decrease of $2.7 million, or 81.3%, compared to $3.3 million for the same period in 2023[181] - Net charge-offs totaled $195,000, or 0.02%, of average loans outstanding for the quarter ended June 30, 2024, compared to $2.7 million, or 0.23%, for the same period in 2023[183] - Nonperforming assets totaled $9.8 million at June 30, 2024, a significant decrease from $17.6 million at December 31, 2023, reflecting improved asset quality[202] - The allowance for credit losses to total loans was 1.02% as of June 30, 2024, compared to 1.01% at the end of 2023, indicating stable credit quality management[201] Interest Rate Risk and Liquidity - The Company’s primary market risk is interest-rate risk, managed through an Asset/Liability Committee that establishes exposure limits[210] - The Company’s liquidity sources include deposit inflows, loan repayments, and borrowings from the FHLB[217] - As of June 30, 2024, the company has immediate liquid resources in cash and cash equivalents totaling $235.1 million, primarily on deposit with FRBB[219] - The company had $385.3 million in brokered deposits as of June 30, 2024, to supplement core deposit fluctuations and loan growth[221] - The company believes it can meet its contractual obligations through adequate cash levels and liquidity management[222] Market and Economic Conditions - The estimated Economic Value of Equity (EVE) decreased by $182,118, or 32.2%, under a +300 basis points interest rate scenario as of June 30, 2024[215] - The Company’s net interest income simulation results indicate a potential decrease of 12.0% in Year One and 14.7% in Year Two under a +300 basis points interest rate scenario as of June 30, 2024[212] - Management continues to monitor the loan portfolio closely for signs of deterioration, particularly in the commercial real estate sector, amid rising vacancies and interest rates[203] - Management identified business-oriented hotels, non-anchored retail space, and metro office space as sectors potentially more susceptible to weakness, with total outstanding balances of $119.7 million, $48.6 million, and $6.2 million respectively[204] - The commercial real estate portfolio is primarily located in New England, with 75% secured by properties in Massachusetts and Rhode Island, highlighting regional concentration[203]

Core Viewpoint - HarborOne Bancorp (HONE) shows a significant improvement in earnings outlook, making it an attractive investment option as analysts continue to raise their earnings estimates [1][2] Earnings Estimate Revisions - Current-quarter earnings estimate is $0.18 per share, reflecting a -10% change from the previous year, but has increased by 7.58% over the last 30 days due to three upward revisions [4] - For the full year, the earnings estimate stands at $0.68 per share, representing a +9.68% change from the year-ago figure, with a 5.47% increase in consensus estimates driven by three upward revisions [5] Analyst Sentiment - There is strong agreement among analysts in revising earnings estimates upward, leading to a Zacks Rank 2 (Buy) for HarborOne Bancorp, indicating positive sentiment and potential for outperformance [3][6] Stock Performance - HarborOne Bancorp shares have increased by 18.6% over the past four weeks, suggesting investor confidence in the company's earnings growth prospects [7]

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell higher, with the expectation that established trends will continue [1] Company Overview: HarborOne Bancorp (HONE) - HONE currently holds a Momentum Style Score of A, indicating strong momentum potential [2][3] - Over the past week, HONE shares increased by 7.78%, outperforming the Zacks Banks - Northeast industry, which rose by 4.74% [4] - In a longer timeframe, HONE's monthly price change of 22.82% is significantly better than the industry's 14.15% performance [4] Trading Volume - HONE's average 20-day trading volume is 132,511 shares, which serves as a bullish indicator when combined with rising stock prices [5] Earnings Estimates - Recent trends show that 2 earnings estimates for HONE have increased, while none have decreased, raising the consensus estimate from $0.64 to $0.66 over the past 60 days [12] - For the next fiscal year, 2 estimates have also moved upwards with no downward revisions [12] Performance Comparison - Over the past quarter, HONE shares have risen by 27.38%, and by 27.74% over the last year, significantly outperforming the S&P 500, which increased by 7.18% and 20.85% respectively [11] Investment Recommendation - Given the strong performance metrics and positive earnings outlook, HONE is rated as a 2 (Buy) stock, making it a promising candidate for investors seeking momentum opportunities [7][9]

HarborOne Bancorp, which belongs to the Zacks Banks - Northeast industry, posted revenues of $43.27 million for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 1.99%. This compares to year-ago revenues of $44.76 million. The company has topped consensus revenue estimates three times over the last four quarters. What's Next for HarborOne Bancorp? Ahead of this earnings release, the estimate revisions trend for HarborOne Bancorp: mixed. While the magnitude and direction of estimate rev ...

