Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Mar. 05, 2019 | Jun. 30, 2018 | |
Document and Entity Information | |||
Entity Registrant Name | HarborOne Bancorp, Inc. | ||
Entity Central Index Key | 0001668224 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Public Float | $ 246,132,000 | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 32,560,136 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Assets | ||
Cash and due from banks | $ 27,686 | $ 16,348 |
Short-term investments | 77,835 | 64,443 |
Total cash and cash equivalents | 105,521 | 80,791 |
Securities available for sale, at fair value | 209,293 | 170,853 |
Securities held to maturity, at amortized cost | 44,688 | 46,869 |
Federal Home Loan Bank stock, at cost | 24,969 | 15,532 |
Loans held for sale, at fair value | 42,107 | 59,460 |
Loans | 2,985,507 | 2,194,967 |
Less: Allowance for loan losses | (20,655) | (18,489) |
Net loans | 2,964,852 | 2,176,478 |
Accrued interest receivable | 9,996 | 6,545 |
Other real estate owned and repossessed assets | 749 | 762 |
Mortgage servicing rights, at fair value | 22,217 | 21,092 |
Property and equipment, net | 57,045 | 24,487 |
Retirement plan annuities | 12,931 | 12,498 |
Bank-owned life insurance | 44,635 | 40,446 |
Deferred income taxes, net | 6,727 | 843 |
Goodwill and other intangible assets | 78,467 | 13,497 |
Other assets | 28,924 | 14,767 |
Total assets | 3,653,121 | 2,684,920 |
Deposits: | ||
Noninterest-bearing deposits | 412,906 | 264,453 |
Interest-bearing deposits | 2,194,647 | 1,675,795 |
Brokered deposits | 77,508 | 73,490 |
Total deposits | 2,685,061 | 2,013,738 |
Short-term borrowed funds | 290,000 | 44,000 |
Long-term borrowed funds | 229,936 | 246,365 |
Subordinated debt | 33,799 | |
Mortgagors' escrow accounts | 4,551 | 5,221 |
Accrued interest payable | 1,611 | 518 |
Other liabilities and accrued expenses | 50,589 | 31,594 |
Total liabilities | 3,295,547 | 2,341,436 |
Commitments and contingencies (Notes 10, 16 and 17) | ||
Common stock, $0.01 par value; 90,000,000 shares authorized; 32,645,161 and 32,662,295 shares issued; 32,563,485 and 32,647,395 shares outstanding at December 31, 2018 and 2017, respectively | 327 | 327 |
Additional paid-in capital | 152,156 | 147,060 |
Retained earnings | 219,088 | 207,590 |
Treasury stock, at cost, 81,676 and 14,900 shares at December 31, 2018 and December 31, 2017, respectively | (1,548) | (280) |
Accumulated other comprehensive loss | (2,358) | (528) |
Unearned compensation - ESOP | (10,091) | (10,685) |
Total stockholders' equity | 357,574 | 343,484 |
Total liabilities and stockholders' equity | $ 3,653,121 | $ 2,684,920 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Consolidated Balance Sheets | ||
Common Stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 90,000,000 | 90,000,000 |
Common Stock, shares issued | 32,645,161 | 32,662,295 |
Common stock, shares outstanding | 32,563,485 | 32,647,395 |
Treasury, shares | 81,676 | 14,900 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Interest and dividend income: | |||
Interest and fees on loans | $ 105,432 | $ 81,114 | $ 67,172 |
Interest on loans held for sale | 2,205 | 2,739 | 2,695 |
Interest on taxable securities | 5,624 | 4,404 | 3,223 |
Interest on non-taxable securities | 856 | 867 | 889 |
Other interest and dividend income | 1,591 | 1,160 | 777 |
Total interest and dividend income | 115,708 | 90,284 | 74,756 |
Interest expense: | |||
Interest on deposits | 20,563 | 10,962 | 8,710 |
Interest on FHLB borrowings | 5,474 | 4,974 | 5,051 |
Interest on subordinated debentures | 741 | ||
Total interest expense | 26,778 | 15,936 | 13,761 |
Net interest and dividend income | 88,930 | 74,348 | 60,995 |
Provision for loan losses | 3,828 | 2,416 | 4,172 |
Net interest income, after provision for loan losses | 85,102 | 71,932 | 56,823 |
Mortgage banking income: | |||
Changes in mortgage servicing rights fair value | (1,396) | (2,056) | (1,130) |
Other | 32,005 | 39,251 | 52,129 |
Total mortgage banking income | 30,609 | 37,195 | 50,999 |
Deposit account fees | 13,500 | 12,311 | 11,664 |
Income on retirement plan annuities | 433 | 455 | 436 |
Gain on sale of consumer loans | 78 | 79 | |
Gain on sale and call of securities, net | 5 | 283 | |
Bank-owned life insurance income | 1,728 | 1,024 | 1,088 |
Other income | 2,923 | 3,471 | 2,554 |
Total noninterest income | 49,198 | 54,534 | 67,103 |
Noninterest expense: | |||
Compensation and benefits | 70,568 | 66,223 | 69,073 |
Occupancy and equipment | 13,212 | 11,715 | 10,230 |
Data processing | 6,789 | 6,157 | 5,867 |
Loan expenses | 5,382 | 6,881 | 9,746 |
Marketing | 3,333 | 3,595 | 2,599 |
Deposit expenses | 1,320 | 1,349 | 1,656 |
Postage and printing | 1,494 | 1,388 | 1,284 |
Professional fees | 3,832 | 4,233 | 2,710 |
Prepayment penalties on Federal Home Loan Bank advances | 400 | ||
Foreclosed and repossessed assets | 95 | 62 | 167 |
Deposit insurance | 2,097 | 1,717 | 1,466 |
Charitable foundation contributions | 4,820 | ||
Merger expenses | 5,092 | ||
Other expenses | 6,879 | 6,094 | 4,680 |
Total noninterest expense | 120,093 | 109,414 | 114,698 |
Income before income taxes | 14,207 | 17,052 | 9,228 |
Income tax provision | 2,813 | 6,673 | 3,297 |
Net income | $ 11,394 | $ 10,379 | $ 5,931 |
Earnings per common share: | |||
Basic earnings per share (in dollars per share) | $ 0.36 | $ 0.33 | |
Diluted earnings per share (in dollars per share) | $ 0.36 | $ 0.33 | |
Weighted average shares outstanding: | |||
Weighted average shares outstanding basic | 31,574,356 | 31,228,317 | |
Weighted average shares outstanding diluted | 31,574,356 | 31,228,317 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Consolidated Statements of Comprehensive Income | |||
Net income | $ 11,394 | $ 10,379 | $ 5,931 |
Securities available for sale: | |||
Unrealized holding gains (losses) | (2,212) | 211 | (951) |
Reclassification adjustment for net realized gains | (283) | ||
Net unrealized gains (losses) | (2,212) | 211 | (1,234) |
Related tax effect | 486 | (74) | 430 |
Net-of-tax amount | (1,726) | 137 | (804) |
Supplemental director retirement plan: | |||
Reclassification adjustment for amortization of prior service cost and actuarial gains | 1,162 | 235 | |
Gain (loss) and prior service cost | (146) | (36) | |
Net unrealized gains | 1,016 | 199 | |
Related tax effect | (391) | (93) | |
Net-of-tax amount | 625 | 106 | |
Total other comprehensive income (loss) | (1,726) | 762 | (698) |
Comprehensive income | $ 9,668 | $ 11,141 | $ 5,233 |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Consolidated Statements of Comprehensive Income | ||
Income tax expense on reclassifications for securities available for sale | $ 113,000 | |
Income tax benefit on reclassification adjustment for amortization of prior service cost | $ 391,000 | $ 93,000 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Common StockIPO | Common StockPrivate Placement | Common Stock | Additional Paid-in CapitalIPO | Additional Paid-in CapitalPrivate Placement | Additional Paid-in Capital | Retained Earnings | Treasury Stock, at Cost | Accumulated Other Comprehensive Loss | Unearned Compensation ESOP | IPO | Private Placement | Total |
Balance, beginning of period at Dec. 31, 2015 | $ 191,280 | $ (592) | $ 190,688 | ||||||||||
Comprehensive income (loss) | 5,931 | (698) | 5,233 | ||||||||||
Issuance of common stock | $ 145 | $ 4 | $ 172 | $ 140,212 | $ 3,851 | $ 140,357 | $ 3,855 | 172 | |||||
Issuance of common stock (in shares) | 14,454,396 | 385,450 | 17,281,034 | ||||||||||
Purchased of shares by the ESOP | $ (11,872) | (11,872) | |||||||||||
ESOP shares committed to be released (59,359 shares) | $ 357 | 594 | 951 | ||||||||||
Balance, end of period at Dec. 31, 2016 | $ 321 | 144,420 | 197,211 | (1,290) | (11,278) | 329,384 | |||||||
Balance, end of period (in shares) at Dec. 31, 2016 | 32,120,880 | ||||||||||||
Comprehensive income (loss) | 10,379 | 762 | 11,141 | ||||||||||
ESOP shares committed to be released (59,359 shares) | 550 | 593 | 1,143 | ||||||||||
Restricted stock awards granted and forfeited, net of awards issued | $ 6 | (6) | |||||||||||
Restricted stock awards granted and forfeited, net of awards issued (in shares) | 541,415 | ||||||||||||
Share-based compensation expense | 2,096 | 2,096 | |||||||||||
Treasury stock purchased | $ (280) | (280) | |||||||||||
Treasury stock purchased (in shares) | (14,900) | ||||||||||||
Balance, end of period at Dec. 31, 2017 | $ 327 | 147,060 | 207,590 | (280) | (528) | (10,685) | $ 343,484 | ||||||
Balance, end of period (in shares) at Dec. 31, 2017 | 32,647,395 | 32,647,395 | |||||||||||
Comprehensive income (loss) | 11,394 | (1,726) | $ 9,668 | ||||||||||
Reclassification of stranded effect of tax rate change (Note 1) | 104 | (104) | |||||||||||
ESOP shares committed to be released (59,359 shares) | 503 | 594 | 1,097 | ||||||||||
Restricted stock awards granted and forfeited, net of awards issued (in shares) | (17,134) | ||||||||||||
Share-based compensation expense | 4,593 | 4,593 | |||||||||||
Treasury stock purchased | (1,268) | (1,268) | |||||||||||
Treasury stock purchased (in shares) | (66,776) | ||||||||||||
Balance, end of period at Dec. 31, 2018 | $ 327 | $ 152,156 | $ 219,088 | $ (1,548) | $ (2,358) | $ (10,091) | $ 357,574 | ||||||
Balance, end of period (in shares) at Dec. 31, 2018 | 32,563,485 | 32,563,485 |
Consolidated Statements of Ch_2
Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) $ in Thousands | 12 Months Ended |
Dec. 31, 2016USD ($)shares | |
Purchase of ESOP shares | 1,187,188 |
ESOP shares committed to be released | 59,359 |
IPO | |
Offering costs | $ | $ 3,914 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash flows from operating activities: | |||
Net income | $ 11,394 | $ 10,379 | $ 5,931 |
Adjustments to reconcile net income to net cash provided (used) by operating activities: | |||
Provision for loan losses | 3,828 | 2,416 | 4,172 |
Net amortization of securities premiums/discounts | 534 | 677 | 783 |
Net amortization of net deferred loan costs/fees and premiums | 3,418 | 4,718 | 6,111 |
Depreciation and amortization of premises and equipment | 3,241 | 2,892 | 2,551 |
Change in mortgage servicing rights fair value | 1,396 | 2,056 | 1,130 |
Mortgage and consumer servicing rights capitalized | (2,521) | (2,844) | (8,561) |
Amortization of consumer servicing rights | 42 | 54 | 68 |
Accretion of fair value adjustment on loans and deposits, net | (1,242) | (295) | (349) |
Amortization of intangible assets | 706 | 88 | 89 |
Amortization of subordinated debt issuance costs | 79 | ||
Gain on sale and call of securities, net | (5) | (283) | |
Bank-owned life insurance income | (1,728) | (1,024) | (1,088) |
Income on retirement plan annuities | (433) | (455) | (436) |
Gain on sale of portfolio loans | (395) | (36) | (365) |
Net loss (gain) on sale and write-down of other real estate owned and repossessed assets | (15) | 98 | (72) |
Deferred income tax provision (benefit) | (1,140) | (698) | (1,262) |
Issuance of common stock to The HarborOne Foundation | 3,855 | ||
ESOP expense | 1,097 | 1,143 | 951 |
Share-based compensation expense | 4,593 | 2,096 | |
Net change in: | |||
Loans held for sale | 26,424 | 26,983 | (22,646) |
Other assets and liabilities, net | 11,892 | (4,373) | 5,106 |
Net cash provided (used) by operating activities | 61,165 | 43,875 | (4,315) |
Activity in securities available for sale: | |||
Maturities, prepayments and calls | 23,833 | 21,655 | 25,639 |
Purchases | (64,691) | (56,163) | (43,708) |
Sales | 8,735 | ||
Activity in securities held to maturity: | |||
Maturities, prepayment and calls | 3,839 | 3,719 | 15,373 |
Purchases | (2,996) | (3,052) | |
Sales | 1,015 | ||
Net (purchase) redemption of FHLB stock | (9,437) | 217 | 2,986 |
Proceeds from life insurance policies | 2,215 | ||
Proceeds from sale of portfolio loans transferred to held for sale | 105,823 | 5,007 | 39,831 |
Participation-in loan purchases | (91,939) | (73,593) | (73,825) |
Loan originations, net of principal payments | (105,671) | (134,233) | (229,631) |
Proceeds from sale of other real estate owned and repossessed assets | 1,638 | 2,192 | 2,349 |
Additions to property and equipment | (5,545) | (3,186) | (2,138) |
Cash paid, net of cash acquired, in business combinations | (73,987) | ||
Net cash used by investing activities | (215,903) | (237,437) | (254,389) |
Cash flows from financing activities: | |||
Net increase in deposits | 194,865 | 208,985 | 113,541 |
Net change in borrowed funds with maturities less than ninety days | (29,000) | (36,000) | 80,000 |
Proceeds from other borrowed funds and subordinated debt | 131,795 | 91,250 | 20,025 |
Repayment of other borrowed funds | (116,254) | (40,004) | (74,504) |
Net change in mortgagors' escrow accounts | (670) | 187 | 548 |
Issuance of common stock | 140,529 | ||
Purchase of shares by the ESOP | (11,872) | ||
Treasury stock purchased | (1,268) | (280) | |
Net cash provided by financing activities | 179,468 | 224,138 | 268,267 |
Net change in cash and cash equivalents | 24,730 | 30,576 | 9,563 |
Cash and cash equivalents at beginning of year | 80,791 | 50,215 | 40,652 |
Cash and cash equivalents at end of year | 105,521 | 80,791 | 50,215 |
Supplemental cash flow information: | |||
Interest paid on deposits | 20,423 | 10,922 | 8,694 |
Interest paid on borrowed funds | 5,227 | 5,024 | 5,087 |
Income taxes paid | 2,834 | 5,561 | 3,700 |
Transfer of loans to other real estate owned and repossessed assets | 1,654 | 1,285 | $ 1,697 |
Transfer of loans to loans held for sale | 105,823 | $ 5,088 | |
Supplemental non-cash activities related to acquisition detailed in Note 2: | |||
Fair value of non-cash tangible assets acquired | 771,993 | ||
Goodwill and intangible assets | 65,348 | ||
