HarborOne Bancorp(HONE) - 2025 Q2 - Quarterly Results

Executive Summary & Financial Highlights HarborOne Bancorp, Inc. reported strong Q2 2025 financial improvements, including increased net income and a definitive merger agreement with Eastern Bankshares, Inc. Q2 2025 Performance Overview Net income significantly increased in Q2 2025, alongside the announcement of a definitive merger agreement with Eastern Bankshares, Inc. | Metric | Q2 2025 | Q1 2025 | Change (QoQ) | Change (%) | | :--------------------- | :-------- | :-------- | :----------- | :--------- | | Net Income | $8.1M | $5.5M | $2.6M | 46.5% | | Diluted EPS | $0.20 | $0.14 | $0.06 | 42.9% | - Net income for the six months ended June 30, 2025, was $13.6 million, or $0.34 per diluted share, compared to $14.6 million, or $0.35 per diluted share for the same period in 2024[1] - The Company entered into a definitive merger agreement with Eastern Bankshares, Inc. on April 24, 2025, in a stock and cash transaction[1] CEO Commentary The CEO highlighted steady financial improvement in Q2, driven by net interest margin expansion, improved core returns, and expense management, while emphasizing customer service during the pending merger. - CEO Joseph F. Casey reported steady financial improvement in Q2, including net interest margin expansion, improved core returns on assets and equity, and continued management of expenses[2] - The HarborOne team remains focused on providing superior service and a seamless transition to customers, communities, and employees, while looking forward to a successful merger with Eastern[2] Key Financial Highlights (Narrative) The second quarter saw a 13 basis point improvement in net interest margin, a 23.6% rise in noninterest income, and a slight increase in noninterest expense due to merger-related costs. | Metric | Q2 2025 | Q1 2025 | Change (QoQ) | | :--------------------------------- | :------ | :------ | :----------- | | Net Interest Margin | 2.52% | 2.39% | +13 bps | | Noninterest Income | $12.2M | $9.9M | +23.6% | | Noninterest Expense (excl. merger) | $32.4M | $32.9M | -$0.5M | | Yield on loans | | | +8 bps | | Cost of deposits (excl. brokered) | | | -7 bps | - Borrowing costs improved 2 basis points, and average borrowings declined $87.8 million[3] - The share repurchase program was suspended pending completion of the merger with Eastern[3] Consolidated Financial Performance This section details the quarter-over-quarter changes in net interest income, noninterest income, and noninterest expenses, highlighting their primary drivers. Net Interest Income Net interest and dividend income increased by $1.7 million, with net interest margin improving by 13 basis points, driven by lower borrowing costs and increased loan yield. | Metric | Q2 2025 | Q1 2025 | Change (QoQ) | | :-------------------------- | :------ | :------ | :----------- | | Net Interest & Dividend Income | $33.2M | $31.5M | +$1.7M | | Net Interest Margin | 2.52% | 2.39% | +13 bps | | Borrowing Costs | | | -2 bps | | Yield on Loans | | | +8 bps | | Cost of Deposits (excl. brokered) | | | -7 bps | - Average borrowings declined $87.8 million, and average deposit balances (excluding brokered deposits) increased $57.2 million, primarily due to a $40.4 million increase in lower cost NOW and noninterest-earning deposits[3] - The $1.9 million increase in net interest and dividend income from the prior year quarter reflects net interest margin improvement of 21 basis points, primarily due to higher prepayment fees, lower cost of funds, and lower average balances of funding liabilities[4] Noninterest Income Total noninterest income rose by $2.3 million, or 23.6%, primarily due to higher mortgage banking income, increased deposit account fees, and a significant rise in other income. | Metric | Q2 2025 | Q1 2025 | Change (QoQ) | | :-------------------------------- | :------ | :------ | :----------- | | Total Noninterest Income | $12.2M | $9.9M | +$2.3M | | Gain on Loan Sales (Mortgage) | $3.4M | $2.7M | +$0.7M | | Mortgage Closings | $176.2M | $114.1M | +$62.1M | | MSR Valuation Decrease | $0.55M | $1.2M | -$0.65M | | Deposit Account Fees | | | +$0.27M | | Other Income | | | +$0.95M | - Other income increased primarily due to a $547,000 Employee Retention Tax Credit and $382,000 of swap fee income[7] - Total noninterest income increased $302,000 compared to the prior year quarter, despite