HarborOne Bancorp, Inc. Announces 2024 Second Quarter Results Selected Financial Highlights: Noninterest Income Total noninterest income improved $1.2 million, or 11.0%, to $11.9 million for the quarter ended June 30, 2024, from $10.7 million for the quarter ended March 31, 2024. HarborOne Mortgage, LLC ("HarborOne Mortgage") capitalized on the seasonal increase in residential real estate sales, with gain on loan sales of $3.1 million from mortgage closings of $173.0 million for the quarter ended June 30, 2 ...

For the quarter ended March 2024, HarborOne Bancorp (HONE) reported revenue of $41.32 million, down 4.1% over the same period last year. EPS came in at $0.17, compared to $0.16 in the year-ago quarter.The reported revenue compares to the Zacks Consensus Estimate of $39.98 million, representing a surprise of +3.36%. The company delivered an EPS surprise of +30.77%, with the consensus EPS estimate being $0.13.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall ...

Exhibit 99.1 HarborOne Bancorp, Inc. Announces 2024 First Quarter Results Contact: Joseph F. Casey, President and CEO Brockton, Massachusetts (April 25, 2024): HarborOne Bancorp, Inc. (the "Company" or "HarborOne") (NASDAQ: HONE), the holding company for HarborOne Bank (the "Bank"), announced net income of $7.3 million, or $0.17 per diluted share, for the first quarter of 2024, compared to a net loss of $7.1 million, or $0.17 per diluted share for the preceding quarter, and net income of $7.3 million, or $0 ...

Part I [Item 1. Business](index=4&type=section&id=Item%201.%20Business) HarborOne Bancorp, a bank holding company, manages $5.67 billion in assets through its banking and mortgage segments, primarily lending in commercial and residential real estate [Human Capital Resources](index=6&type=section&id=Human%20Capital%20Resources) HarborOne had 529 employees as of December 31, 2023, with a diverse workforce, emphasizing an inclusive environment and professional development - As of December 31, 2023, the company's workforce was **61% female** and **22% racially or ethnically diverse**. The senior management team was **44.4% female**[20](index=20&type=chunk) - The company focuses on employee growth through training programs, customized corporate training, and educational reimbursement[22](index=22&type=chunk) [Market Area and Competition](index=8&type=section&id=Market%20Area%20and%20Competition) HarborOne's primary market is Eastern Massachusetts and Rhode Island, facing intense competition from diverse financial institutions across New England - The Bank's primary deposit-gathering area is concentrated in its branch communities, while its lending area extends across New England[26](index=26&type=chunk) - Competition is significant from larger financial institutions with greater resources, as well as from non-depository companies and online financial services, which have lowered barriers to entry[29](index=29&type=chunk)[31](index=31&type=chunk) [Lending Activities](index=8&type=section&id=Lending%20Activities) The company's $4.75 billion loan portfolio is dominated by commercial real estate (49.3%) and residential real estate (31.9%), with a portion of mortgages sold on the secondary market Loan Portfolio Composition (December 31, 2023) | Loan Category | Amount (billions) | % of Total Loans | | :--- | :--- | :--- | | Commercial Real Estate | $2.34 | 49.3% | | Residential Real Estate (1-4 Family) | $1.51 | 31.9% | | Commercial & Industrial | $0.47 | 9.8% | | Commercial Construction | $0.21 | 4.4% | | Second Mortgages & HELOCs | $0.18 | 3.7% | | Other (Consumer, Residential Construction) | $0.04 | 0.9% | - For the year ended December 31, 2023, the company originated **$1.11 billion** in loans, purchased **$32.6 million**, and sold **$480.7 million**[66](index=66&type=chunk) - The Bank's internal loans-to-one-borrower limit is **$85.0 million**, below the regulatory limit of **$111.6 million**. The largest lending relationship was **$41.0 million** as of year-end[80](index=80&type=chunk) [Investment