Fair value of liabilities assumed | $ 763,354 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2018 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Consolidation HarborOne Bancorp, Inc. (the “Company”) is a mid-tier stock holding company whose principal subsidiary is HarborOne Bank (the “Bank”). The Bank is a state-chartered co-operative bank whose primary subsidiary is a residential mortgage banking company, HarborOne Mortgage, LLC (“HarborOne Mortgage”). HarborOne Mortgage was acquired as Merrimack Mortgage, LLC on July 1, 2015 and effective April 3, 2018 became HarborOne Mortgage. The Consolidated Financial Statements include the accounts of the Company, the Company’s subsidiaries Legion Parkway Company LLC, a security corporation formed on July 13, 2016 and HarborOne Bank; and the Bank’s wholly-owned subsidiaries. In addition to HarborOne Mortgage, the Bank has two security corporation subsidiaries and one passive investment subsidiary. The security corporations were established for the purpose of buying, holding and selling securities on their own behalf. The Company established Legion Parkway Company LLC for the same purpose. All significant intercompany balances and transactions have been eliminated in consolidation. Stock Conversion On June 29, 2016, the Bank reorganized into a two-tier mutual holding company structure with a mid-tier stock holding company. The Company sold 14,454,396 shares of common stock at $10.00 per share, including 1,187,188 shares purchased by the Company’s Employee Stock Ownership Plan (“ESOP”). In addition, the Company issued 17,281,034 shares to HarborOne Mutual Bancshares, the Company’s mutual holding company parent (the “MHC”) and 385,450 shares to The HarborOne Foundation (the “Foundation”), a charitable foundation that was formed in connection with the stock offering and is dedicated to supporting charitable organizations operating in the Bank’s local community. A total of 32,120,880 shares of common stock were outstanding following the completion of the stock offering. The direct costs of the Company’s stock offering of $3.9 million were deferred and deducted from the proceeds of the offering. Upon the completion of the stock offering, a special “liquidation account” was established for the benefit of certain depositors of the Bank in an amount equal to the percentage ownership interest in the equity of the Company held by persons other than the MHC as of the date of the latest balance sheet contained in the prospectus. The Company is not permitted to pay dividends on its capital stock if the Company’s shareholders’ equity would be reduced below the amount of the liquidation account. The liquidation account is reduced annually to the extent that eligible account holders have reduced their qualifying deposits. Subsequent increases in an eligible account holder’s qualifying deposits do not restore such holder’s interest in the liquidation account. Nature of Operations The Company, originally established in 1917 as a state-chartered credit union, converted to a state-chartered co-operative bank on July 1, 2013. The Company provides a variety of financial services to individuals and businesses through its 24 full-service bank branches in Massachusetts and Rhode Island, one limited-service bank branch, and a commercial lending office in each of Boston, Massachusetts and Providence, Rhode Island. HarborOne Mortgage maintains 34 offices in Massachusetts, Rhode Island, New Hampshire, Maine, and New Jersey and is also licensed to lend in five additional states. The Company’s primary deposit products are checking, money market, savings and term certificate of deposit accounts while its primary lending products are commercial real estate, commercial, residential mortgages and consumer loans, including indirect automobile lease loans. The Company also originates, sells and services residential mortgage loans primarily through HarborOne Mortgage. Use of Estimates In preparing the Consolidated Financial Statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses and the valuations of mortgage servicing rights, derivatives, goodwill and deferred tax assets. Business Combinations The Company accounts for business combinations under the acquisition method of accounting whereby the Company records the fair value of the assets acquired and liabilities assumed, immediately expenses transaction costs and accounts for restructuring plans separately from the business combination. There is no separate recognition of the acquired allowance for loan losses on the company’s balance sheet as credit related factors are incorporated directly into the fair value of the loans recorded at the acquisition date. The excess of the cost of the acquisition over the fair value of the net tangible and intangible assets acquired is recorded as goodwill. Alternatively, a bargain purchase gain is recorded equal to the amount by which the fair value of assets purchased exceeds the fair value of liabilities assumed and consideration paid. Results of operations of the acquired business are included on the Consolidated Statements of Operations from the effective date of acquisition. Fair values are subject to refinement for up to a year after the closing date of an acquisition as information relative to closing date fair values becomes available. Adjustments recorded to the acquired assets and liabilities are applied prospectively. Significant Group Concentration of Credit Risk The Company has cash and federal fund balances on deposit at correspondent banks that exceed insurable limits. The Company has not experienced any losses on such amounts. At December 31, 2018, the Company had a concentration of cash on deposit at the Federal Reserve Bank amounting to $77.8 million. Most of the Company’s lending activities are with borrowers located within south eastern New England. The ability and willingness of residential and consumer borrowers to honor their repayment commitments is generally dependent on the level of overall economic activity within the borrowers’ geographic area and real estate values. Note 7 provides the detail of the Company’s loan portfolio and Note 5 provides the detail of the Company’s investment portfolio. The Company does not have any significant concentrations to any one industry or customer. Reclassifications Certain previously reported amounts have been reclassified to conform to the current year’s presentation. Cash and Cash Equivalents Cash equivalents include amounts due from banks and short-term investments with original maturities of less than 90 days at time of purchase. Short-term investments mature daily or on demand and are stated at cost, which approximates fair value. Securities Debt securities that management has the positive intent and ability to hold to maturity are classified as held to maturity and are carried at amortized cost, adjusted for the amortization of premiums or the accretion of discounts. Securities not classified as held to maturity are classified as available for sale and recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income (loss). Gains or losses on disposition of securities are recorded on the trade date and are determined using the specific identification method. Premiums and discounts are recognized in interest income using the effective interest method over the terms of the securities, except for premiums on callable securities, which are amortized to the earliest call date . Each reporting period, the Company evaluates all securities with a decline in fair value below the amortized cost of the investment to determine whether or not the impairment is deemed to be other-than-temporary (“OTTI”). OTTI is required to be recognized if (1) the Company intends to sell the security; (2) it is “more likely than not” that the Company will be required to sell the security before recovery of its amortized cost basis; or (3) the present value of expected cash flows is not sufficient to recover the entire amortized cost basis. For all impaired debt securities that the Company intends to sell, or more likely than not will be required to sell, the full amount of the depreciation is recognized as OTTI through earnings. Credit-related OTTI for all other impaired debt securities is recognized through earnings. Non-credit related OTTI for such debt securities is recognized in other comprehensive income (loss), net of applicable taxes. Federal Home Loan Bank Stock The Company, as a member of the Federal Home Loan Bank (“FHLB”) system, is required to maintain an investment in capital stock of the FHLB of Boston. Based on redemption provisions of the FHLB, the stock has no quoted market value and is carried at cost. At its discretion, the FHLB may declare dividends on the stock. The Company reviews FHLB stock for impairment based on the ultimate recoverability of the cost basis. As of December 31, 2018, no impairment has been recognized. Mortgage Loans Held for Sale Residential mortgage loans originated with the intent to sell are classified as held-for-sale and are carried at fair value. Loan origination costs for loans held for sale that the Company accounts for under the fair value option are recognized in noninterest expense when incurred. Changes in fair value are recognized in mortgage banking income. Interest income on mortgage loans held for sale is recorded in interest income. Loans Loans held for investment are reported at their outstanding unpaid principal balances adjusted for charge-offs, the allowance for loan losses, and any unamortized deferred origination fees and costs. Loan origination fees are offset with related direct incremental loan origination costs and the resulting net amount is deferred and amortized to interest income using the level-yield method over the remaining life of the loan. Accrual of interest on loans is discontinued when collectability of principal or interest is uncertain or when payments of principal or interest have become contractually past due 90 days or more. Past due status is based on contractual terms of the loan. However, a loan may remain on accrual status if both the value of any collateral securing the loan is sufficient to cover principal and accrued interest thereon, and the loan is in the process of collection. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. Interest received on nonaccrual loans is either applied against principal or reported as income according to management’s judgment as to the collectability of principal. Interest accruals are resumed on such loans only when they are brought current with respect to interest and principal and when, in the judgment of management, the loans are estimated to be fully collectible as to both principal and interest. The Company’s loan portfolio includes residential real estate, commercial real estate, construction, commercial and consumer segments. Residential real estate loans include classes for one- to four-family and second mortgages and equity lines of credit. Consumer loans include classes for auto and personal loans. The Company’s acquired loans are recorded at fair value with no carryover of the allowance for loan losses. Net discount on performing loans acquired are recognized as interest income over the remaining life of the loan. Acquired loans determined to have evidence of deterioration in credit quality and when it is probable, at acquisition, that all contractually required payments will not be collected, are deemed to be purchased credit impaired ("PCI") loans. For PCI loans, the excess of cash flows expected to be collected over the carrying amount of the loans, referred to as the "accretable yield", is accreted into interest income over the life of the loans using the effective yield method. The Company monitors actual cash flows to determine any deterioration from those forecasted at the acquisition date, which is evaluated and recorded through the allowance for loan losses. Allowance for Loan Losses The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed and generally do not exceed the time frame provided in The Uniform Retail Credit Classification and Account Management Policy. Subsequent recoveries, if any, are credited to the allowance. The allowance for loan losses is evaluated on a regular basis by management. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The allowance consists of general, allocated and unallocated components, as further described below. General component The general component of the allowance for loan losses is based on historical and peer loss experience adjusted for qualitative factors stratified by the Company’s loan segments. Each portfolio segment is further segregated by purchased loans not deemed impaired. Management uses a rolling average of historical losses based on a time frame appropriate to capture relevant loss data for each loan segment except commercial real estate and commercial loans. Due to the lack of historical loss experience for our commercial real estate and commercial loan portfolio, we utilize peer loss data. Adjustments to loss rates are considered for the following qualitative factors: levels/trends in delinquencies; trends in volume and terms of loans; effects of changes in risk selection and underwriting standards and other changes in lending policies, procedures and practices; experience/ability/depth of lending management and staff; and national and local economic trends and conditions. There were no changes in the Company’s policies or methodology pertaining to the general component of the allowance for loan losses during the year ended December 31, 2018. The qualitative factors are determined based on the various risk characteristics of each loan segment. Risk characteristics relevant to each portfolio segment are as follows: Residential real estate – The Company generally does not originate portfolio loans with a loan-to-value ratio greater than 80 percent without obtaining private mortgage insurance and does not generally grant loans that would be classified as subprime upon origination. The Company generally has first or second liens on property securing equity lines of credit. Loans in this segment are generally collateralized by residential real estate and repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, can have an effect on the credit quality in this segment. Residential construction –Residential construction loans include loans to build one- to four-family owner-occupied properties, which are subject to the same credit quality factors as residential real estate loans. Commercial real estate – Loans in this segment are primarily secured by income-producing properties and owner occupied commercial properties in southeastern New England. The underlying cash flows generated by the properties and operations can be adversely impacted by a downturn in the local economy, which can lead to increased vacancy rates and diminished cash flows, which in turn, could have an effect on the credit quality in this segment. Management obtains financial statements annually and continually monitors the cash flows of these loans. Commercial construction –Commercial construction loans may include speculative real estate development loans for which payment is derived from lease or sale of the property. Credit risk is affected by cost overruns, time to lease or sell at an adequate price, and market conditions. Commercial – Loans in this segment are made to businesses and are generally secured by assets of the business. Repayment is expected from the cash flows of the business. A weakened economy, and resultant decreased consumer or business spending, could have an effect on the credit quality in this segment. Consumer – Loans in this segment are generally secured by automobiles or are unsecured and repayment is dependent on the credit quality of the individual borrower. Allocated component The allocated component relates to loans that are classified as impaired. Residential real estate, commercial, commercial real estate and construction loans are evaluated for impairment on a loan-by-loan basis. Impairment is determined by nonaccrual status, whether a loan is subject to a troubled debt restructuring (“TDR”) agreement or in the case of certain loans, based on the internal credit rating. