Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-38955 HarborOne Bancorp, Inc. (Exact name of registrant as specified in its charter) Massachusetts 81-1607465 (State or other jurisdiction of incorporation or o ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-38955 HarborOne Bancorp, Inc. (Exact name of registrant as specified in its charter) Massachusetts 81-1607465 (State or other jurisdiction o ...

PART I. FINANCIAL INFORMATION [ITEM 1. Financial Statements](index=3&type=section&id=ITEM%201.%20Financial%20Statements) Presents unaudited consolidated financial statements for Q2 and H1 2022, detailing balance sheets, income statements, and key accounting policies [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202022%20and%20December%2031%2C%202021) Total assets increased by 3.3% to $4.70 billion, driven by loan growth, while stockholders' equity decreased by 8.1% due to repurchases and unrealized losses | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Total assets | $4,704,044 | $4,553,405 | $150,639 | 3.3% | | Total liabilities | $4,079,566 | $3,874,144 | $205,422 | 5.3% | | Total deposits | $3,847,933 | $3,682,649 | $165,284 | 4.5% | | Total stockholders' equity | $624,478 | $679,261 | $(54,783) | (8.1)% | [Consolidated Statements of Income](index=7&type=section&id=Consolidated%20Statements%20of%20Income%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202022%20and%202021) Net income decreased for both Q2 and H1 2022, primarily due to increased provision for credit losses and lower noninterest income | Metric | Three Months Ended June 30, 2022 (in thousands) | Three Months Ended June 30, 2021 (in thousands) | Six Months Ended June 30, 2022 (in thousands) | Six Months Ended June 30, 2021 (in thousands) | | :--------------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Total interest and dividend income | $39,857 | $35,887 | $75,459 | $71,734 | | Total interest expense | $2,662 | $3,357 | $4,994 | $7,152 | | Net interest and dividend income | $37,195 | $32,530 | $70,465 | $64,582 | | Provision (benefit) for credit losses | $2,546 | $(4,286) | $2,884 | $(4,195) | | Total noninterest income | $14,103 | $21,703 | $33,164 | $59,512 | | Total noninterest expense | $34,954 | $38,598 | $69,789 | $81,400 | | Net income | $9,987 | $14,276 | $22,254 | $33,668 | | Basic EPS | $0.21 | $0.28 | $0.47 | $0.65 | | Diluted EPS | $0.21 | $0.27 | $0.46 | $0.64 | [Consolidated Statements of Comprehensive (Loss) Income](index=8&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20(Loss)%20Income%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202022%20and%202021) The company reported a comprehensive loss for Q2 and H1 2022, primarily due to significant unrealized losses on available-for-sale securities | Metric | Three Months Ended June 30, 2022 (in thousands) | Three Months Ended June 30, 2021 (in thousands) | Six Months Ended June 30, 2022 (in thousands) | Six Months Ended June 30, 2021 (in thousands) | | :------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net income | $9,987 | $14,276 | $22,254 | $33,668 | | Total other comprehensive (loss) income | $(15,220) | $989 | $(32,630) | $(1,356) | | Comprehensive (loss) income | $(5,233) | $15,265 | $(10,376) | $32,312 | - The significant unrealized losses on securities available for sale (net of tax) were **$(15,844) thousand** for the three months ended June 30, 2022, and **$(36,058) thousand** for the six months ended June 30, 2022, largely contributing to the comprehensive loss[12](index=12&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity](index=9&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202022%20and%202021) Stockholders' equity decreased from $679.3 million to $624.5 million, primarily due to comprehensive loss and treasury stock repurchases, partially offset by net income | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Total Stockholders' Equity | $624,478 | $679,261 | | Accumulated other comprehensive loss | $(34,267) | $(1,637) | | Treasury stock, at cost | $(132,296) | $(85,859) | - The decrease in stockholders' equity was significantly impacted by a cumulative effect adjustment of **$(1.9) million** to retained earnings upon adoption of ASC 326 (CECL) on January 1, 2022[16](index=16&type=chunk)[36](index=36&type=chunk) - The company repurchased **1,358,367 shares** of treasury stock at a cost of **$(18,783) thousand** during the three months ended June 30, 2022, and **3,239,588 shares** at a cost of **$(46,437) thousand** during the six months ended June 30, 2022[14](index=14&type=chunk)[16](index=16&type=chunk) [Consolidated Statements of Cash Flows](index=12&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202022%20and%202021) Net cash from operating activities significantly decreased, while investing activities shifted to a net cash use, primarily due to increased loan originations | Cash Flow Activity | Six Months Ended June 30, 2022 (in thousands) | Six Months Ended June 30, 2021 (in thousands) | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net cash provided by operating activities | $21,060 | $122,244 | | Net cash used by investing activities | $(302,108) | $(7,071) | | Net cash provided by financing activities | $170,667 | $94,604 | | Net change in cash and cash equivalents | $(110,381) | $209,777 | | Cash and cash equivalents at end of period | $84,338 | $415,647 | - The significant increase in cash used by investing activities was driven by net loan originations/payments of **$(178.8) million** (vs. $94.5 million provided in 2021) and loan pool purchases of **$(58.3) million**[18](index=18&type=chunk) - Financing activities saw a net increase in deposits of **$165.2 million** and a net change in short-term borrowed funds of **$90.0 million**[22](index=22&type=chunk) [Notes to Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(unaudited)) Provides detailed disclosures on accounting policies, financial instruments, and other significant financial information, including the adoption of CECL and breakdowns of key financial items [Note 1. Summary of Significant Accounting Policies](index=14&type=section&id=Note%201.%20Summary%20of%20Significant%20Accounting%20Policies) Outlines the basis of presentation and significant accounting policies, highlighting the adoption of CECL, which impacted the allowance for credit losses and retained earnings - The Company adopted ASU 2016-13 (CECL) on January 1, 2022, requiring the measurement of expected lifetime credit losses for financial assets at amortized cost and unfunded commitments[33](index=33&type=chunk) | Metric | Impact on January 1, 2022 (in millions) | | :------------------------------------ | :-------------------------------------- | | Decrease in ACL for loans | $(1.3) | | Increase in ACL for unfunded commitments | $3.9 | | Net increase in ACL | $2.6 | | Decrease in retained earnings (net of tax) | $(1.9) | - The Company provides financial services through **31 full-service branches** in Massachusetts and Rhode Island, and HarborOne Mortgage operates **27 offices** across Massachusetts, Rhode Island, and New Hampshire[27](index=27&type=chunk) [Note 2. Debt Securities](index=17&type=section&id=Note%202.