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Following a busy quarter that included an acquisition and rebranding of some of its mortgage operations, the parent company of Brockton-based HarborOne Bank reported net income of $2.3 million, or $0.07 per diluted share, for the first quarter of 2018, compared to $2.7 million, or $0.09 per diluted share, for the same quarter last year.
Net interest and dividend income was $20.1 million for the first quarter, up from $17.4 million for the quarter ended March 31, 2017. The margin ticked up 27 basis points to 3.26 percent.
The bank also in the first quarter announced that it would purchase the parent of Warwick, Rhode Island-based Coastway Bank in an all-cash transaction valued at $125.6 million.
“We are excited as we start 2018, looking forward to welcoming the Coastway customers, employees and communities to HarborOne,” James W. Blake, president and CEO of the company, said in a statement. “We anticipate another robust year, despite a challenging residential mortgage market, with a continued focus on organic balance sheet growth and building commercial loan relationships.”
The bank’s residential and commercial businesses are like night and day.
HarborOne’s commercial real estate loans have grown roughly $130 million year-over-year; construction loans are up over $75 million year-over-year, reaching nearly $145 million, meaning the bank doubled loan volume in this category. The commercial business is the leading factor for the increase in net interest and dividend income.
Meanwhile, the bank’s mortgage business, now at roughly $762 million, is down roughly $3 million year-over-year, as the bank deals with higher residential mortgage interest rates, low housing inventories and reduced refinancing volume. Compared to the same quarter last year, mortgage originations by HarborOne Mortgage decreased 13.9 percent in the first quarter of 2018.
However, HarborOne executives are working to address the slow-down in the bank’s mortgage business.
The bank in February announced it would be purchasing Cumberland County Mortgage of South Portland, Maine, giving the company a new mortgage lending foothold in northern New England. A little more than a month later, HarborOne purchased Coastway Bank, making it a major mortgage lender in New England and the top mortgage lender in Rhode Island.
The deal, which is expected to close in the second quarter of this year, would put HarborOne at roughly $3.4 billion in assets.
Most recently, HarborOne streamlined its mortgage business by rolling Merrimack Mortgage, one of its subsidiaries, into the residential lending operations currently at HarborOne Bank, creating the establishment of HarborOne Mortgage. The move is expected to create more efficiencies.
Although the acquisition of Coastway is expected to make the bank a much bigger player in Massachusetts, there is also speculation that it could lead HarborOne to convert to a fully stock-owned company – right now it is only partially stock-owned.
Total assets at the bank grew almost $170 million year-over-year, while noninterest income declined slightly year-over-year to roughly $11.3 million.
The company recorded a provision for loan losses of $808,000 for the first quarter, compared to $265,000 for the first quarter of 2017. Nonperforming assets were $17.2 million at the end of the first quarter, down more than $6 million year-rover-year, making up .63 percent of total assets.