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, except for TDR, the Company does not separately identify individual consumer loans for impairment evaluation. A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. The Company periodically may agree to modify the contractual terms of loans. When a loan is modified and a concession is made to a borrower experiencing financial difficulty, the modification is considered a TDR. All TDRs are initially classified as impaired. Impairment is measured by either the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent. An allowance is established when the discounted cash flows or collateral value of the impaired loan is lower than the carrying value of that loan. Unallocated component The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating allocated and general reserves in the portfolio. The unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses. Additionally the Company's unseasoned commercial portfolio and use of peer group data to establish general reserves for the commercial portfolio adds another element of imprecision to management's estimates. Property and Equipment Land is carried at cost. Buildings, leasehold improvements, and furniture and equipment are carried at cost, less accumulated depreciation and amortization, computed on the straight-line method over the estimated useful lives of the assets or the terms of the leases, if shorter. Expected terms include lease option periods to the extent that the exercise of such options is reasonably assured. Maintenance and repairs are charged to expense as incurred and improvements are capitalized. Retirement Plan Annuities Retirement plan annuities are reflected on the Consolidated Balance Sheets at the face amount of the policies. Changes in recorded value are reflected in income on retirement plan annuities on the Consolidated Statements of Operations. Bank-owned life insurance Bank-owned life insurance policies are reflected on the Consolidated Balance Sheets at net cash surrender value. Changes in the net cash surrender value of the policies, as well as insurance proceeds received, are reflected in bank-owned life insurance income on the Consolidated Statements of Operations and are not subject to income taxes. The Company is the beneficiary on these life insurance policies which are purchased for select employees of the Company. Employee Stock Ownership Plan Compensation expense for the Company’s ESOP is recorded at an amount equal to the shares committed to be allocated by the ESOP multiplied by the average fair market value of the shares during the year. The Company recognizes compensation expense ratably over the year based upon the Company’s estimate of the number of shares committed to be allocated by the ESOP. The difference between the average fair market value and the cost of the shares committed to be allocated by the ESOP is recorded as an adjustment to additional paid-in capital. Mortgage Servicing Rights The Company services mortgage loans for others. Mortgage servicing assets are recognized as separate assets when rights are acquired through purchase or through sale of financial assets and are carried at fair value. For all mortgage servicing assets, fair value is estimated using market prices when available or, alternatively, using a third party valuation model that calculates the present value of estimated future cash flows based on current prepayment assumptions. Derivative Financial Instruments The Company is party to a variety of derivative transactions, including derivative loan commitments, forward loan sale commitments and interest rate swap contracts. The Company enters into derivative contracts in order to meet the financing needs of its customers. The Company also enters into derivative contracts as a means of reducing its interest rate risk and market risk. Derivative Loan Commitments Mortgage loan commitments qualify as derivative loan commitments if the loan that will result from exercise of the commitment will be held for sale upon funding. Loan commitments that are derivatives are recognized at fair value on the Consolidated Balance Sheets in other assets and other liabilities with changes in their fair values recorded in mortgage banking income. Forward Loan Sale Commitments To protect against the price risk inherent in derivative loan commitments, the Company utilizes both “mandatory delivery” and “best efforts” forward loan sale commitments to mitigate the risk of potential decreases in the values of loans that would result from the exercise of the derivative loan commitments. Mandatory delivery contracts are accounted for as derivative instruments. Generally, the Company’s best efforts contracts meet the definition of derivative instruments when the loans to the underlying borrowers close, and are accounted for as derivative instruments at that time. Forward loan sale commitments are recognized at fair value on the Consolidated Balance Sheets in other assets and other liabilities with changes in their fair values recorded in mortgage banking income. Interest Rate Swaps The Company’s interest rate swap contracts are transacted to meet the financing needs of the Company’s commercial customers. Offsetting swap agreements are simultaneously transacted to effectively eliminate the Company’s market and interest rate risk associated with the swaps. Interest rate swaps are recognized on the Consolidated Balance Sheets in other assets and other liabilities with changes in their fair values recorded in other income. Transfers of Financial Assets Transfers of an entire financial asset, a group of entire financial assets, or a participating interest in an entire financial asset are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets. During the normal course of business, the Company may transfer a portion of a financial asset, for example, a participation loan or the government guaranteed portion of a loan. In order to be eligible for sale treatment, the transfer of the portion of the loan must meet the criteria of a participating interest. If it does not meet the criteria of a participating interest, the transfer must be accounted for as a secured borrowing. In order to meet the criteria for a participating interest, all cash flows from the loan must be divided proportionately, the rights of each loan holder must have the same priority, the loan holders must have no recourse to the transferor other than standard representations and warranties and no loan holder has the right to pledge or exchange the entire loan. Other Real Estate Owned and Repossessed Assets Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value less estimated costs to sell when legal title is obtained, establishing a new cost basis. Subsequently, valuations are periodically updated by management and the assets are carried at the lower of carrying amount or fair value less estimated costs to sell. The excess (deficiency) of any consideration received as compared to the carrying value of other real estate owned is recorded as a gain (loss) on sale of other real estate owned. Revenues and expenses from operations and changes in the valuation allowance and any direct write-downs are included in foreclosed and repossessed assets expense. Repossessed assets includes automobiles to be sold which are recorded at estimated fair value, less costs to sell, with the initial charge to the allowance for loan losses and the subsequent gain or loss on sale recorded to foreclosed and repossessed assets expense. Goodwill and Identifiable Intangible Assets The assets (including identifiable intangible assets) and liabilities acquired in a business combination are recorded at fair value at the date of acquisition. Goodwill is recognized for the excess of the acquisition cost over the fair values of the net assets acquired and is not subsequently amortized. Identifiable intangible assets include core deposit premium and non-compete contracts and are being amortized over their estimated lives. Management assesses the recoverability of goodwill at least on an annual basis and all intangible assets whenever events or changes in circumstances indicate that their carrying value may not be recoverable. The impairment test uses a combined qualitative and quantitative approach. The initial qualitative approach assesses whether the existence of events or circumstances led to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after this assessment, the Company determines that it is more likely than not that the fair value is less than the carrying value, a quantitative impairment test is performed. The quantitative impairment test compares book value to the fair value of the reporting unit. If the carrying amount exceeds fair value, an impairment charge is recorded through earnings. Management has identified two reporting units for purposes of testing goodwill for impairment. The Company’s reporting units are the same as the segments used for segment reporting - the Bank, including the two security corporations, one passive investment company, and HarborOne Mortgage. No impairment has been recognized as of December 31, 2018. Advertising Costs Advertising costs are expensed as incurred. Income Taxes Deferred tax assets and liabilities are determined using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the book and tax bases of the various balance sheet assets and liabilities and gives current recognition to changes in tax rates and laws in the period on enactment. Accordingly, changes resulting from the Tax Act of 2017 enacted on December 22, 2017 have been recognized in the Consolidated Financial Statements as of and for the year ended December 31, 2017 (see Note 15). A valuation allowance is established against deferred tax assets when, based upon the available evidence including historical and projected taxable income, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company elected to early adopt Accounting Standard Update (“ASU”) 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, therefore excess tax benefits or deficiencies are recorded in the consolidated statement of operations as part of the provision for income taxes on a prospective basis. For interim reporting purposes, the excess tax benefits or deficiencies are recorded as discrete items in the period in which they occur. In addition, when calculating incremental shares for earnings per share, excess tax benefits are excluded from assumed proceeds. There was no income tax benefit recorded in the provision for income taxes relating to excess tax benefits on share-based compensation for the years ended December 31, 2018 and 2017. The Company records uncertain tax positions on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The determination of whether or not a tax position has met the more likely than not recognition threshold considers the facts, circumstances and information available at the reporting date and is subject to management’s judgment. The Company records interest and penalties as part of income tax expense. Share-based Compensation Plans The Company’s share-based compensation plans provide for awards of stock options, restricted stock and other stock-based compensation to directors, officers and employees. The cost of employee services received in exchange for awards of equity instruments is based on the grant-date fair value of those awards. Compensation cost is recognized over the requisite service period as a component of compensation expense. The Company uses the Black-Scholes option-pricing model to determine the fair value of stock options granted, while the market price of the Company’s common stock at the date of grant is used for restricted stock awards. The Company has elected to recognize forfeitures of awards as they occur (e.g., when an award does not vest because the employee leaves the Company or does not meet specific performance measures). Earnings Per Share Basic earnings per share represents income available to common shareholders divided by the weighted-average number of common shares outstanding during the period. Unallocated ESOP shares are not deemed outstanding for earnings per share calculations. The restricted stock awards are participating securities; therefore unvested awards are included as common shares outstanding in the computation of basic earnings per share. Diluted earnings per share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that may be issued by the Company relate to outstanding stock options awards and are determined using the treasury stock method. Treasury Stock Any shares repurchased under the Company’s share repurchase programs were purchased in open-market transactions and are held as treasury stock. All treasury stock is held at cost. The Company adopted a share repurchase program on October 27, 2017. The Company may repurchase up to 1,633,155 shares of the Company’s common stock, or approximately 5% of the Company’s then current issued and outstanding shares. As of December 31, 2018, the Company had repurchased 81,676 shares, including 42,076 shares acquired by the Company in connecti |
