UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

or

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-38955

HarborOne Bancorp, Inc.

(Exact name of registrant as specified in its charter)

Massachusetts	81-1607465
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

770 Oak Street, Brockton, Massachusetts	02301
(Address of principal executive offices)	(Zip Code)

(508) 895-1000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act

Title of each Class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.01 par value	HONE	The NASDAQ Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer  ☐	Accelerated filer   ☒
Non-accelerated filer  ☐ ​	Smaller reporting company  ☐ Emerging growth company  ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of November 1, 2021, there were 53,228,410 shares of the Registrant’s common stock, par value $0.01 per share, outstanding

Index

		PAGE
PART I.	FINANCIAL INFORMATION
ITEM 1.	Financial Statements
	Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020 (unaudited)	1
	Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2021 and 2020 (unaudited)	2
	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2021 and 2020 (unaudited)	3
	Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2021 and 2020 (unaudited)	4
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020 (unaudited)	6
	Notes to Consolidated Financial Statements (unaudited)	8
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	44
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	71
ITEM 4.	Controls and Procedures	71
PART II.	OTHER INFORMATION
ITEM 1.	Legal Proceedings	72
ITEM 1A.	Risk Factors	72
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	73
ITEM 3.	Defaults Upon Senior Securities	73
ITEM 4.	Mine Safety Disclosures	73
ITEM 5.	Other Information	73
ITEM 6.	Exhibits	74
EXHIBIT INDEX		74
SIGNATURE		75

HarborOne Bancorp, Inc.

Consolidated Balance Sheets (unaudited)

	September 30,		December 31,
(in thousands, except share data)	2021		2020
Assets
Cash and due from banks	$	42,589	$	31,777
Short-term investments		277,050		174,093
Total cash and cash equivalents		319,639		205,870
Securities available for sale, at fair value		390,552		276,498
Federal Home Loan Bank stock, at cost		6,828		8,738
Asset held for sale		881		—
Loans held for sale, at fair value		77,052		208,612
Loans		3,457,744		3,494,642
Less: Allowance for loan losses		(47,988)		(55,395)
Net loans		3,409,756		3,439,247
Accrued interest receivable		10,880		11,874
Other real estate owned and repossessed assets		28		595
Mortgage servicing rights, at fair value		36,540		24,833
Property and equipment, net		50,480		49,580
Retirement plan annuities		14,065		13,747
Bank-owned life insurance		89,466		87,950
Goodwill		69,802		69,802
Intangible assets		3,399		4,370
Other assets		87,726		81,899
Total assets	$	4,567,094	$	4,483,615
Liabilities and Stockholders' Equity
Deposits:
Demand deposit accounts	$	756,917	$	689,672
NOW accounts		300,577		218,584
Regular savings and club accounts		1,144,595		998,994
Money market deposit accounts		832,441		866,661
Term certificate accounts		659,850		732,298
Total deposits		3,694,380		3,506,209
Short-term borrowed funds		—		35,000
Long-term borrowed funds		55,720		114,097
Subordinated debt		34,128		34,033
Mortgagors' escrow accounts		8,412		7,736
Accrued interest payable		567		1,262
Other liabilities and accrued expenses		93,855		88,964
Total liabilities		3,887,062		3,787,301
Commitments and contingencies (Notes 9 and 10)
Common stock, $0.01 par value; 150,000,000 shares authorized; 59,083,187 and 58,834,970 shares issued; 53,232,110 and 57,205,458 shares outstanding at September 30, 2021 and December 31, 2020, respectively		585		584
Additional paid-in capital		468,526		464,176
Retained earnings		315,683		277,312
Treasury stock, at cost, 5,851,077 and 1,629,512 shares at September 30, 2021 and December 31, 2020, respectively		(73,723)		(16,644)
Accumulated other comprehensive income		(1,118)		2,185
Unearned compensation - ESOP		(29,921)		(31,299)
Total stockholders' equity		680,032		696,314
Total liabilities and stockholders' equity	$	4,567,094	$	4,483,615

The accompanying notes are an integral part of these unaudited interim Consolidated Financial Statements.

1

HarborOne Bancorp, Inc.