Activities](index=18&type=section&id=Investment%20Activities) The company's $309.9 million investment portfolio, primarily in mortgage-backed securities and government obligations, aims for liquidity, risk mitigation, and returns Investment Portfolio Composition (December 31, 2023) | Security Type | Amount (millions) | % of Portfolio | | :--- | :--- | :--- | | Mortgage-Backed Securities & CMOs | $247.4 | 79.8% | | U.S. Government & GSE Obligations | $55.2 | 17.8% | | SBA Asset-Backed Securities | $6.6 | 2.1% | | Corporate Bonds | $1.0 | 0.3% | | **Total Securities** | **$309.9** | **100.0%** | - In addition to the securities portfolio, the company held **$27.1 million** in FHLB stock and **$94.7 million** in BOLI[88](index=88&type=chunk)[89](index=89&type=chunk) [Sources of Funds](index=19&type=section&id=Sources%20of%20Funds) Primary funding sources include $4.39 billion in deposits and $568.5 million in borrowings, supplemented by significant additional borrowing capacity from FHLB and BTFP - Total deposits reached **$4.39 billion** at December 31, 2023. This includes **$471.8 million** in municipal deposits from over 85 cities and towns[91](index=91&type=chunk) - The company utilizes brokered deposits, which totaled **$326.6 million** (**7.4% of total deposits**) at year-end[94](index=94&type=chunk) - Total borrowings were **$568.5 million**, consisting of FHLB advances. The company has significant additional liquidity access, including **$727.5 million** from the FHLB and **$360.9 million** from the FRBB's BTFP[96](index=96&type=chunk)[97](index=97&type=chunk) [Supervision and Regulation](index=21&type=section&id=Supervision%20and%20Regulation) HarborOne Bancorp and its subsidiary are extensively regulated by federal and state authorities, covering capital adequacy, consumer protection, and anti-money laundering, with the Bank classified as "well capitalized" - The Company is a bank holding company subject to regulation by the Federal Reserve, while the Bank is a state-chartered trust company regulated by the FDIC and state banking authorities[100](index=100&type=chunk)[101](index=101&type=chunk) - The Bank must comply with capital adequacy rules, including a capital conservation buffer of **2.5%**. As of December 31, 2023, the Bank was considered **"well capitalized"** under all regulatory definitions[123](index=123&type=chunk)[124](index=124&type=chunk) - The Bank is subject to the Community Reinvestment Act (CRA) and received an **"Outstanding"** rating on its most recent examination. New CRA regulations will become effective on January 1, 2026[118](index=118&type=chunk) [Item 1A. Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant business risks from economic conditions, interest rate volatility, and credit concentrations in commercial real estate, alongside regulatory compliance and cybersecurity threats - **Business & Industry Risks:** Economic downturns, interest rate volatility, and inflation pose significant threats. Changes in interest rates led to a **$21.7 million (14.6%) decline** in net interest and dividend income in 2023[141](index=141&type=chunk)[143](index=143&type=chunk)[145](index=145&type=chunk) - **Credit Risks:** The large concentration in commercial real estate (**$2.34 billion, 49.3% of total loans**) and commercial loans (**$466.4 million, 9.8%**) carries higher risk than residential lending. The unseasoned nature of this portfolio makes future performance difficult to predict[146](index=146&type=chunk)[147](index=147&type=chunk) - **Mortgage Banking Risks:** Mortgage banking income is highly sensitive to interest rates and market demand, declining **$16.4 million (52.6%)** in 2023 due to a **43.4% decrease** in loan production[154](index=154&type=chunk) - **Regulatory Risks:** The company operates in a highly regulated environment. Failure to comply with laws like the Community Reinvestment Act (CRA) or anti-money laundering regulations can lead to sanctions, fines, and reputational damage[208](index=208&type=chunk)[213](index=213&type=chunk)[215](index=215&type=chunk) [Item 1B. Unresolved Staff Comments](index=56&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[220](index=220&type=chunk) [Item 1C. Cybersecurity](index=56&type=section&id=Item%201C.