BUSINESS COMBINATIONS
BUSINESS COMBINATIONS | 12 Months Ended |
Dec. 31, 2018 | |
BUSINESS COMBINATIONS | |
BUSINESS COMBINATIONS | 2. Effective October 5, 2018, the Company completed the acquisition of Coastway Bancorp, Inc. (“Coastway”), the holding company of Coastway Community Bank, a Rhode Island chartered savings bank headquartered in Warwick, Rhode Island with $835.1 million in total assets, $736.2 million in gross loans and $478.3 million in total deposits. Pursuant to the merger agreement, each share of Coastway common outstanding was converted into the right to receive $28.25 in cash. With this acquisition the Company established a broader market position in Rhode Island and increased its loan and deposit base. Goodwill in the amount of $56.4 million was recognized in the Coastway acquisition. HarborOne Mortgage acquired their primary third party originator, Cumberland Mortgage, and recorded $327,000 in goodwill. Goodwill recognized in these transactions is not deductible for income tax purposes. The following table represents the assets acquired and liabilities assumed of Coastway as of October 5, 2018 and the fair value adjustments and amounts recorded by the Company in 2018 under the acquisition method of accounting, which are subject to adjustment for up to one year after the merger date: Coastway Fair Value Fair Carrying Value Adjustment Value (in thousands) Assets Acquired Cash and cash equivalents $ 45,453 $ — $ 45,453 Loans held for sale 9,071 — 9,071 Loans, gross 727,148 (23,234) 703,914 Allowance for loan losses (3,480) 3,480 — Fixed assets 30,965 (711) 30,254 Core deposit intangible — 8,952 8,952 Deferred tax assets 1,144 3,114 4,258 Other assets 24,783 (287) 24,496 Total assets acquired $ 835,084 $ (8,686) $ 826,398 Liabilities Assumed Deposits $ 478,336 $ (1,814) $ 476,522 Borrowings 276,750 — 276,750 Other liabilities 10,082 — 10,082 Total liabilities assumed 765,168 (1,814) 763,354 Net acquired $ 69,916 $ (6,872) $ 63,044 Consideration paid 119,440 Goodwill recognized $ 56,396 The fair value adjustment for loans represents the write-off of $5.4 million of deferred loan costs and the write down of the unpaid principal balance of loans to their estimated fair value based on interest rates and expected cash flows as of the acquisition date, which includes an estimate of expected loan loss inherent in the portfolio. Non-impaired loans had an unpaid principal balance of $716.4 million and a fair value of $698.8 resulting in a $17.5 million fair value adjustment that is accretable in earnings. Purchased credit impaired loans had an unpaid principal balance of $5.4 million and a fair value of $5.1 million. The core deposit intangible asset represents the value of the core deposit base assumed in the acquisition. The asset was recorded as an identifiable intangible asset and will be amortized over the estimated useful life of the deposit base. The fair value of time deposits were determined based on the present value of the contractual cash flows over the remaining period to maturity using a market interest rate. Fair value adjustments to assets acquired and liabilities assumed are generally amortized using either an effective yield or straight-line basis over periods consistent with the average life, useful life and/or contractual term of the related assets and liabilities. Pro Forma Information (unaudited) The Company has determined it is impractical to report the amounts of revenue and earnings of Coastway since the acquisition date. Due to the integration of operations, the Company does not record revenue and earnings separately. The revenue and earnings of Coastway’s operations are included in the Consolidated Statement of Operations. The following table presents selected unaudited pro forma financial information reflecting the acquisition of Coastway assuming the acquisition was completed as of January 1, 2017. The unaudited pro forma financial information includes adjustments for scheduled amortization and accretion of fair value adjustments. These adjustments would have been different if they had been recorded on January 1, 2017, and they do not include the impact of prepayments. The unaudited pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of the combined financial results of the Company and the acquisition had the transaction actually been completed at the beginning of the periods presented, nor does it indicate future results for any other interim or full-year period. The unaudited pro forma information, for the years ended December 31, 2018 and 2017, set forth below reflects adjustments related to (a) amortization and accretion of purchase accounting fair value adjustments; (b) amortization of core deposit intangibles; and (c) an estimated tax rate of 28 percent. Excluded from the pro forma results of operations for the year ended December 31, 2018 are merger-related costs of $6.7 million, net of tax, recognized by both the Company and Coastway in the aggregate. The unaudited pro forma information does not reflect management’s estimate of any revenue-enhancing or anticipated cost-savings that could occur as a result of the acquisition. Pro Forma (unaudited) Year Ended December 31, 2018 2017 (in thousands) Net interest income, after provision for loan losses $ 101,117 $ 91,699 Noninterest income $ 54,603 $ 62,072 Net income $ 18,399 $ 11,544 |
CASH AND DUE FROM BANKS
CASH AND DUE FROM BANKS | 12 Months Ended |
Dec. 31, 2018 | |
CASH AND DUE FROM BANKS | |
CASH AND DUE FROM BANKS | 3. The Company is required to maintain average balances on hand or with the Federal Reserve Bank. At December 31, 2018 and 2017, reserve balances amounted to $6.0 million and $2.3 million, respectively. |
SHORT-TERM INVESTMENTS
SHORT-TERM INVESTMENTS | 12 Months Ended |
Dec. 31, 2018 | |
SHORT-TERM INVESTMENTS | |
SHORT-TERM INVESTMENTS | 4. Short-term investments consist of interest-bearing deposit accounts with balances of $77.8 million and $64.4 million as of December 31, 2018 and 2017, respectively. |
SECURITIES
SECURITIES | 12 Months Ended |
Dec. 31, 2018 | |
SECURITIES | |
SECURITIES | 5. The amortized cost and fair value of securities with gross unrealized gains and losses is as follows: Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value (in thousands) December 31, 2018: Securities available for sale U.S. government and government-sponsored enterprise obligations $ 27,997 $ 71 $ 527 $ 27,541 U.S. government agency and government-sponsored residential mortgage-backed securities 105,340 335 1,658 104,017 U.S. government-sponsored collateralized mortgage obligations 31,293 — 365 30,928 SBA asset-backed securities 47,686 106 985 46,807 Total securities available for sale $ 212,316 $ 512 $ 3,535 $ 209,293 Securities held to maturity U.S. government agency and government-sponsored residential mortgage-backed securities $ 15,025 $ 63 $ 481 $ 14,607 U.S. government-sponsored collateralized mortgage obligations 1,724 29 — 1,753 SBA asset-backed securities 5,818 42 41 5,819 Municipal bonds 22,121 406 — 22,527 Total securities held to maturity $ 44,688 $ 540 $ 522 $ 44,706 December 31, 2017: Securities available for sale U.S. government and government-sponsored enterprise obligations $ 17,985 $ — $ 178 $ 17,807 U.S. government agency and government-sponsored residential mortgage-backed securities 74,368 132 630 73,870 U.S. government-sponsored collateralized mortgage obligations 36,753 35 106 36,682 SBA asset-backed securities 42,558 102 166 42,494 Total securities available for sale $ 171,664 $ 269 $ 1,080 $ 170,853 Securities held to maturity U.S. government agency and government-sponsored residential mortgage-backed securities $ 17,452 $ 97 $ 214 $ 17,335 U.S. government-sponsored collateralized mortgage obligations 2,042 54 — 2,096 SBA asset-backed securities 2,991 — 14 2,977 Municipal bonds 24,384 882 — 25,266 Total securities held to maturity $ 46,869 $ 1,033 $ 228 $ 47,674 There were no securities pledged as collateral as of December 31, 2018 and 2017. The amortized cost and fair value of debt securities by contractual maturity at December 31, 2018 is as follows: Available for Sale Held to Maturity Amortized Fair Amortized Fair Cost Value Cost Value (in thousands) After 5 years through 10 years $ 27,997 $ 27,541 $ 4,394 $ 4,462 Over 10 years — — 17,727 18,065 27,997 27,541 22,121 22,527 U.S. government agency and government-sponsored residential mortgage-backed securities 105,340 104,017 15,025 14,607 U.S. government-sponsored collateralized mortgage obligations 31,293 30,928 1,724 1,753 SBA asset-backed securities 47,686 46,807 5,818 5,819 Total $ 212,316 $ 209,293 $ 44,688 $ 44,706 U.S. government-sponsored residential mortgage-backed securities, collateralized mortgage obligations and securities whose underlying assets are loans from the U.S. Small Business Administration (“SBA asset-backed securities”) have stated maturities of four to twenty-nine years; however, it is expected that such securities will have shorter actual lives due to prepayments. The following table shows proceeds and gross realized gains and losses related to the sales and calls of securities for the periods indicated: Year Ended December 31, 2018 2017 2016 (in thousands) Sales Proceeds (1) $ 1,015 $ — $ 8,735 Gross gains 5 — 242 Gross losses — — — Calls Proceeds $ 1,025 $ 400 $ 15,725 Gross gains — — 41 Gross losses — — — (1) 2018 proceeds include the sale of one held to maturity security due to evidence of significant deterioration of the issuer's creditworthiness. Information pertaining to securities with gross unrealized losses at December 31, 2018 and December 31, 2017 aggregated by investment category and length of time that individual securities have been in a continuous loss position follows: Less Than Twelve Months Twelve Months and Over Gross Gross Unrealized Fair Unrealized Fair Losses Value Losses Value (in thousands) December 31, 2018: Securities available for sale U.S. government and government-sponsored enterprise obligations $ — $ — $ 527 $ 17,460 U.S. government agency and government-sponsored residential mortgage-backed securities 55 12,714 1,603 67,060 U.S. government-sponsored collateralized mortgage obligations — — 365 30,928 SBA asset-backed securities — — 985 36,860 $ 55 $ 12,714 $ 3,480 $ 152,308 Securities held to maturity U.S. government agency and government-sponsored residential mortgage-backed securities $ — $ — $ 481 $ 12,938 SBA asset-backed securities — — 41 2,834 $ — $ — $ 522 $ 15,772 December 31, 2017: Securities available for sale U.S. government and government-sponsored enterprise obligations $ 20 $ 4,980 $ 158 $ 9,827 U.S. government agency and government-sponsored residential mortgage-backed securities 155 31,684 475 26,123 U.S. government-sponsored collateralized mortgage obligations 53 10,886 53 2,870 SBA asset-backed securities 95 24,205 71 4,730 $ 323 $ 71,755 $ 757 $ 43,550 Securities held to maturity U.S. government agency and government-sponsored residential mortgage-backed securities $ 91 $ 8,211 $ 123 $ 6,970 SBA asset-backed securities 14 2,977 — — $ 105 $ 11,188 $ 123 $ 6,970 Management evaluates securities for OTTI at each reporting period, and more frequently when economic or market concerns warrant such evaluation. At December 31, 2018, sixty-three debt securities with an amortized cost of $184.9 million have unrealized losses with aggregate depreciation of 2.19% from the Company’s amortized cost basis. The unrealized losses on the Company’s securities were primarily caused by changes in interest rates. All of these investments are guaranteed by government-sponsored enterprises. Accordingly, it is expected that the securities would not be settled at a price less than the par value of the investment. Because the decline in fair value is attributable to changes in interest rates and not to credit quality, and because the Company does not intend to sell the investments and it is more likely than not that the Company will not be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider these investments to be OTTI at December 31, 2018. |
LOANS HELD FOR SALE
LOANS HELD FOR SALE | 12 Months Ended |
Dec. 31, 2018 | |
LOANS HELD FOR SALE | |
MORTGAGE LOANS HELD FOR SALE | 6. At December 31, 2018 and 2017, there were no mortgage loans held for sale that were greater than ninety days past due. The following table provides the fair value and contractual principal balance outstanding of mortgage loans held for sale accounted for under the fair value option: December 31, 2018 2017 (in thousands) Loans held for sale, fair value $ 42,107 $ 59,460 Loans held for sale, contractual principal outstanding 40,692 57,575 Fair value less unpaid principal balance $ 1,415 $ 1,885 Changes in the fair value of mortgage loans held for sale are classified in mortgage banking income in the Consolidated Statements of Operations. None of the changes in fair value for 2018 or 2017 are attributable to instrument-specific credit risk. Included in mortgage banking income is $23.2 million, $30.5 million and $43.0 million of gains on the sale of mortgage loans held for sale, including originated mortgage servicing rights, for the years ended December 31, 2018, 2017 and 2016, respectively. |
LOANS
LOANS | 12 Months Ended |
Dec. 31, 2018 | |
LOANS | |
