BROCKTON – Strong mortgage banking activity and the release of millions of dollars in loan loss provisions helped HarborOne Bancorp Inc. more than quadruple its first-quarter earnings, the company reported on Tuesday.
The $19.4 million first quarter profit is more than four times the $4.7 million earnings the Harbor One Bank parent company posted in the first quarter of 2020. The increase stems primarily from continued strength in its mortgage business – the company posted record mortgage banking revenue in 2020 and continues to see strong loan demand in the first quarter despite an increase in mortgage rates. The $32.7 million in first-quarter mortgage banking income represents a 219.8% increase over a year ago.
Like other national and regional banks, the company also let go of the millions it had stockpiled during the pandemic in anticipation of bad loans due to “stabilized credit quality” and positive trends in its at-risk lend portfolio, it stated.
The company set aside $91,000 for credit losses in the first quarter, compared to the $3.7 million reserves in the first quarter of 2020.
Earnings per diluted share were 37 cents compared with 9 cents one year prior.
While the company saw a 37.4% increase in total revenue to $76.7 million, areas other than mortgage banking income dropped or remained relatively flat. Interest income of $35.8 million represented a 3.6% year-over-year decrease, due to a lower yield on interest-earning assets with accelerated residential real estate mortgage payoffs, among other factors, the company stated. Net interest margin, the difference between interest income generated versus the amount of interest paid out to lenders, also dropped 23 basis points to 3.14% due to the low interest rate environment, which the company said it expects to continue to put pressure on its margin for the coming year.
The $37.8 million in noninterest income, more than double that of a year ago, driven by more volume in mortgage loans and refinancing. However, the recent uptick in mortgage rates and low for-sale inventory is expected to dampen the success of the company’s mortgage business during the remainder of 2021 compared to 2020, the company stated.
Interest expenses fell 63.8% to $3.8 million due to decreases in the cost of interest-bearing deposits, in part because customers are shifting to more liquid options. Noninterest expenses rose 21.7% year over year to $42.8 million, including a $6.3 million boost to employee compensation and benefits and $91,000 in COVID-related expenses such as cleaning.
Quarterly assets stood at $4.6 billion, including $3.5 billion in loans. The bank’s assets reflected a 12.3% increase over the first quarter of 2020. The company saw growth in nearly every category of commercial loans including real estate, construction and industrial. The $2.2 billion in first-quarter commercial loans also included $81.6 million in forgivable loans to small businesses through the second round of the Paycheck Protection Program, the company stated.
Total deposits stood at $3.67 billion, a 21.6% increase over a year ago, with the largest increases in demand deposit, club and regular savings accounts.
“We have great confidence that we have the right tools and the right team to continue to fuel customer success as we slowly emerge from the impacts of the pandemic,” Joseph Casey, company president and chief operating officer, said in a statement.
Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.
