BROCKTON, Mass. – HarborOne Bancorp Inc. on Tuesday reported a net income of $14.3 million for the second quarter, up 35% from the same period a year ago when banks were bracing a wave of loan defaults amid the COVID-pandemic.
The boost in the bottom line for the parent company of HarborOne Bank was driven in part by the release of $4.3 million from its credit loss provisions. Mirroring actions taken by other banks around the region and the nation, the company stockpiled its loan loss reserves last year in anticipation of bad loans – setting aside $10 million in the second quarter of 2020 alone.
Your Business Has Gone Global. Has Your Insurance?
A decade ago, “doing business internationally” was mostly a large-company concern. Today, a manufacturer in…
Learn More
Wide-spread defaults never materialized, and now the company is cutting back on its reserves, citing stable credit quality alongside commercial real estate loan growth and “positive economic trends.”
Earnings per diluted share increased to 27 cents in the second quarter, up from 19 cents a year ago. The bank had reported a net income of $19.4 million in the first quarter, with earnings per share of 37 cents.
Brockton-based HarborOne has 11 offices in Rhode Island, and ranked ninth in the state in deposit market share, according to 2020 FDIC data.
HarboorOne’s higher net income in the second quarter comes despite a significant decrease in the company’s mortgage banking income, which was cut by more than half compared with a year ago to $15.8 million. The decline reflects a combination of slower refinancing activity, fewer loan closings and narrower gain-on-sale margins, as well as a decrease in the fair value of mortgage servicing rights, the company stated.
Loss of mortgage banking income also drove a decrease in total noninterest income, which fell 43.7% year-over-year to $21.7 million. However, the company gained $1.6 million in deposit account fees, which were temporarily suspended during the pandemic but have since been reinstated.
Interest income also dipped slightly, down 2% to $35.9 million amid a low interest rate environment, as well as elevated loan prepayments and recognition of deferred fees on Paycheck Protection Program. This was partially offset by favorable repricing on deposits, which cut interest expenses by 53.2% to $3.4 million.
The resulting net interest income of $32.5 million represents a 10.5% increase over a year ago.
The net interest margin, the difference between interest income generated and the amount of interest paid out to lenders, increased 6 basis points to 3.06%.
Noninterest expenses of $38.6 million declined 11.8%, including a $2.3 million cut to employee compensation and benefits and a $1.2 million cut to loan expenses as a result of fewer residential mortgage loan closings. As a result of lower mortgage originations, the company laid off 12 employees, along with another eight lost to attrition.
Total quarterly assets stood at $4.6 billion, a 7.3% increase over a year ago driven by an increase in commercial loans. Total loans of $3.4 billion were up 1.5% over a year ago, with gains in commercial real estate and commercial and industrial loans partially offset by declining residential real estate and consumer loans.
The $2.1 billion in commercial loans also included $105.2 million loans in new and outstanding PPP loans, the company stated. In the second quarter alone, the company served as the lender for $4 million in second-round PPP loans, and processed forgiveness for $63.1 million already-approved payroll loans.
Total quarterly deposits of $3.7 billion rose 11.4% over a year ago, with increases in demand deposit, regular savings and club accounts
“We remain focused on the disciplined management of key business drivers, from asset quality to cost of funds to investments in our digital banking capabilities,” Jim Blake, CEO, said in a statement.