%20Debt%20Securities) Details debt securities, including the adoption of Topic 326, with total available-for-sale securities at $334.4 million and significant unrealized losses due to rising interest rates - Effective January 1, 2022, the Company adopted Topic 326 for debt securities; no ACL was recognized on available-for-sale debt securities upon adoption[39](index=39&type=chunk) | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :------------------------------------ | :----------------------------- | :------------------------------- | | Securities available for sale (fair value) | $334,398 | $394,036 | | Securities held to maturity (amortized cost) | $10,000 | $0 | | Gross unrealized losses (available for sale) | $49,891 | $4,753 | - The majority of unrealized losses on debt securities are attributed to changes in interest rates, not credit quality, as most securities are issued by U.S. government-sponsored entities with a history of zero credit loss[53](index=53&type=chunk) [Note 3. Loans Held for Sale](index=24&type=section&id=Note%203.%20Loans%20Held%20for%20Sale) Loans held for sale decreased by $13.9 million to $31.7 million, reflecting dampened residential mortgage demand due to rising interest rates | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Loans held for sale, fair value | $31,679 | $45,642 | $(13,963) | (30.6)% | | Loans held for sale, contractual principal outstanding | $31,073 | $44,245 | $(13,172) | (29.8)% | - The decrease in loans held for sale is primarily due to rising interest rates on residential mortgage loans, which dampened loan demand[206](index=206&type=chunk) [Note 4. Loans and Allowance for Credit Losses](index=25&type=section&id=Note%204.%20Loans%20and%20Allowance%20for%20Credit%20Losses) Total loans increased by 8.4% to $3.91 billion, driven by real estate loans, while the allowance for credit losses decreased, and nonaccrual loans significantly declined | Loan Category | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Residential real estate loans | $1,423,074 | $1,217,980 | $205,094 | 16.8% | | Commercial loans | $2,413,563 | $2,258,048 | $155,515 | 6.9% | | Consumer loans | $75,312 | $131,705 | $(56,393) | (42.8)% | | Total loans | $3,911,949 | $3,607,733 | $304,216 | 8.4% | | Allowance for credit losses on loans | $(43,560) | $(45,377) | $1,817 | 4.0% | | Net loans | $3,868,389 | $3,562,356 | $306,033 | 8.6% | - Nonaccrual loans decreased to **$24.4 million** at June 30, 2022, from $36.1 million at December 31, 2021, primarily due to the resolution of an **$8.8 million** credit in the office at-risk sector[83](index=83&type=chunk)[264](index=264&type=chunk)[266](index=266&type=chunk) | Metric | June 30, 2022 | December 31, 2021 | | :------------------------------------ | :------------ | :---------------- | | Allowance for credit losses to total loans | 1.11% | 1.26% | | Allowance for credit losses to nonaccrual loans | 178.41% | 125.58% | | Total nonperforming loans to total loans | 0.62% | 1.00% | [Note 5. Mortgage Loan Servicing](index=38&type=section&id=Note%205.%20Mortgage%20Loan%20Servicing) Mortgage servicing rights (MSRs) increased to $47.1 million, positively impacted by rising interest rates reducing prepayment speeds, with the unpaid principal balance remaining stable | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :------------------------------------ | :----------------------------- | :------------------------------- | | Mortgage servicing rights, at fair value | $47,130 | $38,268 | | Unpaid principal balance of mortgage loans serviced for others | $3,650,000 | $3,650,000 | - Key assumptions for MSR fair value at June 30, 2022, included a prepayment speed of **7.20%** (down from 9.40% at Dec 31, 2021), a discount rate of **9.24%** (up from 9.20%), and a default rate of **1.49%** (down from 1.64%)[98](index=98&type=chunk) - The increase in MSR fair value is consistent with the rise in the 10-year Treasury Constant Maturity rate, as higher rates generally lead to lower prepayment speeds and increased MSR value[212](index=212&type=chunk)[258](index=258&type=chunk) [Note 6. Goodwill and Other Intangible Assets](index=39&type=section&id=Note%206.%20Goodwill%20and%20Other%20Intangible%20Assets) Goodwill remained stable at $69.8 million, allocated between segments, with other intangible assets at $2.7 million, and no interim impairment test warranted | Metric | June 30, 2022 (in thousands) | | :------------------------------------ | :----------------------------- | | Goodwill | $69,802 | | Other intangible assets | $2,695 | | Goodwill allocated to HarborOne Bank | $59,042 | | Goodwill allocated to HarborOne Mortgage | $10,760 | [Note 7. Deposits](index=39&type=section&id=Note%207.%20Deposits) Total deposits increased by 4.5% to $3.85 billion, driven by consumer, business, and municipal deposits, offsetting decreases in money market and term certificate accounts | Deposit Type | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | Change (in thousands) | % Change | | :------------------------------------ | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Noninterest-bearing deposits | $775,154 | $743,051 | $32,103 | 4.3% | | NOW accounts | $316,771 | $313,684 | $3,087 | 1.0% | | Regular savings | $1,282,913 | $1,138,980 | $143,933 | 12.6% | | Money market accounts | $507,746 | $548,830 | $(41,084) | (7.5)% | | Term certificate accounts | $485,985 | $527,548 | $(41,563) | (7.9)% | | Total deposits | $3,847,933 | $3,682,649 | $165,284 | 4.5% | - The growth in consumer and business deposits reflects marketing efforts and customers maintaining liquidity due to market uncertainty[213](index=213&type=chunk) - Reciprocal deposits, part of a program providing access to FDIC-insured products exceeding limits, totaled **$36.5 million** at June 30, 2022[101](index=101&type=chunk)[213](index=213&type=chunk) [Note 8. Borrowings](index=41&type=section&id=Note%208.%20Borrowings) Total borrowed funds significantly increased to $105.7 million, primarily due to $90.0 million in new short-term FHLB advances, with available borrowing capacity remaining strong | Borrowing Type | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :------------------------------------ | :----------------------------- | :------------------------------- | | Short-term borrowed funds (FHLB) | $90,000 | $0 | | Long-term borrowed funds (FHLB) | $15,693 | $55,711 | | Subordinated debt | $34,222 | $34,159 | | Total borrowed funds | $105,693 | $55,711 | - The Company had **$829.5 million** of available borrowing capacity with the FHLB and **$66.9 million** with the Federal Reserve Bank of Boston at June 30, 2022[107](index=107&type=chunk)[292](index=292&type=chunk) [Note 9. Other Commitments and Contingencies](index=42&type=section&id=Note%209.