LOANS | 7. A summary of the balances of loans follows: December 31, 2018 2017 (in thousands) Residential real estate: One- to four-family $ 942,659 $ 677,837 Second mortgages and equity lines of credit 158,138 89,080 Residential real estate construction 14,659 11,904 Commercial real estate 934,420 655,419 Commercial construction 161,660 116,739 Total mortgage loans on real estate 2,211,536 1,550,979 Commercial 277,271 109,523 Consumer loans: Auto 478,863 513,728 Personal 12,582 14,092 Total consumer loans 491,445 527,820 Total loans 2,980,252 2,188,322 Allowance for loan losses (20,655) (18,489) Net deferred loan costs 5,255 6,645 Loans, net $ 2,964,852 $ 2,176,478 The Company did not sell any indirect auto loans during the year ended December 31, 2018. During the years ended December 31, 2017 and 2016, the Company sold indirect auto loans of $5.0 million and $10.0 million, respectively, and recognized gains on sale of consumer loans of $78,000 and $79,000, respectively. The unpaid principal balance of indirect auto loans serviced for others was $12.4 million and $22.4 million at December 31, 2018 and 2017, respectively. The Company transferred residential portfolio loans with a fair value of $105.4 million to held for sale during the year ended December 31, 2018, recognized a gain of $395,000 and these loans were subsequently sold. The Company did not sell any residential portfolio loans during the year ended December 31, 2017. During the year ended December 31, 2016, the Company sold residential portfolio loans of $29.5 million, and recognized gains on sales of $572,000. The Company has transferred a portion of its originated commercial real estate loans to participating lenders. The amounts transferred have been accounted for as sales and are therefore not included in the Company’s accompanying Consolidated Balance Sheets. The Company and participating lenders share ratably in cash flows and any gains or losses that may result from a borrower’s lack of compliance with contractual terms of the loan. The Company continues to service the loans on behalf of the participating lenders and, as such, collects cash payments from the borrowers, remits payments to participating lenders and disburses required escrow funds to relevant parties. At December 31, 2018 and 2017, the Company was servicing loans for participants aggregating $140.9 million and $85.2 million, respectively. Acquired Loans The loans purchased from Coastway included $5.4 million in purchased credit impaired loans. The purchased credit impaired loans were primarily residential real estate loans. The contractual amount outstanding and carrying value of these loans at December 31, 2018 were $4.7 million and $4.6 million, respectively. The expected cash flow of the pool is $5.3 million and the accretable yield is $186,000. During the year ended December 31, 2018, $34,000 was accreted into interest income. Purchased credit impaired loans are not included in the Company’s impaired loan balances in the following tables. At December 31, 2018, $2.2 million of PCI loans are included in the delinquency table and $500,000 are included in the nonaccrual table. The following is the activity in the allowance for loan losses for the years ended December 31, 2018, 2017 and 2016 follows: Mortgage Loans Commercial Commercial Residential Real Estate Construction Commercial Consumer Unallocated Total (in thousands) Balance at December 31, 2015 $ 5,816 $ 4,365 $ 581 $ 1,454 $ 830 $ 654 $ 13,700 Provision (credit) for loan losses (720) 2,785 343 484 703 577 4,172 Charge-offs (402) — — (27) (935) — (1,364) Recoveries 269 — — 9 182 — 460 Balance at December 31, 2016 $ 4,963 $ 7,150 $ 924 $ 1,920 $ 780 $ 1,231 $ 16,968 Provision (credit) for loan losses (985) 685 886 452 1,019 359 2,416 Charge-offs (144) — — (134) (1,039) — (1,317) Recoveries 166 — — 16 240 — 422 Balance at December 31, 2017 $ 4,000 $ 7,835 $ 1,810 $ 2,254 $ 1,000 $ 1,590 $ 18,489 Provision (credit) for loan losses (761) 2,318 897 1,008 746 (380) 3,828 Charge-offs (50) (94) — (990) (847) — (1,981) Recoveries 50 — — 14 255 — 319 Balance at December 31, 2018 $ 3,239 $ 10,059 $ 2,707 $ 2,286 $ 1,154 $ 1,210 $ 20,655 Allocation of the allowance to loan segments at December 31, 2018 and 2017 follows: Mortgage Loans Commercial Commercial Residential Real Estate Construction Commercial Consumer Unallocated Total (in thousands) December 31, 2018: Loans: Impaired loans $ 30,720 $ 2,502 $ — $ 3,826 $ — $ — $ 37,048 Non-impaired loans 1,084,736 931,918 161,660 273,445 491,445 — 2,943,204 Total loans $ 1,115,456 $ 934,420 $ 161,660 $ 277,271 $ 491,445 $ — $ 2,980,252 Allowance for loan losses: Impaired loans $ 1,205 $ — $ — $ 53 $ — $ — $ 1,258 Non-impaired loans 2,034 10,059 2,707 2,233 1,154 1,210 19,397 Total allowance for loan losses $ 3,239 $ 10,059 $ 2,707 $ 2,286 $ 1,154 $ 1,210 $ 20,655 December 31, 2017: Loans: Impaired loans $ 34,440 $ 312 $ - $ 3,069 $ — $ — $ 37,821 Non-impaired loans 744,381 655,107 116,739 106,454 527,820 — 2,150,501 Total loans $ 778,821 $ 655,419 $ 116,739 $ 109,523 $ 527,820 $ — $ 2,188,322 Allowance for loan losses: Impaired loans $ 1,242 $ — $ — $ 739 $ — $ — $ 1,981 Non-impaired loans 2,758 7,835 1,810 1,515 1,000 1,590 16,508 Total allowance for loan losses $ 4,000 $ 7,835 $ 1,810 $ 2,254 $ 1,000 $ 1,590 $ 18,489 The following is a summary of past due and non-accrual loans at December 31, 2018 and 2017: 90 Days 30-59 Days 60-89 Days or More Total Loans on Past Due Past Due Past Due Past Due Non-accrual (in thousands) December 31, 2018 Residential real estate: One- to four-family $ 1,283 $ 4,554 $ 6,516 $ 12,353 $ 12,120 Second mortgages and equity lines of credit 846 237 754 1,837 1,649 Commercial real estate — — 298 298 298 Commercial 34 550 2,575 3,159 3,087 Consumer: Auto 2,099 446 452 2,997 541 Personal 41 56 5 102 16 Total $ 4,303 $ 5,843 $ 10,600 $ 20,746 $ 17,711 December 31, 2017 Residential real estate: One- to four-family $ 3,269 $ 1,116 $ 5,267 $ 9,652 $ 13,308 Second mortgages and equity lines of credit 256 110 296 662 876 Commercial real estate — 312 — 312 312 Commercial construction — — — — 130 Commercial 2 — 260 262 3,038 Consumer: Auto 1,641 342 165 2,148 162 Personal 32 22 18 72 29 Total $ 5,200 $ 1,902 $ 6,006 $ 13,108 $ 17,855 At December 31, 2018 and 2017, there were no loans past due 90 days or more and still accruing. The following information pertains to impaired loans: December 31, 2018 2017 Unpaid Unpaid Recorded Principal Related Recorded Principal Related Investment Balance Allowance Investment Balance Allowance (in thousands) Impaired loans without a valuation allowance: Residential $ 11,518 $ 12,054 $ — $ 12,561 $ 13,171 $ — Commercial real estate 2,502 2,596 — 312 312 — Commercial construction — — — 130 130 — Commercial 3,761 4,672 — — — — Total 17,781 19,322 — 13,003 13,613 — Impaired loans with a valuation allowance: Residential 19,202 19,634 1,205 21,749 22,457 1,242 Commercial real estate — — — — — — Commercial 65 65 53 3,069 3,153 739 Total 19,267 19,699 1,258 24,818 25,610 1,981 Total impaired loans $ 37,048 $ 39,021 $ 1,258 $ 37,821 $ 39,223 $ 1,981 Year Ended December 31, 2018 2017 2016 Interest Interest Interest Average Interest Income Average Interest Income Average Interest Income Recorded Income Recognized Recorded Income Recognized Recorded Income Recognized Investment Recognized on Cash Basis Investment Recognized on Cash Basis Investment Recognized on Cash Basis (in thousands) Residential $ 32,186 $ 1,764 $ 1,379 $ 38,931 $ 2,146 $ 1,699 $ 48,541 $ 2,599 $ 2,458 Commercial real estate 744 — — 78 — — 121 — — Commercial construction 26 — — 132 13 13 135 9 9 Commercial 2,729 35 32 3,629 122 121 2,056 59 58 Total $ 35,685 $ 1,799 $ 1,411 $ 42,770 $ 2,281 $ 1,833 $ 50,853 $ 2,667 $ 2,525 Interest income recognized and interest income recognized on a cash basis in the table above represents interest income for the years ended December 31, 2018, 2017 and 2016, not for the time period designated as impaired. No additional funds are committed to be advanced in connection with impaired loans. There were no material TDR loan modifications during the year ended December 31, 2018. During the year ended December 31, 2017, there were two commercial TDRs in the second quarter of 2017, which paid off in the fourth quarter of 2017. During the year ended December 31, 2016, there was one material TDR consisting of a $2.3 million commercial loan. For 2016 through 2018, residential real estate troubled debt restructurings included rate reductions ranging from 0.50% to 5.625% for periods of two to twenty-eight years, interest only periods of two to thirty-six months and extensions of maturity dates of eighteen months to twenty-eight years. There was one commercial troubled debt restructuring in 2016, which included an extension of maturity date and compliance with specific covenants. The recorded investment of troubled debt restructurings was $22.0 million and $26.4 million at December 31, 2018 and 2017, respectively. Of these loans, $4.3 million and $6.1 million were on non-accrual at December 31, 2018 and 2017, respectively. Although not general practice, there were modifications that included extending maturity dates. These amounts show an increase from the pre-modification balance due to capitalized delinquent interest and/or escrow. All TDR loans are considered impaired and management performs a discounted cash flow calculation to determine the amount of impairment reserve required on each loan. TDR loans which subsequently default are reviewed to determine if the loan should be deemed collateral dependent. In either case, any reserve required is recorded as part of the allowance for loan losses. For the years ended December 31, 2018, 2017 and 2016, there were no significant troubled debt restructures that defaulted in the first twelve months of restructure. A default is defined as two or more payments in arrears. Credit Quality Information The Company uses a ten grade internal loan rating system for commercial real estate, commercial construction and commercial loans, as follows: Loans rated 1 – 6 are considered “pass” rated loans with low to average risk. Loans rated 7 are considered “special mention.” These loans are starting to show signs of potential weakness and are being closely monitored by management. Loans rated 8 are considered “substandard.” Generally, a loan is considered substandard if it is inadequately protected by the current net worth and paying capacity of the obligors and/or the collateral pledged. There is a distinct possibility that the Company will sustain some loss if the weakness is not corrected. Loans rated 9 are considered “doubtful.” Loans classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, highly questionable and improbable. Loans rated 10 are considered “uncollectible” (loss), and of such little value that their continuance as loans is not warranted. Loans not rated consist primarily of certain smaller balance commercial real estate and commercial loans that are managed by exception. On an annual basis, or more often if needed, the Company formally reviews the ratings on all commercial real estate, construction and commercial loans. Annually, the Company engages an independent third party to review a significant portion of loans within these segments. Management uses the results of these reviews as part of its annual review process. On a monthly basis, the Company reviews the residential construction, residential real estate and consumer installment portfolios for credit quality primarily through the use of delinquency reports. The following table presents the Company’s loans by risk rating at December 31, 2018 and 2017: December 31, 2018 2017 Commercial Commercial Commercial Commercial Real Estate Commercial Construction Real Estate Commercial Construction (in thousands) Loans rated 1 - 6 $ 919,305 $ 268,280 $ 147,124 $ 652,625 $ 105,888 $ 116,739 Loans rated 7 10,595 5,165 14,536 — 818 — Loans rated 8 2,502 1,896 — — 1,990 — Loans rated 9 — 1,930 — — 827 — Loans rated 10 — — — — — — Loans not rated 2,018 — — 2,794 — — $ 934,420 $ 277,271 $ 161,660 $ 655,419 $ 109,523 $ 116,739 |
MORTGAGE LOAN SERVICING
MORTGAGE LOAN SERVICING | 12 Months Ended |
Dec. 31, 2018 | |
MORTGAGE LOAN SERVICING | |
MORTGAGE LOAN SERVICING | 8. MORTGAGE LOAN SERVICING The Company sells residential mortgages to government-sponsored entities and other parties. The Company retains no beneficial interests in these loans, but may retain the servicing rights of the loans sold. Mortgage loans serviced for others are not included in the accompanying Consolidated Balance Sheets. The risks inherent in mortgage servicing rights (“MSRs”) relate primarily to changes in prepayments that result from shifts in mortgage interest rates. The unpaid principal balances of mortgage loans serviced for others were $1.99 billion and $1.93 billion as of December 31, 2018 and 2017, respectively. The Company accounts for MSRs at fair value. The Company obtains valuations from independent third parties to determine the fair value of MSRs. Key assumptions used in the estimation of fair value include prepayment speeds, discount rates, default rates, cost to service, and contractual servicing fees. At December 31, 2018 and 2017, the following weighted average assumptions were used in the calculation of fair value of MSRs: December 31, 2018 2017 Prepayment speed 9.45 % 9.79 % Discount rate 9.32 9.26 Default rate 2.06 2.23 The following summarizes changes to mortgage servicing rights for the years ended December 31, 2018, 2017 and 2016: Year Ended December 31, 2018 2017 2016 (in thousands) Balance, beginning of year $ 21,092 $ 20,333 $ 12,958 Additions 2,521 2,815 8,505 Changes in fair value due to: Reductions from loans paid off during the year (1,795) (1,686) (1,779) Changes in valuation inputs or assumptions 399 (370) 649 Balance, end of year $ 22,217 $ 21,092 $ 20,333 For the years ended December 31, 2018, 2017 and 2016, contractually specified servicing fees included in other mortgage banking income amounted to $5.4 million, $5.2 million, and $4.1 million respectively. |
OTHER REAL ESTATE LOANS AND REP
OTHER REAL ESTATE LOANS AND REPOSSESSED ASSETS | 12 Months Ended |
Dec. 31, 2018 | |
OTHER REAL ESTATE LOANS AND REPOSSESSED ASSETS | |