a $1.8 million gain on disposal of an asset held for sale in the prior year results[5] Noninterest Expense Total noninterest expense increased by $1.2 million, mainly driven by $1.7 million in merger-related expenses, while core expenses saw a slight decrease. | Metric | Q2 2025 | Q1 2025 | Change (QoQ) | | :---------------------- | :------ | :------ | :----------- | | Total Noninterest Expense | $34.1M | $32.9M | +$1.2M | | Merger Expenses | $1.7M | $0 | +$1.7M | - Excluding $1.7 million of merger-related expenses, noninterest expense was down slightly quarter-over-quarter[3] - Occupancy and equipment expenses decreased $359,000, primarily due to a seasonal decrease in landscaping expense, while marketing expense increased $277,000 due to a small business campaign[7] Balance Sheet & Asset Quality This section provides an overview of the company's balance sheet trends, including asset and liability changes, and a detailed analysis of asset quality and credit loss provisions. Balance Sheet Overview Total assets decreased by $91.3 million, primarily due to a decline in loans and deposits, while stockholders' equity and the tangible common equity ratio improved. | Metric | June 30, 2025 | March 31, 2025 | Change (QoQ) | Change (%) | | :------------------------------------ | :------------ | :------------- | :----------- | :--------- | | Total Assets | $5.61B | $5.70B | -$91.3M | -1.6% | | Total Loans | $4.73B | $4.82B | -$93.8M | -1.9% | | Available-for-sale securities | $287.3M | $265.6M | +$21.6M | +8.1% | | Total Deposits | $4.49B | $4.62B | -$125.1M | -2.7% | | Borrowed Funds | $439.7M | $399.5M | +$40.1M | +10.0% | | Total Stockholders' Equity | $580.1M | $576.0M | +$4.1M | +0.7% | | Tangible-Common-Equity-to-Tangible-Assets Ratio | 9.38% | 9.15% | +23 bps | | | Book Value Per Share | $13.47 | $13.27 | +$0.20 | +1.5% | | Tangible Book Value Per Share | $12.09 | $11.90 | +$0.19 | +1.6% | - Commercial real estate and construction loans decreased $118.4 million, favoring payoffs over renewals[11] - FDIC-insured deposits were approximately 73% of total deposits as of June 30, 2025[11] Asset Quality and Credit Losses The provision for credit losses decreased significantly, while net charge-offs also declined, though nonperforming assets and criticized commercial loans increased. | Metric | Q2 2025 | Q1 2025 | Change (QoQ) | | :------------------------------------ | :------ | :------ | :----------- | | Provision for Credit Losses | $739K | $1.9M | -$1.16M | | Net Charge-offs | $1.7M | $8.7M | -$7.0M | | Net Charge-offs (% of avg. loans) | 0.14% | 0.72% | -0.58% | | Allowance for Credit Losses (ACL) on Loans | $48.0M | $49.3M | -$1.3M | | ACL on Loans (% of total loans) | 1.01% | 1.02% | -0.01% | | Total Nonperforming Assets | $32.7M | $30.9M | +$1.8M | | Nonperforming Assets (% of total assets) | 0.58% | 0.54% | +0.04% | | Total Criticized & Classified Commercial Loans | $193.7M | $187.1M | +$6.6M | - The provision for loan credit losses was primarily due to a further specific reserve allocation for a previously identified classified commercial and industrial loan and qualitative factor adjustments[9] - Non-performing commercial real estate loans increased $784,000, and non-performing commercial and industrial loans increased $622,000 compared to the prior quarter[12] Company Information This section provides an overview of HarborOne Bancorp, Inc., outlines forward-looking statements, and explains the use of non-GAAP financial measures. About HarborOne Bancorp, Inc. HarborOne Bancorp, Inc. is the holding company for HarborOne Bank, providing comprehensive financial services and educational resources across Eastern Massachusetts and Rhode Island. - HarborOne Bancorp, Inc. is the holding company for HarborOne Bank, serving financial needs in Eastern Massachusetts and Rhode Island[13] - The Bank operates 30 full-service banking centers and commercial lending offices, and provides educational resources through "HarborOne U"[13] - HarborOne Mortgage, LLC, a subsidiary, provides mortgage lending services throughout New England and other states[13] Forward-Looking Statements The report contains forward-looking statements subject to significant risks and uncertainties, including economic conditions, market turbulence, and merger-related challenges. - Forward-looking statements are based on current beliefs and expectations, subject