%20Cybersecurity) The company manages cybersecurity risks through a comprehensive Information Security Program, overseen by the Board and aligned with NIST and FFIEC frameworks - Oversight is managed by the Chief Risk Officer (CRO) and Chief Information Security Officer (CISO), with ultimate oversight from the Board of Directors and its Audit Committee[222](index=222&type=chunk)[227](index=227&type=chunk) - The Information Security Program aligns with the National Institute of Standards and Technology (NIST) Cybersecurity Framework and FFIEC guidelines, and is reviewed and approved annually by the Board[230](index=230&type=chunk)[233](index=233&type=chunk) - The company uses specialized service providers for continuous monitoring, threat containment, and penetration testing, and maintains a Vendor Management Program for third-party risk[234](index=234&type=chunk) [Item 2. Properties](index=59&type=section&id=Item%202.%20Properties) As of December 31, 2023, the company operated 30 branches and various offices with a net book value of $48.7 million for property and equipment - The company operates **30 full-service branches**, with a mix of owned and leased properties, and commercial lending offices in Boston and Providence[236](index=236&type=chunk) - The net book value of property and equipment was **$48.7 million** at year-end 2023[236](index=236&type=chunk) [Item 3. Legal Proceedings](index=59&type=section&id=Item%203.%20Legal%20Proceedings) The company is not involved in material pending legal proceedings, with a class action lawsuit regarding overdraft fees settled in November 2023 - A class action lawsuit regarding overdraft fees on re-presented transactions received final court approval for settlement on November 14, 2023[238](index=238&type=chunk) [Item 4. Mine Safety Disclosures](index=59&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[239](index=239&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=60&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock (HONE) trades on Nasdaq, pays a quarterly dividend, and repurchased 570,527 shares in Q4 2023 under an ongoing program - The company's common stock (HONE) trades on the Nasdaq Global Select Market. It currently pays a quarterly cash dividend of **$0.075 per share**[241](index=241&type=chunk)[242](index=242&type=chunk) Issuer Purchases of Equity Securities (Q4 2023) | Period | Total Shares Purchased | Average Price Paid Per Share | Shares Remaining in Program | | :--- | :--- | :--- | :--- | | Oct 2023 | 355,000 | $9.74 | 1,317,966 | | Nov 2023 | 207,000 | $10.82 | 1,110,966 | | Dec 2023 | 8,527 | $11.29 | 1,102,439 | | **Total Q4** | **570,527** | **$10.15** | **1,102,439** | [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=63&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Net income significantly decreased to $16.1 million in 2023 due to a goodwill impairment and net interest margin compression, despite asset and deposit growth, while asset quality remained strong Key Performance Indicators (2023 vs 2022) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Net Income | $16.1 million | $45.6 million | | Diluted EPS | $0.37 | $0.97 | | Net Interest Income | $127.3 million | $149.0 million | | Net Interest Margin | 2.44% | 3.35% | | Return on Average Assets | 0.29% | 0.95% | | Return on Average Equity | 2.68% | 7.14% | - The decrease in profitability was driven by a **$10.8 million goodwill impairment charge** at the HarborOne Mortgage segment and significant net interest margin compression[299](index=299&type=chunk)[323](index=323&type=chunk) [Critical Accounting Policies and Estimates](index=65&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Critical accounting policies involve significant judgment, including the Allowance for Credit Losses (ACL), Goodwill impairment (fully impaired for HarborOne Mortgage in 2023), and