%20Other%20Commitments%20and%20Contingencies) The allowance for credit losses on unfunded commitments increased to $5.1 million, with significant off-balance sheet commitments for loans and unadvanced funds - The ACL on unfunded commitments increased by **$3.9 million** upon adoption of Topic 326 on January 1, 2022, and totaled **$5.1 million** at June 30, 2022[110](index=110&type=chunk)[113](index=113&type=chunk)[244](index=244&type=chunk) | Commitment Type | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :------------------------------------ | :----------------------------- | :------------------------------- | | Commitments to grant residential real estate loans | $153,938 | $142,781 | | Commitments to grant other loans | $103,802 | $27,029 | | Unadvanced funds on home equity lines of credit | $229,509 | $211,120 | | Unadvanced funds on revolving lines of credit | $251,995 | $223,110 | | Unadvanced funds on construction loans | $294,452 | $194,101 | [Note 10. Derivatives](index=44&type=section&id=Note%2010.%20Derivatives) The Company uses derivatives, including interest rate swaps and loan commitments, to manage interest rate risk, with varying fair values for hedging and non-hedging instruments | Derivative Type | Notional Amount (in thousands) | Fair Value Asset (in thousands) | Fair Value Liability (in thousands) | | :------------------------------------ | :----------------------------- | :------------------------------ | :-------------------------------- | | Interest rate swaps (cashflow hedge) | $100,000 | $6,431 | $0 | | Derivative loan commitments | $66,802 | $1,187 | $23 | | Forward loan sale commitments | $64,500 | $158 | $216 | | Interest rate swaps (non-hedge) | $656,743 | $15,894 | $15,894 | - The Company expects approximately **$2.5 million** related to the cashflow hedge to be reclassified to interest expense from other comprehensive income in the next twelve months[120](index=120&type=chunk) - Changes in fair value of derivative loan commitments and forward loan sale commitments are reported in mortgage banking income[130](index=130&type=chunk) [Note 11. Operating Lease Right-of-Use Assets and Liabilities](index=47&type=section&id=Note%2011.%20Operating%20Lease%20Right-of-Use%20Assets%20and%20Liabilities) Operating lease ROU assets were $26.5 million and liabilities $28.1 million, with a weighted-average remaining lease term of 16.4 years and total lease expense of $1.7 million | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :------------------------------------ | :----------------------------- | :------------------------------- | | Operating lease ROU assets | $26,500 | $26,800 | | Operating lease liabilities | $28,100 | $28,400 | | Weighted-average remaining lease term | 16.41 years | 16.77 years | | Weighted-average discount rate | 1.96% | 1.94% | | Lease Expense Component | Six Months Ended June 30, 2022 (in thousands) | | :------------------------------------ | :-------------------------------------------- | | Operating lease expense | $1,636 | | Short-term lease expense | $68 | | Variable lease expense | $0 | | Sublease income | $(5) | | Total lease expense | $1,699 | [Note 12. Minimum Regulatory Capital Requirements](index=48&type=section&id=Note%2012.%20Minimum%20Regulatory%20Capital%20Requirements) Both the Company and the Bank exceeded all minimum regulatory capital requirements, including the capital conservation buffer, and were considered 'well capitalized' at June 30, 2022 - The Company and the Bank exceeded all regulatory capital requirements and were considered **'well capitalized'** at June 30, 2022[140](index=140&type=chunk) | Capital Ratio | HarborOne Bancorp, Inc. (June 30, 2022) | HarborOne Bank (June 30, 2022) | Minimum Required for Capital Adequacy | Minimum for 'Well Capitalized' | | :------------------------------------ | :-------------------------------------- | :----------------------------- | :------------------------------------ | :---------------------------- | | Common equity Tier 1 capital to risk-weighted assets | 14.5% | 12.4% | 4.5% | 6.5% (Bank only) | | Tier 1 capital to risk-weighted assets | 14.5% | 12.4% | 6.0% | 8.0% (Bank only) | | Total capital to risk-weighted assets | 16.5% | 13.6% | 8.0% | 10.0% (Bank only) | | Tier 1 capital to average assets | 12.8% | 11.0% | 4.0% | 5.0% (Bank only) | [Note 13. Comprehensive (Loss) Income](index=51&type=section&id=Note%2013.%20Comprehensive%20(Loss)%20Income) Accumulated other comprehensive loss significantly increased to $(34.3) million, primarily due to a substantial increase in net unrealized losses on available-for-sale securities | Component | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :------------------------------------ | :----------------------------- | :------------------------------- | | Total accumulated other comprehensive income (cash flow hedge) | $4,625 | $1,197 | | Total accumulated other comprehensive loss (securities available for sale) | $(38,892) | $(2,834) | | Total accumulated other comprehensive loss | $(34,267) | $(1,637) | - The net unrealized loss on securities available for sale increased from **$(2,834) thousand** at December 31, 2021, to **$(38,892) thousand** at June 30, 2022, reflecting a significant negative impact from market conditions[145](index=145&type=chunk)[146](index=146&type=chunk) [Note 14. Fair Value of Assets and Liabilities](index=52&type=section&id=Note%2014.%20Fair%20Value%20of%20Assets%20and%20Liabilities) The Company measures various assets and liabilities at fair value, primarily using Level 2 inputs, with collateral-dependent impaired loans measured on a non-recurring basis using Level 3 inputs | Asset/Liability (Recurring Fair Value) | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :------------------------------------ | :----------------------------- | :------------------------------- | | Securities available for sale | $334,398 | $394,036 | | Loans held for sale | $31,679 | $45,642 | | Mortgage servicing rights | $47,130 | $38,268 | | Total Assets Measured at Fair Value (Recurring) | $436,877 | $500,066 | | Asset (Non-recurring Fair Value) | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :------------------------------------ | :----------------------------- | :------------------------------- | | Collateral-dependent impaired loans | $8,850 | $21,615 | | Other real estate owned and repossessed assets | $0 | $53 | | Total Assets Measured at Fair Value (Non-recurring) | $8,850 | $21,668 | - The fair value of collateral-dependent impaired loans is determined based on the fair value of the underlying collateral, often adjusted for estimated costs to sell, and is classified as Level 3[155](index=155&type=chunk) [Note 15. Earnings Per Share ("EPS")](index=61&type=section&id=Note%2015.