to significant risks and uncertainties that could cause actual results to differ materially[14] - Risk factors include changes in general business and economic conditions, customer behavior, capital and debt market turbulence, interest rates, loan default and charge-off rates, and fluctuations in real estate values[14] - Specific risks related to the merger with Eastern include failure to complete the merger, unexpected delays, inability to satisfy closing conditions, failure to obtain necessary regulatory approvals, and diversion of management's attention[14] Use of Non-GAAP Measures Non-GAAP financial measures are used by management and analysts to evaluate performance, excluding items not indicative of ongoing operations, but are not substitutes for GAAP results. - Non-GAAP financial measures are used by management, regulators, and market analysts to evaluate the Company's financial position and are useful to investors[16] - Core net income, core noninterest income, and core noninterest expense exclude items not considered indicative of ongoing financial performance or to enhance comparability with prior periods[17] - These disclosures are not substitutes for GAAP results and may not be comparable to non-GAAP measures from other companies due to lack of standardization[18] Financial Tables (Detailed Data) This section provides comprehensive financial tables, including selected highlights, balance sheet trends, income statements, asset quality, average balances, segment data, and non-GAAP reconciliations. Selected Financial Highlights (Consolidated) This table presents a consolidated overview of key financial metrics and ratios across multiple quarters, including earnings, per-share data, profitability, balance sheet, asset quality, and capital adequacy. | | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | | :------------------------------------------ | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Earnings data (Dollars in thousands) | | | | | | | Net interest and dividend income | $33,215 | $31,469 | $31,827 | $31,893 | $31,350 | | Noninterest income | $12,221 | $9,891 | $13,689 | $10,568 | $11,919 | | Total revenue | $45,436 | $41,360 | $45,516 | $42,461 | $43,269 | | Noninterest expense | $34,070 | $32,850 | $32,873 | $32,268 | $33,144 | | Net income | $8,058 | $5,500 | $8,887 | $3,924 | $7,296 | | Per-share data | | | | | | | Earnings per share, diluted | $0.20 | $0.14 | $0.21 | $0.10 | $0.18 | | Book value per share | $13.47 | $13.27 | $13.15 | $13.24 | $12.99 | | Tangible book value per share(1) | $12.09 | $11.90 | $11.78 | $11.88 | $11.63 | | Profitability | | | | | | | Return on average assets | 0.57 % | 0.39 % | 0.62 % | 0.27 % | 0.50 % | | Net interest margin on a fully tax equivalent basis(1) | 2.52 % | 2.39 % | 2.36 % | 2.36 % | 2.31 % | | Cost of total deposits | 2.45 % | 2.48 % | 2.62 % | 2.68 % | 2.53 % | | Efficiency ratio(1) | 74.57 % | 78.97 % | 71.81 % | 75.55 % | 76.16 % | | Balance sheet (Dollars in thousands) | | | | | | | Total assets | $5,609,075 | $5,700,330 | $5,753,133 | $5,775,967 | $5,787,035 | | Total loans | $4,727,232 | $4,821,033 | $4,852,499 | $4,879,503 | $4,839,232 | | Total deposits | $4,493,671 | $4,618,721 | $4,550,753 | $4,536,177 | $4,458,297 | | Asset quality | | | | | | | Nonperforming assets | $32,703 | $30,908 | $29,473 | $28,408 | $9,766 | | Non-performing loans to total loans | 0.69 % | 0.64 % | 0.61 % | 0.58 % | 0.20 % | | Net loans charged off as a percentage of average loans outstanding | 0.14 % | 0.72 % | - % | 0.02 % | 0.02 % | | Capital adequacy | | | | | | | Tangible common equity / tangible assets(1) | 9.38 % | 9.15 % | 9.05 % | 9.17 % | 9.03 % | | Common equity tier 1 ratio ("CET1")(1) | 12.20 % | 11.86 % | 11.79 % | 11.67 % | 11.73 % | Consolidated Balance Sheet Trend This table details the quarterly trends of assets, liabilities, and stockholders' equity, providing a comprehensive view of the company's financial position over time. | (Dollars in thousands) | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | | :------------------------------------ | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Assets | | | | | | | Total cash and cash equivalents | $203,053 | $230,492 | $231,071 | $224,279 | $235,062 | | Securities available for sale, at fair value | $287,266 | $265,644 | $263,904 | $276,817 | $269,078 | | Loans | $4,727,232 | $4,821,033 | $4,852,499 | $4,879,503 | $4,839,232 | | Less: Allowance for credit losses on loans | ($47,964) | ($49,323) | ($56,101) | ($54,004) | ($49,139) | | Net loans | $4,679,268 | $4,771,710 | $4,796,398 | $4,825,499 | $4,790,093 | | Total assets | $5,609,075 | $5,700,330 | $5,753,133 | $5,775,967 | $5,787,035 | | Liabilities and Stockholders' Equity | | | | | | | Total deposits | $4,493,671 | $4,618,721 | $4,550,753 | $4,536,177 | $4,458,297 | | Borrowings | $439,652 | $399,547 | $516,555 | $539,364 | $619,372 | | Total liabilities | $5,028,928 | $5,124,363 | $5,178,122 | $5,191,765 | $5,209,706 | | Total stockholders' equity | $580,147 | $575,967 | $575,011 | $584,202 | $577,329 | | Total liabilities and stockholders' equity | $5,609,075 | $5,700,330 | $5,753,133 | $5,775,967 | $5,787,035 | Consolidated Statements of Net Income - Trend This table provides a quarterly breakdown of interest income, interest expense, net interest and dividend income, provision for credit losses, noninterest income, noninterest expenses, and net income. | | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | | :------------------------------------ | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Interest and dividend income | | | | | | | Total interest and dividend income | $65,600 | $64,439 | $67,519 | $69,034 | $67,951 | | Interest expense | | | | | | | Total interest expense | $32,385 | $32,970 | $35,692 | $37,141 | $36,601 | | Net interest and dividend income | $33,215 | $31,469 | $31,827 | $31,893 | $31,350 | | Provision for credit losses | $739 | $1,385 | $1,927 | $5,903 | $615 | | Noninterest income | | | | | | | Total mortgage banking income | $4,548 | $3,452 | $6,364 | $3,501 | $4,401 | | Deposit account fees | $5,418 | $5,153 | $6,024 | $5,370 | $5,223 | | Total noninterest income | $12,221 | $9,891 | $13,689 | $10,568 | $11,919 | | Noninterest expenses | | | | | | | Compensation and benefits | $18,789 | $18,785 | $18,853 | $18,551 | $18,976 | | Merger expenses | $1,704 | - | - | - | - | | Total noninterest expenses | $34,070 | $32,850 | $32,873 | $32,268 | $33,144 | | Income before income taxes | $10,627 | $7,125 | $10,716 | $4,290 | $9,510 | | Net income | $8,058 | $5,500 | $8,887 | $3,924 | $7,296 | | Earnings per common share: Diluted | $0.20 | $0.14 | $0.21 | $0.10 | $0.18 | Asset Quality Details This table offers a detailed breakdown of non-performing assets, allowance for credit losses on loans, and delinquency trends across multiple quarters. | (Dollars in thousands) | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | | :------------------------------------------ | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Non-performing assets | | | | | | | Total nonaccruing loans | $32,703 | $30,902 | $29,463 | $28,408 | $9,766 | | Total nonperforming assets | $32,703 | $30,908 | $29,473 | $28,408 | $9,766 | | Total nonperforming loans to total loans | 0.69 % | 0.64 % | 0.61 % | 0.58 % | 0.20 % | | Total nonperforming assets to total assets | 0.58 % | 0.54 % | 0.51 % | 0.49 % | 0.17 % | | Allowance for credit losses on loans | | | | | | | Beginning balance | $49,323 | $56,101 | $54,004 | $49,139 | $48,185 | | Total net charge-offs: | ($1,714) | ($8,669) | ($58) | ($182) | ($195) | | Provision for loan credit losses | $355 | $1,891 | $2,155 | $5,047 | $1,149 | | Ending balance | $47,964 | $49,323 | $56,101 | $54,004 | $49,139 | | Allowance for credit losses on loans to total loans | 1.01 % | 1.02 % | 1.16 % | 1.11 % | 1.02 % | | Annualized net charge-offs (recoveries)/average loans | 0.14 % | 0.72 % | - % | 0.02 % | 0.02 % | | Delinquency | | | | | | | Total delinquent loans | $27,664 | $29,821 | $37,427 | $21,325 | $12,990 | | Total delinquent loans to total loans | 0.59 % | 0.62 % | 0.77 % | 0.44 % | 0.27 % | Average Balances and Yield Trend This table presents quarterly average balances for interest-earning assets and interest-bearing liabilities, along with their respective yields, costs, and key ratios. | | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :------------------------------------------ | :------------ | :------------- | :------------ | | Interest-earning assets (Dollars in thousands) | | | | | Average Outstanding Balance: Total interest-earning assets | $5,359,691 | $5,415,953 | $5,507,150 | | Yield/Cost: Total interest-earning assets | 4.95 % | 4.86 % | 4.98 % | | Interest-bearing liabilities (Dollars