HarborOne Bank branch at 68 Legion Parkway in Brockton, Massachusetts. Photo courtesy of HarborOne Bank

Brockton-based HarborOne Bank saw profitability quarter-on-quarter as it attracted more deposits and slightly more loans, despite the high-interest rate environment dragging its performance year-on-year.

Net income reached $8.4 million, or $0.20 per diluted share, in the third quarter which is higher compared to the $7.5 million, or $0.17 per diluted share, in the last quarter but lower than the $13.8 million, or $0.30 per diluted share, it had in the third quarter last year.

“As many of our competitors struggled with deposit contraction, we grew the average balance of customer deposits at a 14.7 percent annualized pace in the third quarter. This strong deposit growth allowed the pay-down of over $167 million in wholesale funds during the quarter,” Joseph F. Casey, HarborOne President and CEO, said in a statement.

“Additionally, we expect to redeem $35 million in subordinated debt on December 1, 2023, which carries a current annualized expense rate of 8.45 percent. And we continue to return shareholder value, commencing a sixth stock buyback plan in Q3, purchasing $6.4 million of HarborOne shares at an average cost of $9.81 per share,” he added. The buydown of subordinated debt will decrease the bank’s liabilities.

Despite increasing interest rates bringing up the company’s year-on-year interest expense on deposits and FHLB borrowings, the bank managed to reduce its noninterest expense by 7.5 percent to $31.9 million from the $34.4 million the same quarter a year ago, as it lowered compensation and benefits costs as well as expenses in its mortgage business.

Net interest and dividend income was $31.1 million in the third quarter, lower than the $32.1 million in the second quarter and $39.3 million in the third quarter of 2022. This is due to the usual profit compression amid the high interest rate environment with higher cost of funding offsetting the yields on loans, and repricing of bank liabilities such as central bank loans outpacing HarborOne’s assets.

Deposits grew by 2.8 percent to $4.41 billion, more than the $4.29 billion the previous quarter as competitive rate specials attracted deposits during the quarter while the bank decreased its brokered deposits.

Loans increased by $24.7 million or 0.5 percent to $4.72 billion from $4.70 billion a quarter ago as the bank saw increases in both commercial and residential real estate loans, partially offset by commercial construction, C&I loans, and consumer loans.

The bank’s total assets improved to $5.62 billion from $5.95 billion last quarter.