%20Earnings%20Per%20Share%20(%22EPS%22)) Basic EPS for Q2 2022 was $0.21 (down from $0.28), and diluted EPS was $0.21 (down from $0.27), reflecting the decrease in net income | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS | $0.21 | $0.28 | $0.47 | $0.65 | | Diluted EPS | $0.21 | $0.27 | $0.46 | $0.64 | | Weighted average basic shares outstanding | 46,980,830 | 51,778,293 | 47,406,257 | 52,155,754 | | Weighted average diluted shares outstanding | 47,536,033 | 52,650,071 | 48,110,863 | 52,823,354 | [Note 16. Revenue Recognition](index=62&type=section&id=Note%2016.%20Revenue%20Recognition) Revenue is recognized when performance obligations are satisfied, either at a point in time or over time, with transactional revenues recognized immediately upon service completion - Revenue is recognized when performance obligations are satisfied, which can be at a point in time (e.g., transactional fees) or over time[184](index=184&type=chunk)[186](index=186&type=chunk) - The Company acts as a principal when providing services directly or through a third party, reporting gross consideration, and as an agent when referring services, reporting net fees or commissions[185](index=185&type=chunk) [Note 17. Segment Reporting](index=62&type=section&id=Note%2017.%20Segment%20Reporting) The Company operates through HarborOne Bank and HarborOne Mortgage segments, with both experiencing decreased net income due to increased credit loss provision and reduced mortgage banking income - The Company has two reportable segments: HarborOne Bank (interest on loans/securities, deposit service charges) and HarborOne Mortgage (interest on loans, residential mortgage origination/sale/servicing fees)[187](index=187&type=chunk) | Segment Net Income (in thousands) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | HarborOne Bank | $9,354 | $12,274 | $18,160 | $20,548 | | HarborOne Mortgage | $1,390 | $2,599 | $5,626 | $14,253 | [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=65&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Provides management's perspective on financial performance and condition, discussing changes in assets, liabilities, equity, results of operations, critical accounting policies, and market risk [Forward-Looking Statements](index=65&type=section&id=Forward-Looking%20Statements) The report contains forward-looking statements subject to significant risks and uncertainties, including economic conditions, interest rate changes, and credit losses - Forward-looking statements are identified by words like 'may,' 'will,' 'should,' 'could,' 'would,' 'plan,' 'potential,' 'estimate,' 'project,' 'believe,' 'intend,' 'anticipate,' 'expect,' 'target' and similar expressions[195](index=195&type=chunk) - Key risks include the impact of the COVID-19 pandemic, changes in economic conditions, interest rate fluctuations, credit losses, market turbulence, and operational risks[196](index=196&type=chunk) [Critical Accounting Policies and Estimates](index=65&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Identifies Allowance for Credit Losses, Income Taxes, and Goodwill as critical accounting policies requiring significant judgment and estimates susceptible to material changes - The most critical accounting policies are Allowance for Credit Losses, Income Taxes, and Goodwill and Identifiable Intangible Assets[201](index=201&type=chunk) - Estimates are subject to changes based on interest rates, economic performance, and borrower financial condition[200](index=200&type=chunk) [COVID-19 Update](index=67&type=section&id=COVID-19%20Update) Ongoing uncertainty from the pandemic and inflation could affect credit quality, with management monitoring specific sectors for increased credit risk - Management continues to monitor five sectors for increased credit risk: retail, office space, hotels, restaurants, and recreation[202](index=202&type=chunk) | Sector | Loans (in millions) | Nonaccrual Loans (in millions) | | :------------------------------------ | :------------------ | :----------------------------- | | Business-oriented hotels | $123.3 | $10.6 | | Non-anchored retail space | $58.8 | $0 | | Metro office space | $14.9 | $0 | [Comparison of Financial Condition](index=68&type=section&id=Comparison%20of%20Financial%20Condition%20at%20June%2030%2C%202022%20and%20December%2031%2C%202021) Total assets increased by 3.3% to $4.70 billion due to loan growth, while stockholders' equity decreased by 8.1% from share repurchases and unrealized losses [Total Assets](index=68&type=section&id=Total%20Assets) Total assets increased by $150.6 million, or 3.3%, to $4.70 billion, primarily due to a $304.2 million increase in loans | Metric | June 30, 2022 (in billions) | December 31, 2021 (in billions) | Change (in millions) | % Change | | :------------------------------------ | :-------------------------- | :------------------------------ | :------------------- | :------- | | Total assets | $4.70 | $4.55 | $150.6 | 3.3% | [Cash and Cash Equivalents](index=68&type=section&id=Cash%20and%20Cash%20Equivalents) Cash and cash equivalents decreased by $110.4 million to $84.3 million, primarily used to fund loan growth | Metric | June 30, 2022 (in millions) | December 31, 2021 (in millions) | Change (in millions) | % Change | | :------------------------------------ | :-------------------------- | :------------------------------ | :------------------- | :------- | | Cash and cash equivalents | $84.3 | $194.7 | $(110.4) | (56.7)% | [Loans Held for Sale](index=68&type=section&id=Loans%20Held%20for%20Sale) Loans held for sale decreased by $13.9 million to $31.7 million due to reduced residential mortgage loan demand from rising interest rates | Metric | June 30, 2022 (in millions) | December 31, 2021 (in millions) | Change (in millions) | % Change | | :------------------------------------ | :-------------------------- | :------------------------------ | :------------------- | :------- | | Loans held for sale | $31.7 | $45.6 | $(13.9) | (30.5)% | [Loans, net](index=68&type=section&id=Loans%2C%20net) Net loans increased by 8.6% to $3.87 billion, driven by commercial and residential real estate loans, while the allowance for loan losses decreased | Loan Category | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | Change (in thousands) | % Change | | :------------------------------------ | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Residential real estate loans | $1,423,074 | $1,217,980 | $205,094 | 16.8% | | Commercial real estate | $1,847,619 | $1,699,877 | $147,742 | 8.7% | | Commercial and industrial | $407,182 | $421,608 | $(14,426) | (3.4)% | | Consumer loans | $75,312 | $131,705 | $(56,393) | (42.8)% | | Total loans | $3,911,949 | $3,607,733 | $304,216 | 8.4% | | Allowance for loan losses | $(43,560) | $(45,377) | $1,817 | 4.0% | | Loans, net | $3,868,389 | $3,562,356 | $306,033 | 8.6% | - The increase in one- to four-family loans includes a purchased pool of **$58.1 million**[207](index=207&type=chunk) [Securities](index=68&type=section&id=Securities) Total investment securities decreased by 12.6% to $344.4 million, with available-for-sale securities significantly impacted by $49.9 million in unrealized losses | Metric | June 30, 2022 (in millions) | December 31, 2021 (in millions) | Change (in millions) | % Change | | :------------------------------------ | :-------------------------- | :------------------------------ | :------------------- | :------- | | Total investment securities | $344.4 | $394.0 | $(49.6) | (12.6)% | | Securities available for sale (unrealized losses) | $(49.9) | $(3.6) | $(46.3) | 1286.1% | | Securities held to maturity | $10.0 | $0 | $10.0 | N/A | [Mortgage servicing rights](index=68&type=section&id=Mortgage%20servicing%20rights) Mortgage servicing rights (MSRs) increased to $47.1 million, positively influenced by rising interest rates reducing prepayment speeds, with no hedging strategy | Metric | June 30, 2022 (in millions) | December 31, 2021 (in millions) | Change (in millions) | % Change | | :------------------------------------ | :-------------------------- | :------------------------------ | :------------------- | :------- | | Total MSRs | $47.1 | $38.3 | $8.8 | 23.0% | | Unpaid principal balance of mortgage loans serviced for others | $3,650 | $3,650 | $0 | 0.0% | - Management has made the strategic decision not to hedge mortgage servicing assets, meaning future declines in interest rates would likely decrease MSR fair value and earnings, while increases would have the opposite effect[212](index=212&type=chunk) [Deposits](index=70&type=section&id=Deposits) Deposits increased by 4.5% to $3.85 billion, driven by consumer, business, and municipal deposits, offsetting decreases in money market and term certificate accounts | Deposit Type | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | Change (in thousands) | % Change | | :------------------------------------ | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Noninterest-bearing deposits | $775,154 | $743,051 | $32,103 | 4.3% | | Regular savings | $1,282,913 | $1,138,980 | $143,933 | 12.6% | | Money market accounts | $507,746 | $548,830 | $(41,084) | (7.5)% | | Term certificate accounts | $485,985 | $527,548 | $(41,563) | (7.9)% | | Total deposits | $3,847,933 | $3,682,649 | $165,284 | 4.5% | [Stockholders' equity](index=70&type=section&id=Stockholders'%20equity) Total stockholders' equity decreased by 8.1% to $624.5 million, primarily due to share repurchases and elevated unrealized losses on available-for-sale securities | Metric | June 30, 2022 (in millions) | December 31, 2021 (in millions) | Change (in millions) | % Change | | :------------------------------------ | :-------------------------- | :------------------------------ | :------------------- | :------- | | Total stockholders' equity | $624.5 | $679.3 | $(54.8) | (8.1)% | | Tangible common equity to tangible assets ratio | 11.92% | 13.53% | (1.61)% | (11.9)% | - The Company commenced its fourth share repurchase program on April 12, 2022, repurchasing **1,337,602 shares** at an average price of **$13.83** through June 30, 2022[214](index=214&type=chunk)[308](index=308&type=chunk) [Comparison of Results of Operations](index=71&type=section&id=Comparison%20of%20Results%20of%20Operations%20for%20the%20Three%20Months%20and%20Six%20Months%20Ended%20June%2030%2C%202022%20and%202021) Consolidated net income decreased due to higher credit loss provision and lower noninterest income, despite increased net interest and dividend income and improved net interest margin [Overview](index=71&type=section&id=Overview) Consolidated net income for Q2 2022 was $10.0 million (down from $14.3 million), and for H1 2022, it was $22.3 million (down from $33.7 million) | Metric | Three Months Ended June 30, 2022 (in millions) | Three Months Ended June 30, 2021 (in millions) | Six Months Ended June 30, 2022 (in millions) | Six Months Ended June 30, 2021 (in millions) | | :------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Consolidated net income | $10.0 | $14.3 | $22.3 | $33.7 | [Average Balances and Yields](index=71&type=section&id=Average%20Balances%20and%20Yields) Average interest-earning assets and liabilities increased, with improved yield on assets and decreased cost of liabilities, leading to better net interest spread and margin | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Average interest-earning assets (in millions) | $4,289,945 | $4,260,866 | $4,247,242 | $4,202,602 | | Yield on interest-earning assets | 3.73% | 3.38% | 3.58% | 3.44% | | Average interest-bearing liabilities (in millions) | $3,116,912 | $3,024,022 | $3,077,596 | $3,000,711 | | Cost of interest-bearing liabilities | 0.34% | 0.45% | 0.33% | 0.48% | | Net interest spread | 3.39% | 2.93% | 3.25% | 2.96% | | Net interest margin | 3.48% | 3.06% | 3.35% | 3.10% | [Rate/Volume Analysis](index=75&type=section&id=Rate%2FVolume%20Analysis) Net interest income increased by $4.7 million for Q2 and $5.9 million for H1, driven by volume increases in loans and securities, and favorable rate changes | Change in Net Interest Income (in thousands) | Three Months Ended June 30, 2022 v. 2021 | Six Months Ended June 30, 2022 v. 2021 | | :------------------------------------------- | :--------------------------------------- | :------------------------------------- | | Total increase (decrease) due to volume | $3,704 | $4,333 | | Total increase (decrease) due to rate | $961 | $1,550 | | Total change in net interest income | $4,665 | $5,883 | [Interest and Dividend Income](index=76&type=section&id=Interest%20and%20Dividend%20Income) Interest and dividend income increased by 11.1% for Q2 and 5.2% for H1, primarily due to higher average balances and yields on loans and securities | Metric | Three Months Ended June 30, 2022 (in millions) | Three Months Ended June 30, 2021 (in millions) | Six Months Ended June 30, 2022 (in millions) | Six Months Ended June 30, 2021 (in millions) | | :------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Total interest and dividend income | $39.9 | $35.9 | $75.5 | $71.7 | - Loan interest and fees increased by **$3.4 million (10.0%)** for the three months, driven by loan growth and including **$1.1 million** in prepayment penalties and **$368,000** from PPP loan fees[235](index=235&type=chunk) - Interest income on securities increased by **$1.1 million (136.2%)** for the three months due to higher average balance and rate[235](index=235&type=chunk) [Interest Expense](index=76&type=section&id=Interest%20Expense) Interest expense decreased