OTHER REAL ESTATE LOANS AND REPOSSESSED ASSETS | 9. Income and expenses applicable to foreclosed and repossessed assets include the following: Year Ended December 31, 2018 2017 2016 (in thousands) Gain on sales of real estate, net $ (126) $ (40) $ (343) Net loss on sales of repossessed assets 106 81 59 Write-downs of real estate 5 57 212 Operating expenses 110 (36) 239 $ 95 $ 62 $ 167 Foreclosed and repossessed assets consist of two and four residential real estate properties with recorded values of $556,000 and $665,000 at December 31, 2018 and 2017, respectively. Foreclosed and repossessed assets also includes real estate properties and automobiles with total recorded values of $193,000 and $97,000 at December 31, 2018 and 2017, respectively. All foreclosed and repossessed assets are held for sale. Mortgage loans in the process of foreclosure totaled $4.8 million and $4.5 million as of December 31, 2018 and 2017, respectively, and are reported in loans. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2018 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | 10. A summary of the cost and accumulated depreciation of property and equipment follows: December 31, 2018 2017 (in thousands) Land $ 12,605 $ 5,466 Buildings and leasehold improvements 51,076 29,553 Furniture, equipment and vehicles 25,246 20,437 Fixed assets in process 2,883 554 91,810 56,010 Less accumulated depreciation and amortization (34,765) (31,523) Property and equipment, net $ 57,045 $ 24,487 Depreciation and amortization expense amounted to $3.2 million, $2.9 million and $2.6 million for the years ended December 31, 2018, 2017 and 2016, respectively. At December 31, 2018 and 2017, fixed assets in process represents building improvements and equipment not placed in service. Pursuant to the terms of noncancelable operating lease agreements in effect at December 31, 2018, pertaining to property and equipment, future minimum lease payments under various operating leases are as follows: Years Ending December 31, (in thousands) 2019 $ 2,045 2020 1,569 2021 1,303 2022 992 2023 829 Thereafter 2,990 $ 9,728 The noncancelable lease agreements contain options to extend for periods from three to twenty-five years, the cost of which is not included above. Rent expense amounted to $2.0 million, $1.7 million and $1.6 million for the years ended December 31, 2018, 2017 and 2016 and is included in occupancy and equipment expenses in the accompanying Consolidated Statements of Operations. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2018 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
GOODWILL AND OTHER INTANGIBLE ASSETS | 11. Goodwill The following table presents changes in the carrying value of goodwill for the periods indicated: Year Ended December 31, 2018 2017 (in thousands) Balance, beginning of year $ 13,365 $ 13,365 Goodwill acquired - Coastway 56,396 — Goodwill acquired - Cumberland Mortgage 327 — Balance, end of year $ 70,088 $ 13,365 HarborOne Mortgage is identified as a reporting unit for purposes of goodwill impairment testing. HarborOne Mortgage goodwill was evaluated for impairment in the fourth quarter of 2018 with no impairment loss recognition considered necessary. Core Deposit Intangible The Company recognized core deposit intangibles (“CDI”) of $9.0 million in connection with the Coastway acquisition. The Company’s change in the gross amount of core deposit intangibles and the related accumulated amortization consisted of the following: Year Ended December 31, 2018 (in thousands) Gross amount of CDI: Balance, beginning of year $ — Additions due to acquisitions 8,952 Balance, end of year 8,952 Accumulated amortization: Balance, beginning of year — Amortization (618) Balance, end of year (618) Net CDI, end of year $ 8,334 The estimated aggregate amortization expense related to the Company’s core deposit intangible assets for each of the next five years is $2.3 million, $1.7 million, $1.2 million, $900,000 and $800,000. The weighted average original amortization period is 7.3 years. Other Intangible Assets The non-compete intangible asset was recognized in connection with HarborOne Mortgage and it is being amortized over the four year period of the agreement. Amortization expense for this asset of $88,000, $88,000, and $89,000 was recorded in 2018, 2017, and 2016, respectively, with the remaining amortization of $45,000 to occur in 2019. |
DEPOSITS
DEPOSITS | 12 Months Ended |
Dec. 31, 2018 | |
DEPOSITS | |
DEPOSITS | 12. A summary of deposit balances, by type, is as follows: December 31, 2018 2017 (in thousands) NOW and demand deposit accounts $ 556,517 $ 395,153 Regular savings and club accounts 482,088 356,300 Money market deposit accounts 758,933 721,021 Total non-certificate accounts 1,797,538 1,472,474 Term certificate accounts greater than $250,000 180,305 78,165 Term certificate accounts less than or equal to $250,000 629,710 389,609 Brokered deposits 77,508 73,490 Total certificate accounts 887,523 541,264 Total deposits $ 2,685,061 $ 2,013,738 The Company has established a relationship to participate in a reciprocal deposit program with other financial institutions. The reciprocal deposit program provides access to FDIC-insured deposit products in aggregate amounts exceeding the current limits for depositors. At December 31, 2018 and 2017, total reciprocal deposits were $110.4 million and $174.2 million, respectively, consisting primarily of money market accounts. A summary of certificate accounts by maturity at December 31, 2018 is as follows: Weighted Average Amount Rate (dollars in thousands) Within 1 year $ 646,130 2.06 % Over 1 year to 2 years 124,312 2.11 Over 2 years to 3 years 84,875 1.91 Over 3 years to 4 years 25,002 1.96 Over 4 years to 5 years 8,954 2.10 Total certificate deposits 889,273 2.05 % Less unaccreted acquisition discount (1,750) Total certificate deposits, net $ 887,523 |
FHLB BORROWINGS
FHLB BORROWINGS | 12 Months Ended |
Dec. 31, 2018 | |
FHLB BORROWINGS | |
FHLB BORROWINGS | 13. Borrowed funds at December 31, 2018 and 2017 consisted of FHLB advances. Short-term advances were $290.0 million and $44.0 million at December 31, 2018 and 2017, respectively, with a weighted average rate of 2.65% and 1.50%, respectively. Long-term advances are summarized below: December 31, 2018 2017 Amount by Weighted Amount by Weighted Scheduled Amount by Average Scheduled Amount by Average Maturity* Call Date (1) Rate (2) Maturity* Call Date (1) Rate (2) (dollars in thousands) Year ending December 31: 2018 $ — $ — — % $ 111,250 $ 111,250 1.47 % 2019 90,000 120,000 2.06 60,000 60,000 2020 77,000 87,000 2.25 50,000 50,000 2021 41,750 21,750 1.95 20,000 20,000 2022 — — — — — — 2023 20,199 199 1.56 5,115 5,115 0.65 2024 and thereafter 987 987 — — — — $ 229,936 $ 229,936 2.05 % $ 246,365 $ 246,365 % * Includes an amortizing advance requiring monthly principal and interest payments. (1) Callable FHLB advances are shown in the respective periods assuming that the callable debt is redeemed at the call date, while all other advances are shown in the periods corresponding to their scheduled maturity date. There were no callable advances at December 31, 2017. (2) Weighted average rates are based on scheduled maturity dates. The FHLB advances are secured by a blanket security agreement on qualified collateral defined primarily as 81% of the carrying value of first mortgage loans on residential property and a portion of the commercial real estate loans deemed acceptable to the FHLB of Boston. The Company also has an available line of credit with the Federal Reserve Bank secured by 75% of the carrying value of indirect auto loans with an amortized balance amounting to $70.6 million and $136.1 million, respectively, of which no amount was outstanding at December 31, 2018 and 2017. |
SUBORDINATED DEBENTURES
SUBORDINATED DEBENTURES | 12 Months Ended |
Dec. 31, 2018 | |
SUBORDINATED DEBENTURES | |
SUBORDINATED DEBENTURES | 14. On August 30, 2018, the Company issued $35.0 million in fixed-to-floating rate subordinated notes due 2028 (the “Notes”) in a private placement transaction to institutional accredited investors. The Notes bear interest at annual fixed rate of 5.625% until September 1, 2023 at which time the interest rate resets quarterly to an interest rate per annum equal to the three–month LIBOR plus 278 basis points. Interest is payable semi-annually on March 1 and September 1 each year through September 1, 2023 and quarterly thereafter. The Notes can be redeemed partially or in whole, prior to the maturity date beginning September 1, 2023 and on any scheduled interest payment date thereafter, at par. The Notes are carried on the Consolidated Balance Sheets net of issuance costs of $1.2 million, which are being amortized over the period to maturity date using the interest method. At December 31, 2018, the Notes qualified as Tier 2 Capital for regulatory capital purposes. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2018 | |
INCOME TAXES | |
INCOME TAXES | 15. Allocation of the federal and state income taxes between current and deferred portions for the years ended December 31, 2018, 2017 and 2016 are as follows: 2018 2017 2016 (in thousands) Current tax provision: Federal $ 2,576 $ 6,000 $ 3,571 State 1,377 1,371 988 3,953 7,371 4,559 Deferred tax benefit: Federal (740) (442) (1,099) State (400) (256) (163) (1,140) (698) (1,262) Income tax provision $ 2,813 $ 6,673 $ 3,297 The reasons for the differences between the statutory federal income tax and the actual income tax provision for the years ended December 31, 2018, 2017 and 2016 are summarized as follows: 2018 2017 2016 (dollars in thousands) Statutory tax rate 21% 35% 34% Statutory tax provision $ 2,983 $ 5,968 $ 3,138 Increase (decrease) resulting from: State taxes, net of federal tax benefit 772 694 545 Bank-owned life insurance (358) (359) (370) Non-deductible merger expenses 196 — — Non-deductible stock offering expenses — — 100 Employee Stock Ownership Plan expenses 106 195 122 Tax exempt income (180) (303) (302) Effect of tax rate change — 243 — Reduction in uncertain tax positions (801) — — Other, net 95 235 64 Income tax provision $ 2,813 $ 6,673 $ 3,297 The tax effects of each item that give rise to deferred taxes at December 31, 2018 and 2017 are as follows: 2018 2017 (in thousands) Deferred tax assets: Allowance for loan losses $ 5,776 $ 5,197 Employee benefit plans 5,288 3,322 Mark-to-market loans 4,728 540 Accrued expenses not deducted for tax purposes 976 181 HarborOne Mortgage loan repurchase reserve 212 193 Charitable contribution and other carryforwards 380 1,046 Net unrealized loss on securities available for sale 665 179 Other 661 179 18,686 10,837 Deferred tax liabilities: Deferred income annuities (1,352) (1,237) Depreciation and amortization (294) (167) Deferred loan fees (1,742) (2,661) Mortgage servicing rights (6,241) (5,929) Core deposit intangible (2,330) — (11,959) (9,994) Net deferred tax asset $ 6,727 $ 843 A summary of the change in the net deferred tax asset (liability) for the years ended December 31, 2018, 2017 and 2016 is as follows: 2018 2017 2016 (in thousands) Balance at beginning of year $ 843 $ 610 $ (989) Deferred tax benefit 1,140 698 1,262 Coastway net deferred tax asset acquired 4,258 - - Change in directors' retirement plan — (391) (93) Change in securities available for sale 486 (74) 430 Balance at end of year $ 6,727 $ 843 $ 610 The Tax Act of 2017 was enacted on December 22, 2017, resulting in changes in U.S. corporate tax rates, business-related exclusions, deductions and credits. Enactment of the Tax Act of 2017 required the Company to reflect the changes associated with the law's provisions in its Consolidated Financial Statements as of the enactment date. Accordingly, the Company revalued its deferred tax assets and liabilities and recorded a net reduction in the Company’s net deferred tax asset and an additional income tax provision in the amount of $243,000 in the Company’s Consolidated Financial Statements. The Company’s income tax returns are subject to review and examination by federal and state taxing authorities. The Company is currently open to audit under the applicable statutes of limitations by the Internal Revenue Service (“IRS”) and Massachusetts Department of Revenue for the years ended December 31, 2015 through 2018. At December 31, 2018, the Bank had a net operating loss carryforward in the state of New Hampshire of $2.8 million related to the acquisition of HarborOne Mortgage with a recorded deferred tax asset of $22,000 at December 31, 2018. The net operating loss expires on December 31, 2024. The state of New Hampshire limits the use of acquired net operating losses that can be used by the Bank each year based on Internal Revenue Code Section 382. This limitation is $552,000 per year. Management believes it is more likely than not that it will be able to utilize the New Hampshire net operating loss carryforward prior to expiration. The Company may carryforward charitable contributions to the succeeding five taxable years. The utilization of the charitable contribution carryforward may not exceed 10% of taxable income as defined by the federal taxation laws. At December 31, 2018, the Company had a charitable contribution carryforward of $1.1 million. This carryforward was generated from the Company’s creation of the Foundation to which it contributed 385,450 shares of its common stock and $965,000 in cash in connection with the offering in June 2016. Management believes it is more likely than not that it will utilize the benefit over the five year carryforward period. During 2017, federal and state amended tax returns were filed that requested tax refunds of approximately $3.2 million. These refunds reflected the change in the tax basis of certain assets not reflected on the original tax return filings. In addition, net operating loss carryforwards for 2016 and related uncertain tax benefits were recognized on the 2016 and 2017 tax return filings. The amended tax return filings net of the tax impact of a temporary difference adjustment of $320,000 reflect "unrecognized tax benefits", which are defined as the aggregate differences between tax return positions and the benefits recognized in the Consolidated Financial Statements. Interest on the uncertain tax positions was reflected in the determination of tax expense for 2018 and 2017. Federal tax refunds for years 2014 and 2015 in the amount of $826,000 and $1.3 million, respectively, were received during 2018. The balance of unrecognized tax benefits, the amount of related interest accrued and what management believes to be the range of reasonably possible changes in the next 12 months, are: December 31, 2018 2017 (in thousands) Unrecognized tax benefits $ 3,635 $ 4,570 Accrued interest on unrecognized tax benefits 134 34 Portion that, if recognized, would reduce tax expense and effective tax rate 3,769 4,604 Reasonably possible reduction to the balance of unrecognized tax in subsequent year 1,032 1,959 Portion that, if recognized, would reduce tax expense and effective tax rate 1,032 1,959 In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable income over the periods the deferred tax assets are expected to be deductible, management believes it is more likely than not that its deferred tax assets are realizable. It should be noted, however, that factors beyond management’s control, such as the general economy and real estate values, can affect future levels of taxable income, and no assurance can be given that sufficient taxable income will be generated to fully absorb gross deductible temporary differences. |
