After another year of slumping mortgage originations, HarborOne Bank is bulking up its residential business.
The bank’s parent company yesterday announced it would be purchasing Cumberland County Mortgage of South Portland, Maine, giving the company a new mortgage lending foothold in northern New England.
HarborOne Bank President Joseph Casey told Banker & Tradesman that the owner of Cumberland had been busy with other businesses he worked with, and decided it was time to sell. He also said the bank intends to integrate its current mortgage subsidiary, Merrimack Mortgage Co., and Cumberland all under the HarborOne brand, which he thinks will create some efficiencies.
The acquisition will position HarborOne as a leading home lender in Maine – Cumberland County Mortgage did $131.6 million in loan volume in 2016.
“This is a natural evolution for the robust mortgage business we have been building in northern New England,” said Casey.
With the deal, the bank hopes to get its mortgage business back on track.
In its recent earnings report for the fourth quarter of 2017, HarborOne reported net income of $1.6 million, or $0.05 per basic and diluted share, compared to net income of $2.9 million, or $0.09 per basic and diluted share, for the same quarter last year.
The decrease in net income in the fourth quarter primarily reflects a decrease in mortgage banking income of $1.5 million due to a decrease in mortgage origination volumes.
Casey said that the mortgage business has been down in all areas, but that on the whole the company has remained vibrant in Massachusetts, New Hampshire and Maine.
“We continue to believe interest rates going up will be more of a headwind,” he said, referring to rate hikes the Federal Reserve is likely to move forward with later this year.
The bank’s residential book lost about $4 million in value year-over-year, bringing total volume at the end of 2017 to nearly $767 million.
Compared to the same quarter in 2016, mortgage originations by the bank’s subsidiary Merrimack Mortgage Co. decreased 28.7 percent in 2017 primarily as a result of higher residential mortgage interest rates and reduced refinance volume in 2017.
HarborOne’s residential mortgage book makes up about one-third of the bank’s overall loans, but it has been struggling for a while now.
The residential portfolio shrunk from roughly $810 million to about $771 million between the end of 2015 and the end of 2016.
Still, the $2.68 billion asset company nearly doubled its yearly earnings in 2017, with $190 million loan volume growth in its commercial book year-over-year.