HarborOne Bancorp, Inc. (HONE)·Q3 2024 Earnings Summary

Executive Summary

• EPS of $0.10 missed Street expectations, driven by a $5.9M provision tied primarily to a $17.2M suburban office CRE credit; net interest margin expanded to 2.33% on linked-quarter basis as the bank paid down higher-cost borrowings .
• Total revenue was $42.46M, down 1.9% sequentially and roughly flat year over year; noninterest income fell 11.3% QoQ on MSR valuation declines, partially offset by stronger mortgage loan gains and BOLI income .
• Deposit growth remained healthy (+$77.9M QoQ), cost of deposits rose 15 bps to 2.68%, and borrowings were reduced by $80M, improving funding mix and supporting margin expansion .
• Asset quality weakened as nonperforming assets rose to $28.4M (0.49% of assets), reflecting office CRE stress; ACL/loans increased to 1.11%, with classified commercial loans climbing to $57.5M (three office credits totaling $37.0M, $5.2M specific reserves) .
• Dividend maintained at $0.08/share; buybacks continued (Q3 repurchases 347,670 shares at $12.23), and capital ratios stayed strong (TCE/TA 9.17%); these capital actions remain a potential stock support if credit costs normalize .

What Went Well and What Went Wrong

What Went Well

• Net interest margin expanded to 2.33% from 2.29% QoQ, aided by paying down higher-rate borrowings and modest loan yield improvement; management highlighted positioning for further margin improvement as market rates decline: “Our balance sheet is positioned for margin improvement from declining cost of funds enabled by lower market interest rates.” — Joseph F. Casey, President & CEO .
• Core deposit momentum with client deposits up $89.5M annualized (+$77.9M reported QoQ), while brokered deposits fell $11.6M; FDIC-insured deposits ~74% of total provide stability .
• Mortgage production improved: gain on sale of mortgage loans increased to $3.75M on $209.5M closings; hedging related to MSRs produced an $845K gain, partially mitigating MSR valuation headwinds .

What Went Wrong

• Credit costs rose: total provision of $5.9M (loan provision $5.0M; unfunded commitments $855K) primarily tied to suburban office CRE; NPA surged to $28.4M (0.49% of assets), and classified commercial loans jumped to $57.5M QoQ (three office credits totaling $37.0M with $5.2M specific reserves) .
• Noninterest income fell 11.3% QoQ to $10.6M on a larger MSR valuation decline (-$2.64M vs. -$1.10M prior quarter), offsetting stronger mortgage gains; prior quarter included one-time items (sale-leaseback gain $1.8M and $1.0M securities loss) absent in Q3 .
• Deposit costs rose 15 bps QoQ to 2.68% amid competitive pricing and CD mix shift; efficiency ratio remained elevated at 75.55% on lower revenue and higher funding costs .

Financial Results

Segment breakdown (Q3 2024):

Key KPIs:

Estimate comparison (non-SPGI sources; S&P Global consensus unavailable):

Guidance Changes

Note: Company did not issue formal quantitative revenue/EPS/margin guidance in Q3 materials .

Earnings Call Themes & Trends

Note: A Q3 2024 earnings call transcript could not be located; we searched HONE transcripts and investor materials without finding a full Q3 call transcript [SearchDocuments] .

Management Commentary

• “I am pleased to see continued margin expansion coupled with an almost $90 million increase in client deposits. Our balance sheet is positioned for margin improvement from declining cost of funds enabled by lower market interest rates.” — Joseph F. Casey, President and CEO .
• Management emphasized proactive credit reviews and accommodations for stressed but creditworthy borrowers amid office sector pressure and rising classified loans .
• The company highlighted strong capital and liquidity positions, with TCE/TA at 9.17% and $1.27B of borrowing capacity, as well as continued share repurchases and dividends .

Q&A Highlights

• A Q3 2024 earnings call transcript was not available despite targeted searches across company filings, investor materials, and third-party sources; therefore, Q&A details and any intra-quarter guidance clarifications could not be verified [SearchDocuments] .

Estimates Context

• S&P Global consensus data was unavailable due to access limitations; based on independent sources, consensus EPS was ~$0.18 vs. actual $0.10 (miss of $0.08, -44.4%), and revenue consensus was ~$43.37M vs. actual $42.46M (miss of ~$0.91M, -2.1%) .
• Estimate revisions likely need to incorporate higher CRE-related credit costs and continued MSR valuation sensitivity to rate moves, offset by improving margin from funding mix shifts and lower borrowings .

Key Takeaways for Investors

• Margin tailwinds are emerging from reduced wholesale funding and steady asset yields; further declines in funding costs could continue to lift NIM if rate dynamics persist .
• Credit normalization bears monitoring: suburban office stress drove higher provisions and NPAs; the magnitude and timing of resolution on the three office credits will influence EPS trajectory near term .
• Mortgage segment remains a swing factor: stronger production and gain on sale were offset by MSR valuation declines; the hedge helped but won’t fully neutralize valuation sensitivity to rates .
• Deposit growth and insured deposit mix (~74%) underpin funding stability, but competitive pricing continues to pressure deposit costs and mix toward CDs .
• Capital deployment via dividends ($0.08/share) and buybacks (continued repurchases) provides shareholder support; capital ratios are solid (TCE/TA 9.17%) .
• Near-term trading: EPS misses tied to credit costs may weigh on sentiment; catalysts include resolution of office CRE exposures and confirmation of continued NIM improvement from funding actions .
• Medium-term thesis: A stable deposit base, improving margin, and disciplined capital management can offset mortgage cyclicality and CRE credit headwinds as rate conditions stabilize .