HarborOne parent company reports $14M Q3 profit

BROCKTON, Mass. – Rising interest rates helped boost HarborOne Bancorp’s earnings to $13.8 million for the third quarter, the company reported on Wednesday.

The HarborOne Bank parent company’s latest profits mark a 12.2% increase over the third quarter of 2021. Earnings per diluted share also rose 6 cents to 30 cents per share.

Interest income was the primary driver for higher earnings, up 24.4% year-over-year to $44.6 million. This was partially offset by a 73.8% hike to interest-related expenses – another byproduct of higher interest rates – which reached $5.2 million.

Also a sign of higher interest rates, the net interest margin, the difference between interest income generated versus the amount of interest paid, rose 39 basis points to 3.47%.

- Advertisement -

However, rising rates hurt mortgage banking income, with declining demand for mortgage loans and smaller gain-on-sale margins cutting mortgage revenue nearly in half, to $8.1 million. This, in turn, drove down total noninterest income by 35.3%, to $14.3 million.

Noninterest expenses also fell, down 12.2% to $34.5 million, with lower compensation and benefits and loan expenses because of the drop in the mortgage business, the company stated.

Mirroring the strategy followed by financial institutions nationwide, the company also began building back up its credit loss provisions due to loan growth and economic uncertainty. The company added $668,000 to its loan loss reserves in the third quarter of 2022, compared with the release of $1.6 million from its stockpile a year ago.

Total quarterly assets stood at $5.0 billion, up 9.2% year-over-year, reflecting a 21.4% jump in total loans. The increase in quarterly loans to $4.2 billion came mostly from growth in commercial real estate loans, which was partially offset by declines in industrial and consumer loans. As of Sept. 30, the company also had $2 million in outstanding loans through the Paycheck Protection Program, with an expected $24,000 in deferred processing fee income remaining. 

Quarterly deposits of $3.9 billion marked a 5.1% increase, with gains in money market, demand deposit and regular savings accounts.

“I am proud of our team’s ability to manage the volatile interest rate environment,” Joseph F. Casey, president and CEO said in a statement.  “The Company continues to drive revenue through expanded margin which was up 30 basis points year-over-year resulting in net interest income expansion of $12.4 million, or 12.7%. Our mortgage segment remains profitable as the increasing value of our servicing rights, coupled with expense reductions, partially offset declining origination volume and gain-on-sale margins.”

Harbor One Bank has eight branches in Rhode Island since it acquired Coastway Bancorp in 2018. The bank ranks ninth in terms of Rhode Island deposit market share as of June 30, according to the Federal Deposit Insurance Corp.

Nancy Lavin is a PBN staff writer. Contact her at Lavin@PBN.com.