Deferred Tax Assets - **Allowance for Credit Losses (ACL):** Estimated using the CECL model, which involves significant management judgment on economic forecasts and qualitative factors. A sensitivity analysis on commercial loan qualitative factors showed the ACL could vary by approximately **+/- $13 million**[265](index=265&type=chunk)[266](index=266&type=chunk)[269](index=269&type=chunk) - **Goodwill:** Tested annually for impairment. The determination of fair value for reporting units (Bank and HarborOne Mortgage) requires significant assumptions. In 2023, the goodwill for the HarborOne Mortgage reporting unit was determined to be **fully impaired**[271](index=271&type=chunk)[274](index=274&type=chunk)[275](index=275&type=chunk) - **Deferred Tax Assets:** Management assesses the need for a valuation allowance based on historical and forecasted operating results. Realization is dependent on generating future taxable income[276](index=276&type=chunk) [Comparison of Financial Condition](index=67&type=section&id=Comparison%20of%20Financial%20Condition) Total assets grew 5.8% to $5.67 billion, driven by loan and deposit growth, while stockholders' equity decreased due to share repurchases Balance Sheet Changes (2023 vs 2022) | Account | Dec 31, 2023 ($B) | Dec 31, 2022 ($B) | % Change | | :--- | :--- | :--- | :--- | | Total Assets | $5.67 | $5.36 | 5.8% | | Net Loans | $4.70 | $4.50 | 4.4% | | Total Deposits | $4.39 | $4.19 | 4.7% | | Total Borrowings | $0.57 | $0.43 | 31.3% | | Stockholders' Equity | $0.58 | $0.62 | -5.4% | - The deposit mix shifted significantly, with noninterest-bearing and regular savings deposits declining by **13.5%** and **13.8%** respectively, while term certificate accounts grew by **73.5%** as customers sought higher yields[291](index=291&type=chunk) - Stockholders' equity decreased primarily due to the repurchase of **3.7 million shares** for **$44.9 million** during 2023[298](index=298&type=chunk) [Comparison of Results of Operations](index=71&type=section&id=Comparison%20of%20Results%20of%20Operations) Consolidated net income decreased to $16.1 million in 2023 due to lower net interest income and a goodwill impairment, with net interest margin compressing to 2.44% Consolidated Income Statement Highlights (2023 vs 2022) | Metric | 2023 ($M) | 2022 ($M) | % Change | | :--- | :--- | :--- | :--- | | Net Interest Income | $127.3 | $149.0 | -14.6% | | Provision for Credit Losses | $5.7 | $5.7 | 0.0% | | Noninterest Income | $41.9 | $57.3 | -26.9% | | Noninterest Expense | $138.3 | $138.9 | -0.4% | | Net Income | $16.1 | $45.6 | -64.7% | - Net interest margin on a tax equivalent basis decreased **91 basis points** to **2.44%** in 2023 from **3.35%** in 2022, as the cost of interest-bearing liabilities rose from **0.70%** to **2.83%**[302](index=302&type=chunk)[309](index=309&type=chunk) Segment Net Income (Loss) (2023 vs 2022) | Segment | 2023 Net Income ($M) | 2022 Net Income ($M) | | :--- | :--- | :--- | | HarborOne Bank | $32.0 | $43.0 | | HarborOne Mortgage | $(14.0) | $4.8 | - HarborOne Mortgage's results were significantly impacted by a **$10.8 million goodwill impairment charge** and a **53.7% decrease** in mortgage banking income, driven by a **43.4% decline** in loan closings to **$579.5 million**[323](index=323&type=chunk)[324](index=324&type=chunk) [Asset Quality](index=81&type=section&id=Asset%20Quality) Asset quality remained strong in 2023, with nonperforming assets at 0.31% of total assets, primarily due to a single commercial real estate credit Asset Quality Metrics | Metric | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Nonperforming Assets | $17.6 million | $14.8 million | | Nonperforming Assets to Total Assets | 0.31% | 0.28% | | Nonperforming Loans to Total Loans | 0.37% | 0.32% | | ACL to Total Loans | 1.01% | 0.99% | | Net Charge-offs to Average Loans (Annual) | 0.08% | 0.09% | - The increase in non-accrual loans was primarily driven by a single commercial real estate credit in the metro office sector with a carrying value of **$5.7 