in thousands) | | | | | Average Outstanding Balance: Total interest-bearing deposits | $3,885,502 | $3,850,571 | $3,658,853 | | Yield/Cost: Total interest-bearing deposits | 2.89 % | 2.91 % | 3.00 % | | Average Outstanding Balance: Total borrowings | $405,383 | $493,206 | $776,852 | | Yield/Cost: Total borrowings | 4.36 % | 4.38 % | 4.83 % | | Average Outstanding Balance: Total interest-bearing liabilities | $4,290,885 | $4,343,777 | $4,435,705 | | Yield/Cost: Total interest-bearing liabilities | 3.03 % | 3.08 % | 3.32 % | | Key Ratios | | | | | Tax equivalent interest rate spread | 1.92 % | 1.78 % | 1.66 % | | Net interest margin on a fully tax equivalent basis | 2.52 % | 2.39 % | 2.31 % | | Cost of total deposits | 2.45 % | 2.48 % | 2.53 % | Segments Key Financial Data This section provides key financial performance data broken down by the HarborOne Bank and HarborOne Mortgage segments. HarborOne Bank Segment This table details the net interest and dividend income, provision for credit losses, noninterest income, noninterest expenses, and net income for the HarborOne Bank segment across multiple quarters. | | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | | :------------------------------------------ | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Net interest and dividend income | $32,906 | $31,315 | $31,681 | $31,780 | $31,098 | | Provision for credit losses | $739 | $1,385 | $1,927 | $5,903 | $615 | | Total noninterest income | $7,381 | $6,392 | $7,385 | $6,665 | $7,156 | | Total noninterest expenses | $28,237 | $28,185 | $27,400 | $26,752 | $27,791 | | Net income | $8,558 | $6,234 | $7,724 | $4,915 | $7,538 | | Tax equivalent efficiency ratio (non-GAAP) | 68.74 % | 73.35 % | 68.84 % | 68.29 % | 71.67 % | HarborOne Mortgage Segment This table presents financial data for the HarborOne Mortgage segment, including net interest and dividend income, mortgage banking income, noninterest expenses, net income (loss), closed loan volume, and gain on sale margin. | | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | | :------------------------------------------ | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Net interest and dividend income | $307 | $149 | $140 | $105 | $240 | | Total mortgage banking income | $5,038 | $3,628 | $6,163 | $3,823 | $4,758 | | Total noninterest expenses | $4,775 | $4,504 | $5,490 | $5,600 | $5,269 | | Net income (loss) | $469 | ($491) | $1,133 | ($1,137) | ($191) | | Closed loan volume | $176,210 | $114,136 | $179,077 | $209,525 | $172,994 | | Gain on sale margin | 1.92 % | 2.38 % | 2.21 % | 1.79 % | 1.82 % | Non-GAAP Reconciliation This table reconciles GAAP financial measures to non-GAAP measures, such as core net income, core earnings per share, efficiency ratios, and tangible equity and assets, across multiple quarters. | | June 30, 2025 | March 31, 2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | | :------------------------------------------ | :------------ | :------------- | :---------------- | :----------------- | :------------ | | Core Net Income (Dollars in thousands) | | | | | | | Net income, as presented (GAAP) | $8,058 | $5,500 | $8,887 | $3,924 | $7,296 | | Core net income (non-GAAP) | $9,215 | $5,500 | $8,341 | $3,924 | $6,689 | | Core earnings per common share (non-GAAP): Diluted | $0.23 | $0.14 | $0.20 | $0.10 | $0.16 | | Core return on average earning assets (non-GAAP) | 0.65 % | 0.39 % | 0.58 % | 0.27 % | 0.46 % | | Core return on average earning equity (non-GAAP) | 6.36 % | 3.79 % | 5.71 % | 2.69 % | 4.65 % | | Efficiency ratio | | | | | | | Efficiency ratio (non-GAAP) | 74.57 % | 78.97 % | 71.81 % | 75.55 % | 76.16 % | | Core efficiency ratio (non-GAAP) | 71.68 % | 78.97 % | 71.81 % | 75.55 % | 77.54 % | | Tangible equity and assets (Dollars in thousands) | | | | | | | Total stockholders' equity, as presented (GAAP) | $580,147 | $575,967 | $575,011 | $584,202 | $577,329 | | Tangible common equity (non-GAAP) | $520,727 | $516,357 | $515,212 | $524,213 | $517,151 | | Tangible assets (non-GAAP) | $5,549,655 | $5,640,720 | $5,693,334 | $5,715,978 | $5,726,857 | | Tangible book value per share (non-GAAP) | $12.09 | $11.90 | $11.78 | $11.88 | $11.63 | | Tangible common equity/tangible assets (non-GAAP) | 9.38 % | 9.15 % | 9.05 % | 9.17 % | 9.03 % | | Core return on average tangible common equity (non-GAAP) | 7.09 % | 4.23 % | 6.36 % | 3.00 % | 5.19 % |