OTHER COMMITMENTS AND CONTINGEN
OTHER COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2018 | |
OTHER COMMITMENTS AND CONTINGENCIES | |
OTHER COMMITMENTS AND CONTINGENCIES | 16. Loan Commitments The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and advance funds on various lines of credit. Those commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the accompanying Consolidated Financial Statements. The Company’s exposure to credit loss is represented by the contractual amount of these commitments. The Company uses the same credit policies in making commitments as it does for on-balance sheet instruments. The following off-balance sheet financial instruments were outstanding at December 31, 2018 and 2017. The contract amounts represent credit risk. December 31, 2018 2017 (in thousands) Commitments to grant loans $ 47,958 $ 86,790 Unadvanced funds on home equity lines of credit 138,227 77,117 Unadvanced funds on revolving lines of credit 125,257 71,151 Unadvanced funds on construction loans 111,333 144,918 Commitments to extend credit and unadvanced portion of construction loans are agreements to lend to a customer, as long as there is no violation of any condition established in the contract. Commitments to grant loans generally have fixed expiration dates or other termination clauses and may require payment of a fee. The commitments for unadvanced funds on construction loans, home equity and revolving lines of credit may expire without being drawn upon; therefore, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s credit worthiness on a case-by-case basis. Commitments to grant loans, unadvanced construction loans and home equity lines of credit are collateralized by real estate, while revolving lines of credit are unsecured. Employment Agreements The Company has entered into employment agreements with certain executive officers. The term of the agreements commenced on the effective date of the signed agreements and continues thereafter until terminated, as defined by the agreements. The agreements generally provide for a specified minimum annual compensation and the continuation of benefits currently received. However, such employment can be terminated for cause, as defined, without incurring any continuing obligations. In addition, all of the agreements provide for severance payments to the officers following a change in control, as defined. The Company entered into an employment agreement with the former President and Chief Executive Officer of Coastway as part of the merger agreement. The agreement has a five year term that provides total compensation of $2.2 million. Generally, in the event of termination after the first 12 months, the remaining total compensation is payable. The Company is expensing the total compensation over the 12 months and recognized $509,000 in compensation for the year ended December 31, 2018 and the remaining $1.7 million will be recognized in 2019. Reserve for Residential Mortgage Loan Repurchase Losses The Company sells residential mortgage loans on a “whole-loan” basis to government-sponsored entities (“GSEs” or “Agencies”) Fannie Mae and Freddie Mac and also to non-agency investors. These loan sales occur under industry standard contractual provisions that include various representations and warranties, which typically cover ownership of the loan, compliance with loan criteria set forth in the applicable agreement, validity of the lien securing the loan and other similar matters. The Company may be required to repurchase certain loans sold with identified defects, indemnify the investor, or reimburse the investor for any credit losses incurred. The Company establishes mortgage repurchase reserves related to various representations and warranties that reflect management’s estimate for which we have a repurchase obligation. The reserves are established by a charge to loan expenses in our Consolidated Statements of Operations. At December 31, 2018 and 2017, this reserve totaled $757,000 and $688,000, respectively, and is included in other liabilities and accrued expenses on the Consolidated Balance Sheets. The repurchase reserve is applicable to loans the Company originated and sold with representations and warranties, which is representative of the entire sold portfolio. The repurchase loss liability is estimated by origination year and to the extent that repurchase demands are made by investors, we may be able to successfully appeal such repurchase demands. The reserve considers anticipated future losses and the Company’s lack of historical experience with the make-whole demands. The reserve for residential mortgage loan repurchase losses represents our best estimate of the probable loss that we may incur due to the representations and warranties in our loan sales contracts with investors. Repurchase losses depend upon economic factors and other external conditions that may change over the life of the underlying loans. Additionally, lack of access to the servicing records of loans sold on a service released basis adds difficulty to the estimation process. To the extent that future investor repurchase demand and appeals success differ from past experience, the Company could have increased demands and increased loss severities on repurchases, causing future additions to the repurchase reserve. Certain loans were sold with recourse provisions, and at both December 31, 2018 and 2017, the related maximum contingent liability related to loans sold amounted to $1.6 million. Based on discounted cash flow of projected losses on sold loans in this portfolio at December 31, 2018 and 2017, the Company had no recourse liability. Contingent Consideration A portion of the purchase price of HarborOne Mortgage was contingent on future results of HarborOne Mortgage. The Company recorded a contingent liability of $3.5 million in July 2015, at the time of the acquisition. The contingent liability was based on estimated future pre-tax earnings for the four-year period ending June 30, 2019. The contingency was settled in full in the fourth quarter of 2017 and the Company reversed the $1.2 million remaining contingent liability which was included in other income. Other In the ordinary course of business, various legal claims arise from time to time and, in the opinion of management based on discussion with legal counsel, management does not believe these claims will have a material effect on the Company’s financial position or results of operations. |
DERIVATIVES
DERIVATIVES | 12 Months Ended |
Dec. 31, 2018 | |
DERIVATIVES | |
DERIVATIVES | 17. Interest Rate Risk Management – Derivative Instruments Not Designated As Hedging Instruments The Company is party to a variety of derivative transactions, including derivative loan commitments, forward loan sale commitments and interest rate swap contracts. The Company enters into derivative contracts in order to meet the financing needs of its customers. The Company also enters into derivative contracts as a means of reducing its interest rate risk and market risk. All derivatives are recognized in the Consolidated Balance Sheets at fair value. Changes in the fair value of derivatives are recognized in earnings. The Company did not have any fair value hedges or cash flow hedges at December 31, 2018 or 2017. Derivative Loan Commitments Mortgage loan commitments qualify as derivative loan commitments if the loan that will result from exercise of the commitment will be held for sale upon funding. The Company enters into commitments to fund residential mortgage loans at specified times in the future, with the intention that these loans will subsequently be sold in the secondary market. A mortgage loan commitment binds the Company to lend funds to a potential borrower at a specified interest rate and within a specified period of time, generally up to 60 days after inception of the rate lock. Outstanding derivative loan commitments expose the Company to the risk that the price of the loans arising from exercise of the loan commitment might decline from inception of the rate lock to funding of the loan due to increases in mortgage interest rates. If interest rates increase, the value of these loan commitments decreases. Conversely, if interest rates decrease, the value of these loan commitments increases. Forward Loan Sale Commitments The Company utilizes both “mandatory delivery” and “best efforts” forward loan sale commitments to mitigate the risk of potential decreases in the values of loans that would result from the exercise of the derivative loan commitments. With a “mandatory delivery” contract, the Company commits to deliver a certain principal amount of mortgage loans to an investor at a specified price on or before a specified date. If the Company fails to deliver the amount of mortgages necessary to fulfill the commitment by the specified date, it is obligated to pay a “pair-off” fee, based on then-current market prices, to the investor to compensate the investor for the shortfall. With a “best efforts” contract, the Company commits to deliver an individual mortgage loan of a specified principal amount and quality to an investor if the loan to the underlying borrower closes. Generally, the price the investor will pay the seller for an individual loan is specified prior to the loan being funded (e.g., on the same day the lender commits to lend funds to a potential borrower). The Company expects that these forward loan sale commitments will experience changes in fair value opposite to the change in fair value of derivative loan commitments. Interest Rate Swaps The Company enters into interest rate swap agreements that are transacted to meet the financing needs of its commercial customers. Offsetting interest rate swap agreements are simultaneously transacted with a third-party financial institution to effectively eliminate the Company’s interest rate risk associated with the customer swaps. The primary risks associated with these transactions arise from exposure to the ability of the counterparties to meet the terms of the contract. The interest rate swap notional amount below is the aggregate notional amount of the customer swap and the offsetting third-party swap. The following tables present the fair values of derivative instruments in the Consolidated Balance Sheets: Assets Liabilities Balance Balance Notional Sheet Fair Sheet Fair Amount Location Value Location Value (in thousands) December 31, 2018: Derivative loan commitments $ 71,325 Other assets $ 1,261 Other liabilities $ 112 Forward loan sale commitments 54,500 Other assets — Other liabilities 518 Interest rate swaps 285,541 Other assets 3,193 Other liabilities 3,193 Risk participation agreements 80,418 Other assets — Other liabilities — Total $ 4,454 $ 3,823 December 31, 2017: Derivative loan commitments $ 81,604 Other assets $ 1,047 Other liabilities $ 27 Forward loan sale commitments 95,680 Other assets 46 Other liabilities 92 Interest rate swaps 246,704 Other assets 2,153 Other liabilities 2,153 Risk participation agreements 42,856 — — Total $ 3,246 $ 2,272 The following table presents information pertaining to the Company’s derivative instruments on the Consolidated Statements of Operations: Amount of Gain (Loss) Year Ended December 31, Location of Gain (Loss) 2018 2017 2016 (in thousands) Derivative loan commitments Mortgage banking income $ 129 $ (1,211) 799 Forward loan sale commitments Mortgage banking income (472) 39 (225) Total $ (343) $ (1,172) 574 |
COMPENSATION AND BENEFIT PLANS
COMPENSATION AND BENEFIT PLANS | 12 Months Ended |
Dec. 31, 2018 | |
COMPENSATION AND BENEFIT PLANS | |