million**[332](index=332&type=chunk) - The ACL methodology uses a DCF model incorporating a one-year forecast of the national unemployment rate, supplemented by qualitative factors[335](index=335&type=chunk)[337](index=337&type=chunk) [Management of Market Risk](index=84&type=section&id=Management%20of%20Market%20Risk) The company manages interest rate risk using NII simulation and EVE analysis, showing asset sensitivity in falling rates and liability sensitivity in rising rates Net Interest Income Sensitivity (as of Dec 31, 2023) | Rate Shock (basis points) | Year One NII Change | Year Two NII Change | | :--- | :--- | :--- | | +300 | (17.5)% | (14.2)% | | +200 | (11.6)% | (9.2)% | | +100 | (5.6)% | (4.2)% | | -100 | 6.1% | 5.3% | - The company also uses an Economic Value of Equity (EVE) analysis. A **+200 basis point rate shock** was estimated to decrease EVE by **19.0%**[355](index=355&type=chunk) [Liquidity Management and Capital Resources](index=87&type=section&id=Liquidity%20Management%20and%20Capital%20Resources) The company maintains a strong liquidity position with $277.4 million in cash and significant borrowing capacity, exceeding all regulatory capital requirements - Primary liquidity sources are deposits, loan repayments, and borrowings. The company has access to significant secondary liquidity sources[358](index=358&type=chunk) Available Borrowing Capacity (as of Dec 31, 2023) | Source | Capacity (millions) | | :--- | :--- | | FHLB | $727.5 | | FRBB (BTFP) | $360.9 | | FRBB (BIC) | $69.4 | | Correspondent Bank Line | $25.0 | - At December 31, 2023, both the Company and the Bank were considered **"well capitalized"** under regulatory guidelines[363](index=363&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=91&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for 2023, including balance sheets, income statements, and detailed notes on accounting policies and financial instruments [Report of Independent Registered Public Accounting Firm](index=92&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Crowe LLP issued an unqualified opinion on the financial statements and internal controls, identifying ACL qualitative factors as a critical audit matter - Crowe LLP provided an **unqualified opinion**, stating the financial statements are presented fairly in all material respects and that internal control over financial reporting was effective[375](index=375&type=chunk) - The critical audit matter identified was the determination of qualitative factors for the Allowance for Credit Losses (ACL), which involves significant management judgment and subjectivity[381](index=381&type=chunk)[385](index=385&type=chunk) [Consolidated Financial Statements](index=95&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show total assets of $5.67 billion and net income of $16.1 million for 2023, a decrease primarily due to lower net interest income and goodwill impairment Consolidated Balance Sheet Highlights (as of Dec 31, 2023) | Account | Amount (in thousands) | | :--- | :--- | | **Assets** | | | Net Loans | $4,702,339 | | Securities (AFS & HTM) | $309,947 | | Goodwill | $59,042 | | **Total Assets** | **$5,667,896** | | **Liabilities & Equity** | | | Total Deposits | $4,387,409 | | Total Borrowings | $568,462 | | **Total Liabilities** | **$5,084,137** | | **Total Stockholders' Equity** | **$583,759** | Consolidated Income Statement Highlights (Year Ended Dec 31, 2023) | Account | Amount (in thousands) | | :--- | :--- | | Net Interest Income | $127,271 | | Provision for Credit Losses | $5,680 | | Noninterest Income | $41,854 | | Noninterest Expense | $138,320 | | **Net Income** | **$16,077** | [Notes to Consolidated Financial Statements](index=102&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies and financial data, including CECL, loan and securities portfolios, goodwill impairment, deposit structures, and regulatory capital compliance, confirming "well capitalized" status - Note 4 (Loans and ACL): Details the loan portfolio composition, with commercial loans at **$3.02 billion** and