Consolidated Statements of Income (unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except share data)	2021		2020		2021		2020
Interest and dividend income:
Interest and fees on loans	$	33,680	$	34,496	$	101,646	$	102,491
Interest on loans held for sale		665		1,060		2,841		2,625
Interest on taxable securities		1,293		1,312		2,671		4,446
Interest on non-taxable securities		—		5		—		103
Other interest and dividend income		170		175		384		1,173
Total interest and dividend income		35,808		37,048		107,542		110,838
Interest expense:
Interest on deposits		2,050		4,520		7,072		19,018
Interest on FHLB borrowings		431		835		1,514		2,933
Interest on subordinated debentures		524		524		1,571		1,571
Total interest expense		3,005		5,879		10,157		23,522
Net interest and dividend income		32,803		31,169		97,385		87,316
Provision (credit) for loan losses		(1,627)		13,454		(5,822)		27,207
Net interest and dividend income, after provision (credit) for loan losses		34,430		17,715		103,207		60,109
Noninterest income:
Mortgage banking income:
Gain on sale of mortgage loans		12,756		34,055		51,820		77,195
Changes in mortgage servicing rights fair value		(992)		(193)		(135)		(5,691)
Other		3,882		4,258		12,472		10,650
Total mortgage banking income		15,646		38,120		64,157		82,154
Deposit account fees		4,658		3,451		13,056		10,351
Income on retirement plan annuities		108		104		318		308
Gain on sale and call of securities, net		241		—		241		2,533
Bank-owned life insurance income		515		560		1,516		1,665
Other income		842		2,203		2,234		4,642
Total noninterest income		22,010		44,438		81,522		101,653
Noninterest expense:
Compensation and benefits		24,760		29,839		77,360		78,493
Occupancy and equipment		4,765		4,581		14,723		13,296
Data processing		2,205		2,119		6,910		6,576
Loan expenses		1,323		3,166		5,008		7,121
Marketing		880		817		2,524		2,750
Deposit expenses		431		475		1,209		1,435
Postage and printing		396		455		1,215		1,386
Professional fees		1,362		1,458		4,432		4,204
Prepayment penalties on Federal Home Loan Bank advances		1,095		—		1,095		—
Foreclosed and repossessed assets		(308)		27		(332)		165
Deposit insurance		341		310		993		860
Other expenses		2,024		2,452		5,537		8,350
Total noninterest expense		39,274		45,699		120,674		124,636
Income before income taxes		17,166		16,454		64,055		37,126
Income tax provision		4,907		4,561		18,128		9,934
Net income	$	12,259	$	11,893	$	45,927	$	27,192
Earnings per common share:
Basic	$	0.25	$	0.22	$	0.89	$	0.50
Diluted	$	0.24	$	0.22	$	0.88	$	0.50
Weighted average shares outstanding:
Basic		49,801,123		54,465,339		51,362,252		54,436,090
Diluted		50,663,415		54,465,339		52,094,749		54,436,090

The accompanying notes are an integral part of these unaudited interim Consolidated Financial Statements.

2

HarborOne Bancorp, Inc.

Consolidated Statements of Comprehensive Income (unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2021		2020		2021		2020
Net income	$	12,259	$	11,893	$	45,927	$	27,192
Other comprehensive income:
Unrealized gain/loss on cash flow hedge:
Unrealized holding gains (losses)		22		32		1,392		(1,581)
Reclassification adjustment for net losses (gains) included in net income		140		82		373		(67)
Net change in unrealized gains (losses) on derivatives in cash flow hedging instruments		162		114		1,765		(1,648)
Related tax effect		(46)		(32)		(494)		461
Net-of-tax amount		116		82		1,271		(1,187)
Unrealized gain/loss on securities available for sale:
Unrealized holding (losses) gains		(2,406)		(1,335)		(5,626)		4,212
Reclassification of unrealized gain on securities transferred to available for sale		—		—		—		522
Reclassification adjustment for net realized gains		(241)		—		(241)		(2,533)
Net unrealized (losses) gains		(2,647)		(1,335)		(5,867)		2,201
Related tax effect		584		132		1,293		(718)
Net-of-tax amount		(2,063)		(1,203)		(4,574)		1,483
Total other comprehensive (loss) income		(1,947)		(1,121)		(3,303)		296
Comprehensive income	$	10,312	$	10,772	$	42,624	$	27,488

The accompanying notes are an integral part of these unaudited interim Consolidated Financial Statements.

3

HarborOne Bancorp, Inc.

Consolidated Statements of Changes in Stockholders’ Equity (unaudited)

										Accumulated
	Common Stock			Additional				Treasury		Other		Unearned		Total
	Outstanding			Paid-in		Retained		Stock,		Comprehensive		Compensation		Stockholders'
(in thousands, except share data)	Shares	Amount		Capital		Earnings		at Cost		Income (Loss)		- ESOP		Equity
Balance at June 30, 2020	58,418,021	$	584	$	462,881	$	251,032	$	(721)	$	2,897	$	(32,218)	$	684,455
Comprehensive income	—		—		—		11,893		—		(1,121)		—		10,772
Dividends declared of $0.03 per share	—		—		—		(1,621)		—		—		—		(1,621)
ESOP shares committed to be released (57,680 shares)	—		—		33		—		—		—		459		492
Restricted stock awards forfeited	(8,679)		—		—		—		—		—		—		—
Share-based compensation expense	—		—		617		—		—		—		—		617
Treasury stock purchased	(66,878)		—		—		—		(612)		—		—		(612)
Balance at September 30, 2020	58,342,464	$	584	$	463,531	$	261,304	$	(1,333)	$	1,776	$	(31,759)	$	694,103
Balance at June 30, 2021	55,735,623	$	585	$	467,194	$	305,831	$	(38,588)	$	829	$	(30,380)	$	705,471
Comprehensive income (loss)	—