Image courtesy of HarborOne Bank.
While HarborOne has seen its mortgage banking income decline, the bank said the rising value of its servicing rights has helped keep its mortgage business profitable.
HarborOne Bank had third quarter net income of $13.8 million, or $0.30 per basic and diluted share, compared to net income of $12.3 million, or $0.24 per diluted share, in the third quarter of 2021. Net income in the second quarter of 2022 was $10 million, or $0.21 per basic and diluted share.
“I am proud of our team’s ability to manage the volatile interest rate environment,” Joseph F. Casey, HarborOne’s president and CEO, said in the bank’s third quarter earnings statement. “The Company continues to drive revenue through expanded margin which was up 30 basis points year-over-year resulting in net interest income expansion of $12.4 million, or 12.7 percent. Our mortgage segment remains profitable as the increasing value of our servicing rights, coupled with expense reductions, partially offset declining origination volume and gain-on-sale margins.”
HarborOne saw total noninterest income decrease year-over-year by $7.8 million, or 35.3 percent. The bank attributed the lower income primarily to a $7.6 million, or 48.4 percent, decline in mortgage banking income, which included a decrease in loan closings and narrowing gain-on-sale margins.
The bank saw the fair value of mortgage servicing rights increase during the third quarter by $2.6 million compared to an increase of $1.6 million in the second quarter.
“As interest rates rise and prepayment speeds slow, mortgage servicing rights values tend to increase; conversely, as interest rates fall and prepayment speeds quicken, mortgage servicing rights values tend to decrease,” the bank said in the statement.
HarborOne had total assets of $283.6 million, up 6 percent during the quarter to $4.99 billion. The bank said the increase primarily reflected loan growth of $285.4 million.
This loan growth of 7.3 percent during the third quarter gave the bank $4.2 billion in total loans. The bank said the growth was primarily due to increases in commercial real estate loans, commercial construction loans and residential real estate loans of $97.7 million, partially offset by decreases in commercial and industrial loans, as well as consumer loans.
The bank’s total deposits were $3.88 billion at the end of the third quarter compared to $3.85 billion on June 30.