by 20.7% for Q2 and 30.2% for H1, primarily due to lower interest expense on FHLB borrowings and deposits, reflecting decreased average costs | Metric | Three Months Ended June 30, 2022 (in millions) | Three Months Ended June 30, 2021 (in millions) | Six Months Ended June 30, 2022 (in millions) | Six Months Ended June 30, 2021 (in millions) | | :------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Total interest expense | $2.7 | $3.4 | $5.0 | $7.2 | - Interest expense on FHLB borrowings decreased by **$412,000** for the three months, reflecting a decrease in both average balance and cost[230](index=230&type=chunk) - Interest expense on deposits decreased by **$283,000** for the three months, driven by a decrease in the cost of interest-bearing deposits[230](index=230&type=chunk) [Net Interest and Dividend Income](index=76&type=section&id=Net%20Interest%20and%20Dividend%20Income) Net interest and dividend income increased by 14.3% for Q2 and 9.1% for H1, driven by higher average balances of loans and investments, with improved net interest spread and margin | Metric | Three Months Ended June 30, 2022 (in millions) | Three Months Ended June 30, 2021 (in millions) | Six Months Ended June 30, 2022 (in millions) | Six Months Ended June 30, 2021 (in millions) | | :------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net interest and dividend income | $37.2 | $32.5 | $70.5 | $64.6 | | Net interest spread | 3.39% | 2.93% | 3.25% | 2.96% | | Net interest margin | 3.48% | 3.06% | 3.35% | 3.10% | [Income Tax Provision](index=76&type=section&id=Income%20Tax%20Provision) The income tax provision decreased for both Q2 and H1 2022, with the effective tax rate remaining relatively stable around 28% | Metric | Three Months Ended June 30, 2022 (in millions) | Three Months Ended June 30, 2021 (in millions) | Six Months Ended June 30, 2022 (in millions) | Six Months Ended June 30, 2021 (in millions) | | :------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Income tax provision | $3.8 | $5.6 | $8.7 | $13.2 | | Effective tax rate | 27.6% | 28.3% | 28.1% | 28.2% | [Segments](index=78&type=section&id=Segments) HarborOne Bank and HarborOne Mortgage segments showed divergent performance, with both experiencing decreased net income due to increased credit loss provision and reduced mortgage banking income [HarborOne Bank Segment](index=80&type=section&id=HarborOne%20Bank%20Segment) HarborOne Bank's net income decreased by 23.8% for Q2 and 11.6% for H1, primarily due to increased provision for credit losses and higher noninterest expenses [Net Income](index=80&type=section&id=Net%20Income) The Bank's net income decreased for Q2 and H1 2022, primarily due to increased provision for credit losses and noninterest expense, partially offset by higher net interest income | Metric | Three Months Ended June 30, 2022 (in millions) | Three Months Ended June 30, 2021 (in millions) | Six Months Ended June 30, 2022 (in millions) | Six Months Ended June 30, 2021 (in millions) | | :------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net income | $9.4 | $12.3 | $18.2 | $20.5 | | Pre-tax income | $12.9 | $17.1 | $25.3 | $28.8 | [Allowance for Credit Losses](index=80&type=section&id=Allowance%20for%20Credit%20Losses) The Bank recorded a provision for credit losses of $2.5 million for Q2 and $2.8 million for H1, a significant increase from prior year reversals, reflecting CECL adoption | Metric | Three Months Ended June 30, 2022 (in millions) | Three Months Ended June 30, 2021 (in millions) | Six Months Ended June 30, 2022 (in millions) | Six Months Ended June 30, 2021 (in millions) | | :------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Provision (benefit) for credit losses | $2.5 | $(4.3) | $2.8 | $(4.2) | | Net recoveries (charge-offs) | $0.5 | $0.2 | $(2.2) | $0.1 | - Nonperforming assets were **$24.4 million** at June 30, 2022, down from $32.7 million at June 30, 2021, with nonperforming assets to total assets at **0.52%**[246](index=246&type=chunk) [Noninterest Income](index=80&type=section&id=Noninterest%20Income) Total noninterest income for HarborOne Bank increased, driven by a positive change in MSR fair value and higher deposit account fees, partially offset by intersegment losses | Noninterest Income (in thousands) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total mortgage banking loss | $(749) | $(1,053) | $(534) | $(1,129) | | Other noninterest income | $6,084 | $5,898 | $11,971 | $10,989 | | Total noninterest income | $5,335 | $4,845 | $11,437 | $9,860 | | Changes in MSR fair value | $127 | $(419) | $717 | $(133) | | Other deposit account fees | $2,173 | $1,805 | $4,184 | $3,247 | - The positive change in MSR fair value was consistent with the increase in the 10-year Treasury Constant Maturity rate, which positively impacts MSR valuations[252](index=252&type=chunk) [Noninterest Expense](index=83&type=section&id=Noninterest%20Expense) Total noninterest expense for HarborOne Bank increased, primarily due to higher compensation and benefits from increased staffing and salary increases, as well as marketing and deposit expenses | Noninterest Expense (in thousands) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Compensation and benefits | $16,269 | $13,765 | $31,487 | $26,928 | | Marketing | $914 | $782 | $2,048 | $1,539 | | Deposit expenses | $513 | $338 | $1,059 | $778 | | Total noninterest expense | $27,131 | $24,128 | $53,956 | $48,591 | - The increase in compensation and benefits reflects increased staffing, annual salary increases, and expenses related to the former CEO's retirement[253](index=253&type=chunk) [HarborOne Mortgage Segment](index=84&type=section&id=HarborOne%20Mortgage%20Segment) HarborOne Mortgage's net income significantly decreased due to a substantial drop in mortgage banking income, as rising interest rates dampened origination volumes [Net Income](index=84&type=section&id=Net%20Income) HarborOne Mortgage's net income decreased for Q2 and H1 2022, heavily impacted by prevailing interest rates and reduced refinancing activity | Metric | Three Months Ended June 30, 2022 (in millions) | Three Months Ended June 30, 2021 (in millions) | Six Months Ended June 30, 2022 (in millions) | Six Months Ended June 30, 2021 (in millions) | | :------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net income | $1.4 | $2.6 | $5.6 | $14.3 | [Noninterest Income](index=84&type=section&id=Noninterest%20Income) Total noninterest income for HarborOne Mortgage decreased significantly due to a sharp decline in gain on sale of mortgage loans and processing fees from reduced loan closings | Noninterest Income (in thousands) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Gain on sale of mortgage loans | $4,538 | $14,262 | $9,860 | $39,064 | | Processing, underwriting and closing fees | $571 | $2,281 | $1,257 | $5,173 | | Changes in