residential at **$1.71 billion**. The ACL on loans was **$48.0 million** at year-end 2023[512](index=512&type=chunk)[515](index=515&type=chunk) - Note 8 (Goodwill): A goodwill impairment charge of **$10.8 million** was recorded for the HarborOne Mortgage reporting unit in 2023, representing **100%** of its goodwill balance[543](index=543&type=chunk) Regulatory Capital Ratios (as of Dec 31, 2023) | Ratio | HarborOne Bancorp, Inc. | HarborOne Bank | Minimum to be Well Capitalized (Bank) | | :--- | :--- | :--- | :--- | | Common Equity Tier 1 | 12.0% | 10.8% | 6.5% | | Tier 1 Capital | 12.0% | 10.8% | 8.0% | | Total Capital | 13.1% | 11.9% | 10.0% | | Tier 1 Leverage | 10.0% | 9.0% | 5.0% | [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=119&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[701](index=701&type=chunk) [Item 9A. Controls and Procedures](index=119&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2023, with no material changes in Q4 - Management concluded that disclosure controls and procedures were effective as of December 31, 2023[702](index=702&type=chunk) - Management's assessment, based on the COSO framework, concluded that the company maintained effective internal control over financial reporting as of December 31, 2023[704](index=704&type=chunk) [Item 9B. Other Information](index=119&type=section&id=Item%209B.%20Other%20Information) The company reports no other required information and no Rule 10b5-1 trading plan changes by directors or executive officers in Q4 2023 - No directors or executive officers adopted, modified, or terminated a Rule 10b5-1 trading plan or any non-Rule 10b5-1 trading arrangement during the fourth quarter of 2023[707](index=707&type=chunk) Part III [Item 10. Directors, Executive Officers and Corporate Governance](index=120&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2024 Definitive Proxy Statement - Information is incorporated by reference from the company's proxy statement[710](index=710&type=chunk) [Item 11. Executive Compensation](index=120&type=section&id=Item%2011.%20Executive%20Compensation) Information on executive and director compensation is incorporated by reference from the company's Definitive Proxy Statement - Information is incorporated by reference from the company's proxy statement[711](index=711&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=120&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) As of December 31, 2023, equity compensation plans had 1,049,075 securities for outstanding options and 3,564,628 available for future issuance Equity Compensation Plan Information (as of Dec 31, 2023) | Description | Value | | :--- | :--- | | Securities to be issued upon exercise of outstanding options | 1,049,075 | | Weighted-average exercise price | $10.00 | | Securities remaining available for future issuance | 3,564,628 | [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=120&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related party transactions and director independence is incorporated by reference from the company's Definitive Proxy Statement - Information is incorporated by reference from the company's proxy statement[714](index=714&type=chunk) [Item 14. Principal Accounting Fees and Services](index=121&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information on principal accounting fees and services is incorporated by reference from the company's Definitive Proxy Statement - Information is incorporated by reference from the company's proxy statement[715](index=715&type=chunk) Part IV [Item 15. Exhibits and Financial Statement Schedules](index=122&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all exhibits filed with the Form 10-K, including organizational documents, compensation plans, and certifications - Lists all exhibits filed with or incorporated by reference into the Annual Report on Form 10-K[718](index=718&type=chunk) [Item 16. Form 10-K Summary](index=124&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable to the company - Not applicable[722](index=722&type=chunk)