BROCKTON, Mass. – Record mortgage banking revenue helped HarborOne Bancorp Inc. more than double its year-end profits, ending 2020 with $44.8 million in net income, the company reported Thursday.
The annual profits for the parent company of HarborOne Bank represent a 145.2% increase over the prior year. Earnings per diluted share were 82 cents, compared with 33 cents one year prior.
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The increase in profits came despite a marked rise in the bank’s provision for credit losses due to the pandemic. The 2020 stockpile set aside in anticipation of bad loans totaled $34.8 million, more than seven times the $4.7 million in 2019.
Total revenue rose 33.3% to $287.7 million for the year.
Crucial to the strong performance in a year of economic uncertainty and low interest rates was a reported record-breaking demand for mortgages, which brought in $114.4 million, a 203.8% increase over 2019. The spike in mortgage banking fees helped to boost total noninterest income of $139.1 million, up 128.2% over a year ago.
Interest income fell 4% to $148.6 million, however, reflecting a low interest rate environment.
Interest expenses also dropped 37.7% to $28.5 million, reflecting offsetting rate and volume changes, the company stated.
Noninterest expenses totaled $166.4 million, a 16.7% year-over-year increase that included $105.6 million in employee compensation and benefits spurred by higher mortgage banking volume, the company stated.
Net interest margin, the difference between interest income generated versus the amount of interest paid out to lenders, declined eight basis points to 3.06%.
Year-end average assets stood at $4.3 billion, including $3.4 billion in total loans. While consumer loans dipped slightly, commercial loans increased 29% to $1.9 billion. Participation in the Paycheck Protection Program also amounted to $126.5 million in loans.
Year-end total deposits of $3.3 billion increased 12.7% year over year.
Fourth-quarter profits of $17.6 million were more than four times the $4.3 million earnings in the fourth quarter of 2019, with a record earnings per diluted share of 33 cents.
Quarterly net interest margin also rose 14 basis points to 3.22% despite the continued low interest rate environment, reflecting a decrease in deposit rates and $1.3 million in deferred fees on PPP loans, the company stated.
Strong mortgage banking revenue continued through the fourth quarter, though the $31.9 million was less than the mortgage banking revenue of the quarter immediately prior. Economic uncertainty and increased unemployment rates may also hurt mortgage loan originations in the future, the company stated.
Despite significant increases in loan loss provisions, the company has not yet seen significant credit quality deterioration in its loan portfolios, with quarterly net charge-offs representing just .16% of average loans outstanding on an annualized basis.
“We’re pleased that the momentum we had in Q3 continued into Q4. It’s a testament to the tremendous teamwork and commitment to our customers during a very challenging time,” James Blake, CEO, said in a statement.
Nancy Lavin is a PBN staff writer. You may reach her at Lavin@PBN.com.