MSR fair value | $735 | $(2,133) | $5,430 | $990 | | Total mortgage banking income | $8,763 | $16,838 | $21,942 | $49,640 | - Loan production decreased significantly, with total loan amounts of **$297.5 million** for the three months (down from $638.8 million in 2021) and **$551.4 million** for the six months (down from $1,399.0 million in 2021)[258](index=258&type=chunk) - Purchase money mortgages constituted a larger share of originations (**79.8%** for Q2 2022 vs. 46.7% for Q2 2021), while refinance activity declined (**16.8%** for Q2 2022 vs. 51.8% for Q2 2021)[258](index=258&type=chunk) [Noninterest Expense](index=87&type=section&id=Noninterest%20Expense) Total noninterest expense for HarborOne Mortgage decreased significantly due to lower compensation and benefits and reduced loan expenses, consistent with lower origination volumes | Noninterest Expense (in thousands) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Compensation and benefits | $5,435 | $11,376 | $11,186 | $25,638 | | Loan expenses | $249 | $1,075 | $633 | $3,080 | | Professional fees | $166 | $452 | $376 | $1,061 | | Total noninterest expense | $7,242 | $14,101 | $15,003 | $32,158 | - The decrease in compensation and benefits primarily reflects reduced commission expense and staffing levels, consistent with lower mortgage origination volumes[261](index=261&type=chunk) [Asset Quality](index=88&type=section&id=Asset%20Quality) Asset quality remained strong, with total nonperforming assets decreasing to $24.4 million and the allowance for credit losses on loans at 1.11% of total loans [Nonperforming Assets](index=88&type=section&id=Nonperforming%20Assets) Total nonperforming assets decreased to $24.4 million, primarily due to the resolution of an $8.8 million credit in the office at-risk sector | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :------------------------------------ | :----------------------------- | :------------------------------- | | Total nonaccrual loans | $24,415 | $36,133 | | Total nonperforming assets | $24,441 | $36,186 | | Nonperforming assets to total assets | 0.52% | 0.79% | | Performing troubled debt restructurings | $8,935 | $10,003 | - The decrease in nonperforming assets was primarily due to the resolution of one **$8.8 million** credit, which also resulted in a **$2.8 million** charge-off in Q1 2022[266](index=266&type=chunk) [Allowance for Credit Losses (ACL) Methodology](index=88&type=section&id=Allowance%20for%20Credit%20Losses%20(ACL)%20Methodology) The ACL methodology, updated with CECL adoption, evaluates quantitative and qualitative factors, pooling loans by risk characteristics and individually analyzing others using various valuation methods - The ACL methodology combines quantitative (pooled loans by risk characteristics, DCF with econometric factors like unemployment rate) and qualitative factors[267](index=267&type=chunk)[271](index=271&type=chunk) - Individually analyzed loans (nonaccrual, TDRs, high-risk commercial) are measured using DCF, market price, or collateral fair value[268](index=268&type=chunk)[271](index=271&type=chunk) [Allowance for Loan Losses Breakdown](index=90&type=section&id=Allowance%20for%20Loan%20Losses%20Breakdown) The ACL on loans was $43.6 million, or 1.11% of total loans, with commercial real estate loans accounting for the largest portion at 46.9% | Loan Category | June 30, 2022 ACL (in thousands) | % of Total Allowance | December 31, 2021 ACL (in thousands) | % of Total Allowance | | :------------------------------------ | :------------------------------- | :------------------- | :------------------------------- | :------------------- | | Residential real estate: One- to four-family | $10,082 | 23.15% | $3,631 | 8.00% | | Commercial real estate | $20,431 | 46.90% | $33,242 | 73.26% | | Commercial and industrial | $7,174 | 16.47% | $4,638 | 10.22% | | Total ACL | $43,560 | 100.00% | $45,377 | 100.00% | - The ACL on individually analyzed loans amounted to **$3.6 million**, representing **10.9%** of their carrying value[272](index=272&type=chunk) [Net Charge-offs (Recoveries)](index=90&type=section&id=Net%20Charge-offs%20(Recoveries)) Net recoveries were $505,000 for Q2, while net charge-offs were $2.2 million for H1, including a $2.8 million charge-off from a single commercial credit resolution | Metric | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2022 | | :------------------------------------ | :------------------------------- | :----------------------------- | | Net Charge-offs (Recoveries) (in thousands) | $(505) | $2,225 | | Annualized Net Charge-off (Recovery) Rate | (0.05)% | 0.12% | - The six-month period included a **$2.8 million** charge-off upon the resolution of one commercial credit[246](index=246&type=chunk) [Management of Market Risk](index=91&type=section&id=Management%20of%20Market%20Risk) The Company uses income simulation and Economic Value of Equity (EVE) analysis to measure interest rate risk, indicating sensitivity to rising rates with a projected (18.0)% decrease in EVE for a +300 bps shift [Net Interest Income Analysis](index=91&type=section&id=Net%20Interest%20Income%20Analysis) Income simulation projects a (0.7)% decrease in net interest income over one year for a +300 basis point shift in the yield curve | Change in Interest Rates (basis points) | Change in Net Interest Income (Year One) | | :-------------------------------------- | :--------------------------------------- | | +300 | (0.7)% | | +200 | (0.3)% | | +100 | (0.2)% | | -100 | (2.1)% | [Economic Value of Equity Analysis](index=93&type=section&id=Economic%20Value%20of%20Equity%20Analysis) EVE analysis estimates an (18.0)% decrease in EVE for a +300 basis point instantaneous parallel shift in interest rates | Change in Interest Rates (basis points) | Estimated Change in EVE (Percent) | | :-------------------------------------- | :-------------------------------- | | +300 | (18.0)% | | +200 | (10.4)% | | +100 | (4.8)% | | -100 | (1.7)% | [Liquidity Management and Capital Resources](index=93&type=section&id=Liquidity%20Management%20and%20Capital%20Resources) The Company maintains strong liquidity through deposit inflows, loan repayments, and FHLB borrowings, with both the Company and Bank exceeding all regulatory capital requirements - Primary sources of funds include deposit inflows, loan repayments, maturities and sales of securities, and FHLB borrowings[286](index=286&type=chunk) | Metric | June 30, 2022 (in millions) | | :------------------------------------ | :-------------------------- | | Cash and cash equivalents | $84.3 | | Available-for-sale investment securities | $334.4 | | Total deposits | $3,850 | | Available borrowing capacity from FHLB | $829.5 | | Available borrowing capacity from FRBB | $66.9 | - The Company and the Bank were considered **'well capitalized'** under regulatory guidelines at June 