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Image courtesy of HarborOne Bank.
HarborOne saw second quarter earnings increase about 35 percent over the same quarter last year, but a decline in mortgage refinance activity has affected the bank’s income.
The Brockton-based bank had second quarter net income of $14.3 million, or $0.27 per diluted share, compared to $19.4 million, or $0.37 per diluted share, in the first quarter and $10.6 million, or $0.19 per diluted share, for the second quarter of 2020.
Net income for the first six months of 2021 was $33.7 million, or $0.64 per diluted share, compared to $15.3 million, or $0.28 per diluted share, for the same period last year.
“We remain focused on the disciplined management of key business drivers, from asset quality to cost of funds to investments in our digital banking capabilities,” HarborOne CEO Jim Blake said in the bank’s earnings statement.
A decrease in the cost of funds helped drive up net interest income in the second quarter. The bank had net interest and dividend income of $32.5 million in the second quarter, up 1.5 percent from the first quarter and 10.5 percent from the second quarter of 2020. Lower interest rates led to a 7 basis point decrease in the cost of interest-bearing deposits, the bank said.
The net interest margin of 3.06 percent was down compared to the first quarter, when the net interest margin was 3.14 percent. It was 3.00 percent in the second quarter of 2020.
Total noninterest income decreased $16.1 million, or 42.6 percent, from $37.8 million in the first quarter to $21.7 million in the second quarter. After several quarters with more than $30 million in mortgage banking income, HarborOne’s total mortgage banking income in the second quarter was $15.78 million.
“Mortgage loan demand decreased as refinancing activity slowed and gain-on-sale margins narrowed, negatively impacting total mortgage banking income,” the bank said in the earnings statement.
HarborOne’s total mortgage loan closings were $638.8 million in the second quarter, resulting in a gain from sales of those loans of $14.3 million. In the first quarter, the bank had $760.2 million in mortgage closings for a $24.8 million gain on sales.
With refinancing volumes down and low inventory for sale, the locked residential mortgage pipeline decreased $99.8 million, the bank said. The bank added that residential mortgage loan payoffs resulted in a decrease of mortgage servicing rights in the amount of $1.5 million in the second quarter and $1.6 million in the first quarter.
HaborOne’s total assets were $4.62 billion in the second quarter compared to $4.61 billion in the first quarter and $4.48 billion at the end of 2020.
Net loans were $3.37 billion in the second quarter compared to $3.41 billion in the first quarter. The decrease included forgiveness of Paycheck Protection Program loans. Total deposits were $3.69 billion on June 30 compared to $3.67 billion on March 31.
Like others in the region’s banking industry, HarborOne is looking to capitalize on market disruption resulting from merger activity.
“We continued our de novo branch expansion with our second Boston branch, and believe we’re well positioned to take advantage of the significant market dislocation we expect in Q4 and Q1 2022 with two in-market community bank mergers,” Joseph Casey, the bank’s president and chief operating officer, said in the statement.
