The organization of its new charitable arm, in conjunction with its recent IPO, took a bite out of HarborOne’s second quarter earnings, even as it grew its commercial loan portfolio.
The holding company for HarborOne Bank posted a net loss of $681,000 in the quarter ended June 30, compared with net income of $124,000 in the first quarter. For the six-month period ended June 30, HarborOne posted a net loss of $557,000, compared with a $2 million net gain for the same period last year. The company said in a statement that the second quarter’s results included a one-time, pre-tax contribution of $4.8 million to fund its new charitable organization, The HarborOne Foundation.
“We are pleased with the affirmation of our business strategy demonstrated by our deposit customers through their oversubscription of our initial stock offering,” President and CEO James Blake said in a statement. “Ensuring compliance with the FDIC’s 8 percent de novo bank capital requirement during the second quarter of 2016 required that we actively manage our balance sheet, prepaying borrowings and reducing our participation in institutional fund deposits.”
“However, our initial public offering, which was completed in late June 2016, and the termination of the de novo bank capital requirements as of July 1, 2016, have provided relief from these immediate capital constraints and allowed us to refocus on executing our growth strategy, including prudent commercial loan growth and expansion opportunities,” the statement continued. “In addition we were able to make a significant contribution to the foundation to continue our commitment to strengthening and empowering the communities we serve.”
Net interest income totaled $14.7 million in the second quarter, representing a 5.5 percent increase from the prior quarter and a 17.9 percent increase from the year ago quarter. The company increased its net interest margin to 2.81 percent from 2.72 percent from the prior quarter and 2.53 percent in the year-ago quarter. The company said that increase was largely attributable to commercial real estate loan growth funded with core deposits.
Total assets ticked up 1 percent quarter-over-quarter to $2.267 million at June 30. Net loans increased 4.7 percent, or $81.4 million, to $1.8 billion from the prior quarter. Over that time period, commercial real estate loans increased $76.5 million, commercial and industrial loans increased $3.7 million, and auto loans increased $16 million. Construction loans and residential real estate loans, however, declined $9.8 million and $3.9 million, respectively.
Mortgage loans held for sale increased $32.1 million, or 47.5 percent, to $99.7 million from the linked quarter, which the company attributed to the continued low interest rate environment and seasonal home purchase activity.
Total deposits declined 2.4 percent to $1.7 billion from the linked quarter but increased about 2.8 percent from the year-ago period.
The company increased its provision for loan losses to $801,000 for the quarter ended June 30 from $205,000 in the prior quarter and $667,000 in the year-ago quarter, largely to keep up with commercial loan growth.
The allowance for loan losses totaled $14.4 million and represented 0.79 percent of total loans at June 30, compared with $13.7 million and 0.78 percent at March 31 and $14.1 million and 0.81 percent last year. Net charge-offs totaled $59,000 in the second quarter and represented 0.01 percent of average loans outstanding on an annualized basis compared with $209,000 and 0.05 percent at March 31 and $329,000 and 0.08 percent a year ago.
Nonperforming assets totaled $27.8 million at June 30, compared with $29.7 million at March 31 and $34.2 million a year ago. As a percentage of total assets, nonperforming assets were 1.23 percent in the most recent quarter, 1.32 percent in the prior quarter and 1.58 percent in the year-ago quarter.
Total stockholders’ equity stood at $324.2 million on June 30, compared with $191.9 million at March 31 and $187.2 million last year. HarborOne said the increase over both those periods reflected its recent mutual to stock conversion completed on June 29.
