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HarborOne Bancorp Posts Q2 Profit Gain
The Motley Foolยท 2025-07-25 20:04
Core Viewpoint - HarborOne Bancorp reported strong second quarter results for 2025, with earnings per share exceeding expectations and total revenue showing year-over-year growth, indicating steady improvement in profitability and margin despite challenges in deposit and credit quality [1][2]. Financial Performance - Diluted earnings per share (GAAP) for Q2 2025 were $0.20, surpassing the consensus estimate of $0.19 and up 11.1% from $0.18 in Q2 2024 [2]. - Total revenue (GAAP) reached $45.44 million, slightly above the estimate of $45.34 million and up 5.0% from $43.27 million in Q2 2024 [2]. - Net income (GAAP) increased by 46.5% from the previous quarter to $8.1 million, driven by a 23.6% rise in noninterest income due to a rebound in mortgage banking activities [5]. - The net interest margin improved to 2.52%, up from 2.31% in Q2 2024, reflecting better deposit cost management [2][6]. Business Overview - HarborOne Bancorp operates as a community-oriented bank serving Eastern Massachusetts and Rhode Island, focusing on consumer and commercial banking services, with commercial real estate lending as its largest loan category [3]. - The bank has a network of 30 full-service branches and offers online services to support its customers [3]. Strategic Focus - The company is concentrating on navigating a competitive regional banking market, managing risks in its commercial loan portfolio, and controlling costs to protect earnings [4]. - The digital platform, HarborOne U, provides educational resources for small businesses and personal finance [4][10]. Cost Management and Efficiency - Noninterest expenses rose to $34.07 million, including $1.7 million in merger costs related to the upcoming merger with Eastern Bankshares; however, core expenses decreased when excluding these costs [7]. - The core efficiency ratio improved significantly from 78.97% in Q1 2025 to 71.68% [7]. Asset Quality and Credit Management - Net charge-offs decreased sharply to $1.7 million from $8.7 million in Q1 2025, while criticized and classified commercial loans increased by $6.6 million [8]. - The total allowance for credit losses was 1.01% of total loans, slightly down from 1.02% in the previous quarter [8]. Deposit Trends and Funding - Total deposits fell by $125.1 million to $4.49 billion, with non-certificate deposits dropping $66.5 million and brokered deposits decreasing by $51.1 million [9][10]. - The cost of deposits slightly declined to 2.45%, while borrowings increased by $40.1 million, resulting in a loan-to-deposit ratio of 105.2% [10]. Future Outlook - Management did not provide standalone financial guidance due to the focus on the merger with Eastern Bankshares, and the share buyback program has been suspended [11][12]. - The near-term outlook will depend on the successful execution of the merger and maintaining credit quality amid funding cost pressures [12].