HarborOne reports $12M Q3 profit as mortgage banking revenue falls

BROCKTON, Mass. – A drop-off in mortgage loans cut HarborOne Bancorp.’s third-quarter mortgage banking income by more than half compared to a year ago, the company reported on Tuesday.

The parent company for HarborOne Bank nonetheless saw its bottom line increase, reporting a $12.3 million profit for the quarter, a 3.1% increase over a year ago, driven by the dumping of $1.6 million from its credit loss provisions.

Like banks nationwide, HarborOne stockpiled its loan loss reserves in 2020 in anticipation of bad loans, which, for the most part, largely never materialized. The company cited positive economic trends, vaccination rates and COVID-19 cases, low delinquency rates and the status of referred loans as reasons for reducing its loan loss provisions.

Earnings per diluted share rose 2 cents year over year to 24 cents.

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The higher quarterly profit comes despite a 59% cut to mortgage banking income to $15.6 million, which skyrocketed during 2020 amid record mortgage loan originations and refinancing. The loss of mortgage banking income was partially offset by a $1.2 million boost to deposit account fees, which the company reinstated in 2021 after a temporary suspension.

Total noninterest income of $22.0 million represented a 50.5% decline over a year ago.

Interest income also fell slightly, down 3.3% year over year amid a continued low interest rate environment, despite recognition of $1.9 million in deferred fees on Paycheck Protection Program loan forgiveness, the company stated. This was partially offset by favorable repricing of deposits, which helped cut interest expenses nearly in half to $3.0 million.

Also a sign of suppressed interest rates and margin pressure, the bank’s net interest margin dropped 1 basis point to 3.08%.

Noninterest expenses fell 14.1% year over year, including declines to compensation and benefits and loan expenses which reflected the drop in residential mortgage loan closings. The company closed its New Jersey mortgage office during the third quarter as a result of lower mortgage activity.

Total assets of $4.6 billion were up 3.1% over a year ago, including a more than doubling of short-term investments and an increase in securities available for sale at fair value. Total loans ticked down 1.7% to $3.5 billion, with losses in commercial construction, commercial and industrial and consumer loans, partially offset by growth of commercial real estate loans. As of Sept. 30, the company reported $54.3 million in outstanding PPP loans, with plans to complete forgiveness on most outstanding loans by the end of the year.

Total deposits stood at $3.7 billion, a 9.8% year-over-year increase reflecting growth in regular savings and club accounts and demand deposit accounts.

Planned acquisition of four East Boston Savings Bank branches in Greater Boston from Rockland Trust Co. is expected to close by the end of the year, the company said. The value of the deal has not been disclosed, but HarborOne is expected to add 19 new employees to staff the new branches in addition to acquiring the branch furniture and equipment, the company stated. 

“We continue to make steady progress against our plan despite market challenges including an ultra-competitive rate environment, tight labor market, and the ongoing impact of COVID-19,” Jim Blake, CEO, said in a statement.

Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.