30, 2022[294](index=294&type=chunk) [Off-Balance Sheet Arrangements, Credit Commitments, and Contractual Obligations](index=95&type=section&id=Off-Balance%20Sheet%20Arrangements%2C%20Credit%20Commitments%2C%20and%20Contractual%20Obligations) The Company had $257.7 million in loan origination commitments and $776.0 million in unadvanced funds, with no other material off-balance sheet arrangements identified | Commitment Type | June 30, 2022 (in millions) | | :------------------------------------ | :-------------------------- | | Outstanding commitments to originate loans | $257.7 | | Unadvanced funds on loans | $776.0 | | Certificates of deposit maturing within one year | $421.6 | - Management expects a substantial portion of maturing certificates of deposit to be renewed, but may use FHLB advances or brokered deposits if not, potentially increasing interest expense[295](index=295&type=chunk) [Non-GAAP Financial Measures and Reconciliation to GAAP](index=95&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliation%20to%20GAAP) The Company uses the non-GAAP tangible common equity to tangible assets ratio, which was 11.92% at June 30, 2022, for evaluating financial condition - The tangible common equity to tangible assets ratio is a non-GAAP measure used by regulators and market analysts[297](index=297&type=chunk) | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :------------------------------------ | :----------------------------- | :------------------------------- | | Total stockholders' equity | $624,478 | $679,261 | | Less: Goodwill | $69,802 | $69,802 | | Less: Other intangible assets | $2,695 | $3,164 | | Tangible common equity | $551,981 | $606,295 | | Total assets | $4,704,044 | $4,553,405 | | Less: Goodwill | $69,802 | $69,802 | | Less: Other intangible assets | $2,695 | $3,164 | | Tangible assets | $4,631,547 | $4,480,439 | | Tangible common equity / tangible assets | 11.92% | 13.53% | [ITEM 3. Quantitative and Qualitative Disclosures about Market Risk](index=98&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section refers to market risk disclosures in Item 2, detailing strategies and analyses for managing interest rate risk through income simulation and EVE analysis - Market risk disclosures are incorporated by reference from the 'Management of Market Risk' section in Item 2[302](index=302&type=chunk) [ITEM 4. Controls and Procedures](index=98&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective, with changes to internal control over financial reporting implemented due to CECL adoption, including new model validation controls - Disclosure controls and procedures were evaluated and concluded to be effective as of June 30, 2022[302](index=302&type=chunk) - Changes to internal controls over financial reporting were implemented to support the adoption of Topic 326 (CECL), including new controls for model validation and input review[303](index=303&type=chunk) PART II. OTHER INFORMATION [ITEM 1. Legal Proceedings](index=99&type=section&id=ITEM%201.%20Legal%20Proceedings) The Company is not involved in any material pending legal proceedings beyond routine matters, with no expected material impact on financial condition or results of operations - No material pending legal proceedings are currently affecting the Company[306](index=306&type=chunk) [ITEM 1A. Risk Factors](index=99&type=section&id=ITEM%201A.%20Risk%20Factors) No material changes to the Company's risk factors have occurred since those disclosed in its Annual Report on Form 10-K for the year ended December 31, 2021 - No material changes in risk factors since the December 31, 2021 Annual Report on Form 10-K[307](index=307&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=99&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities occurred, but the Company repurchased 1,337,602 shares of common stock under its fourth share repurchase program - No unregistered sales of equity securities or use of proceeds[308](index=308&type=chunk) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :------------------------------------ | :------------------------------- | :--------------------------- | | May 1 to May 31, 2022 | 673,141 | $13.78 | | June 1 to June 30, 2022 | 664,461 | $13.87 | | Total (April 1 to June 30, 2022) | 1,337,602 | $13.83 | - The fourth share repurchase program, authorized on April 12, 2022, allows for the repurchase of up to **2,526,134 shares** (approximately 5% of outstanding shares)[308](index=308&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=99&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the reporting period - No defaults upon senior securities[309](index=309&type=chunk) [ITEM 4. Mine Safety Disclosures](index=99&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - Not applicable[310](index=310&type=chunk) [ITEM 5. Other Information](index=99&type=section&id=ITEM%205.%20Other%20Information) No other information is required to be disclosed under this item - No other information[311](index=311&type=chunk) [ITEM 6. Exhibits](index=101&type=section&id=ITEM%206.%20Exhibits) This section lists the exhibits included in or incorporated by reference into the Quarterly Report on Form 10-Q, including certifications from the CEO and CFO, and interactive data files - Exhibits include CEO and CFO certifications (31.1, 31.2, 32.1) and interactive data files (101, 104)[314](index=314&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-38955 HarborOne Bancorp, Inc. (Exact name of registrant as specified in its charter) Massachusetts 81-1607465 (State or other jurisdiction of in ...

Table of Contents For the Fiscal Year Ended December 31, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-38955 HarborOne Bancorp, Inc. (Exact name of registrant as specified in its charter) Massachusetts 81-1607465 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 1 ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-38955 HarborOne Bancorp, Inc. (Exact name of registrant as specified in its charter) Massachusetts 81-1607465 (State or other jurisdiction o ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-38955 HarborOne Bancorp, Inc. (Exact name of registrant as specified in its charter) Massachusetts 81-1607465 (State or other jurisdiction of inc ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-38955 HarborOne Bancorp, Inc. (Exact name of registrant as specified in its charter) Massachusetts 81-1607465 (State or other jurisdiction of in ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-38955 HarborOne Bancorp, Inc. (Exact name of registrant as specified in its charter) Massachusetts 81-1607465 (State or other jurisdiction of incorporation or o ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-38955 HarborOne Bancorp, Inc. (Exact name of registrant as specified in its charter) Massachusetts 81-1607465 (State or other jurisdiction o ...