COMPENSATION AND BENEFIT PLANS | 18. Defined Contribution Plan The Company provides a savings plan which qualifies under Section 401(k) of the Internal Revenue Code and provides for voluntary contributions by participating employees up to the maximum amount permitted by law. The Company may contribute 9.3% of each employee’s compensation plus 5.7% of the employee’s compensation in excess of the social security wage base on a discretionary basis up to regulatory maximums. Contributions expensed were $2.3 million, $2.1 million and $2.0 million for the years ended December 31, 2018, 2017 and 2016, respectively. Management Incentive Program The Company from time to time creates incentive compensation plans for senior management and other officers to participate in at varying levels. In addition, the Company may also pay a discretionary bonus to senior management, officers, and/or nonofficers of the Company. These programs are administered by the Compensation Committee of the Board of Directors. The expense for the incentive plans amounted to $3.3 million, $2.0 million and $2.9 million for the years ended December 31, 2018, 2017 and 2016, respectively. Supplemental Retirement Plans The Company provides supplemental retirement benefits to two senior executive officers of the Company under the terms of the Supplemental Executive Retirement Plan Agreements (the “Agreements”). Benefits to be paid under the Agreements are based primarily on the officer’s compensation and estimated mortality. The Agreements are funded with annuities purchased by the Company. At December 31, 2018, 2017 and 2016, included in other liabilities and accrued expenses is the Company’s obligation under the plans of $5.3 million, $4.7 million and $3.8 million, respectively. The retirement benefits, as defined in the Agreements, are accrued by charges to compensation expense over the required service periods of the officers. Expense related to these benefits was $628,000, $933,000 and $1.6 million for the years ended December 31, 2018, 2017 and 2016, respectively. The Company assumed a supplemental retirement plan in the Coastway acquisition. At December 31, 2018, the Company’s obligation under the plan of $3.4 million is included in other liabilities and accrued expenses. Compensation expense related to this benefit was $90,000 for the year ended December 31, 2018. The plan was frozen as part of the merger agreement and the settlement of the plan will be completed in the first quarter of 2019. Split-Dollar Life Insurance Arrangements The Company has collateral assignment split dollar life insurance agreements with an executive officer and a retired executive, whereby the Company made annual premium payments for the executives’ life insurance policies. The Company has the unqualified right to receive from the insurer an amount which is equal to the lesser of the cash surrender value of the policy or the aggregate un-reimbursed amount of premium payments with respect to the policy for which the Company paid. The final payment was made in 2016. In 2016, the Company terminated the agreement with one of the officers and ownership of the policy was transferred to the Company to fully reimburse the Company for premiums paid on the policy of $1.2 million. An endorsement split dollar life insurance agreement was established for the officer whereby the Company will pay to the executives’ estates or beneficiaries a portion of the death benefit that the Company will receive as beneficiary of such policy. Expense associated with this post retirement benefit for the years ended December 31, 2018, 2017 and 2016 amounted to $73,000, $106,000 and $101,000, respectively. The cash surrender value of the new policy is included in bank-owned life insurance on the Consolidated Balance Sheets. Deferred Compensation Plan The Company is the sole owner of an annuity policy pertaining to one of the Company’s executives. The Company has an agreement with this executive whereby upon retirement the Company will pay to the executive an amount equal to the cash surrender value of the annuity less premiums paid accumulated at an interest rate of 1.5% per year. At December 31, 2018, 2017 and 2016, included in other liabilities and accrued expenses is the Company’s obligation under the plan of $322,000, $293,000 and $265,000, respectively. For the years ended December 31, 2018, 2017 and 2016, the expense amounted to $29,000, $28,000 and $27,000, respectively. The Company has agreements with two executive officers whereby the Company will pay the cost of the premium for individual supplemental medical and prescription drug coverage for their lifetime upon retirement at age 65 or later. Spousal coverage is provided each year the executive is eligible for coverage and the spouse is age 65 or over. At December 31, 2018, 2017 and 2016, included in other liabilities and accrued expenses is the Company’s obligation under the plan of $229,000, $226,000 and $216,000, respectively. For the years ended December 31, 2018, 2017 and 2016, the expense amounted to $3,000, $10,000 and $33,000, respectively. The Company assumed a deferred compensation plan in the Coastway acquisition. At December 31, 2018, other assets included $1.5 million in plan assets and other liabilities and accrued expenses included a liability for the benefit obligation of $1.5 million. Compensation expense related to this plan for the year ended December 31, 2018 was $46,000. Long-Term Incentive Plan During 2015, the Company entered into a long-term incentive plan with several executive officers. Benefits are earned annually based on the Company’s achievement of performance goals. The plan is administered by the Company’s Board of Directors. Included in other liabilities and accrued expenses at December 31, 2018, 2017 and 2016 is $1.3 million, $1.3 million and $810,000, respectively, for this plan. For the years ended December 31, 2018, 2017 and 2016, the expense amounted to $56,000, $453,000 and $474,000, respectively. The plan was amended effective January 1, 2018 and no further incentive awards will be awarded under the plan. Post-Retirement Life Insurance Employees who are covered under the Company’s bank-owned life insurance program can elect to participate in the benefits of the program while employed by the Company. The Company granted post-employment coverage to certain executives. This post retirement benefit is included in other liabilities and accrued expenses at December 31, 2018, 2017 and 2016 in the amount of $171,000, $142,000 and $136,000, respectively. For the years ended December 31, 2018, 2017 and 2016, the expense amounted to $29,000, $7,000 and $57,000, respectively. Employee Stock Ownership Plan On June 29, 2016, the Company established an ESOP to provide eligible employees the opportunity to own Company stock. The plan is a tax-qualified retirement plan for the benefit of the eligible Company employees. The ESOP shares were purchased through a loan from the Company and as the debt is repaid, shares are released. Contributions are allocated to eligible participants on the basis of compensation, subject to federal tax limits. The unreleased shares are deducted from stockholders' equity as unearned ESOP shares in the accompanying Consolidated Balance Sheets. The number of shares committed to be released per year is 59,359 through 2035. The following table presents share information held by the ESOP: December 31, 2018 2017 Allocated shares 118,719 59,359 Shares committed to be allocated 59,359 59,359 Unallocated shares 1,009,110 1,068,470 Total shares 1,187,188 1,187,188 Fair value of unallocated shares $ 16,035,000 $ 20,472,000 Total compensation expense recognized in connection with the ESOP was $1.1 million, $1.1 million and $951,000 for the years ended December 31, 2018, 2017 and 2016, respectively. ESOP Restoration Plan During 2016, the Company also adopted an ESOP Restoration Plan for the benefit of ESOP eligible employees whose annual compensation exceeds the amount of annual compensation permitted to be recognized under the ESOP by the Internal Revenue Code. Under the ESOP Restoration Plan, eligible participants would receive a credit each year equal to the amount they would have received under the ESOP but for the Internal Revenue Service imposed compensation limit. Any benefits earned under the ESOP Restoration Plan would become payable at the earliest of six months and a day after the participant’s separation of service from the Bank, the participant’s death, a change in control of the Company or upon termination of the ESOP Restoration Plan. These benefits are accrued over the period during which employees provide services to earn these benefits. For the year ended December 31, 2018, 2017 and 2016, $24,000, $182,000 and $13,000, respectively, was accrued for the ESOP Restoration Plan. Defined Benefit Plan The Company assumed a frozen noncontributory defined benefit pension plan in the Coastway acquisition. At December 31, 2018 the fair value of the plan assets were $1.4 million and the projected benefit obligation was $1.6 million. The unfunded liability balance of $202,000 is included in other liabilities and accrued expenses. Directors’ Retirement Plan The Company has an unfunded director fee continuation plan which provides postretirement benefits to eligible directors of the Company. Participants in the plan must have at least six years of service as a director to be vested in the benefit which is determined based on number of years of service. The Company elected to curtail the plan in 2017. Based on the actuarial analysis, the funded status of the plan and the components of net periodic cost are as follows: Year Ended December 31, 2018 2017 2016 (in thousands) Change in projected benefit obligation: Benefit obligation at beginning of year $ 1,837 $ 1,536 $ 1,369 Service cost — 87 75 Interest cost 76 69 56 Loss — 145 36 Benefits paid (37) — — Benefit obligation and funded status at end of year $ 1,876 $ 1,837 $ 1,536 Accumulated benefit obligation $ 1,876 $ 1,837 $ 1,380 Service cost $ — $ 87 $ 75 Interest cost 76 69 56 Loss recognized — 200 3 Prior service cost recognized — 962 232 Net periodic cost $ 76 $ 1,318 $ 366 The following assumptions were used to determine the benefit obligation and net periodic cost at or for the years ended December 31: 2018 2017 2016 Discount rate 4.14 % 4.00 % 4.00 % Rate of compensation increase N/A N/A % 3.00 % The following is a summary of benefit payments expected to be paid by the director’s retirement plan over the next ten years: Years Ending December 31, (in thousands) 2019 $ 37 2020 385 2021 226 2022 226 2023 226 2024-2028 1,009 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2018 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | 19. The Bank has made loans to directors and officers, in the ordinary course of business at arms-length terms, amounting to $189,000 and $500,000 at December 31, 2018 and 2017, respectively. There were no new loans granted in 2018 and 2017. Loan repayments and reductions due to officer retirements were $311,000 and $720,000 in 2018 and 2017, respectively. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2018 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | 20. Under the HarborOne Bancorp, Inc. 2017 Stock Option and Incentive Plan (the “Equity Plan”), adopted on August 9, 2017, the Company may grant options, stock appreciation rights, restricted stock, restricted units, unrestricted stock awards, cash based awards, performance share awards, and dividend equivalent rights to its directors, officers and employees. Total shares reserved for issuance under the plan are 2,077,577. Both incentive stock options and non-qualified stock options may be granted under the Equity Plan, with the total shares reserved for options equaling 1,483,984. The exercise price of each option equals the market price of the Company’s stock on the date of grant and the maximum term of each option is ten years. The total number of shares reserved for restricted stock or restricted units is 593,593. Options and awards vest ratably over three years. The fair value of shares awarded is based on the market price at the date of grant. Expense related to options and restricted stock granted to directors is recognized within other noninterest expense. The following table presents the pre-tax expense associated with stock options and restricted stock awards and the related tax benefits recognized for the years presented: Year Ended December 31, 2018 2017 (in thousands) Stock-based compensation expense Stock options $ 694 $ 600 Restricted stock awards 2,360 895 Directors' fee expense Stock options 629 246 Restricted stock awards 910 355 Total stock-based award expense $ 4,593 $ 2,096 Related tax benefits recognized in earnings $ 965 $ 589 The Company has standard form agreements used for stock option and restricted stock awards. The standard form agreements used for the Chief Executive Officer and all other executive officers have previously been disclosed in Securities and Exchange Commission filings and generally provide that: (1) any unvested options or unvested restricted stock vest upon a Change in Control, which is an event described in Section 280G of the Internal Revenue Code of 1986; and, that (2) any stock options which vest pursuant to a Change in Control will be cashed out at the difference between the acquisition price and the exercise price of the stock option. Stock Options The Company made the following awards of nonqualified options to purchase shares of common stock in 2018 and 2017: Year Ended December 31, 2018 2018 2017 Date of grant 11/26/2018 9/26/2018 8/17/2017 Options granted 148,398 13,062 883,311 Vesting period (years) Expiration date 11/26/2028 9/26/2028 8/17/2027 Expected volatility 22 % 24 % 24 % Expected life (years) 6 Expected dividend yield — % — % — % Risk free interest rate 2.93 % 2.98 % 1.88 % Fair value per option $ $ $ · Volatility is based on peer group volatility due to lack of sufficient trading history for the Company. · Expected life represents the period of time that the option is expected to be outstanding, taking into account the contractual term and the vesting period. · Expected dividend yield is based on the Company’s history and expectation of dividend payouts. · The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for a period equivalent to the expected life of the option. A summary of the status of the Company’s stock option grants at December 31, 2018 is presented in the table below: Outstanding Nonvested Weighted Average Weighted Weighted Remaining Aggregate Average Stock Option Average Contractual Intrinsic Stock Option Grant Date Awards Exercise Price Term (years) Value Awards Fair Value Balance at January 1, 2018 (1) 883,311 $ 18.35 883,311 $ 5.07 Granted 161,460 17.68 161,460 5.08 Vested (294,427) 5.07 Forfeited (54,251) 18.35 (54,251) 5.07 Balance at December 31, 2018 990,520 $ 18.24 8.60 $ — 696,093 $ 5.07 Exercisable at December 31, 2018 294,427 $ 18.35 7.85 $ — Unrecognized cost inclusive of directors' awards $ 2,989,000 Weighted average remaining recognition period (years) 1.96 (1) During the quarter ended September 30, 2018, the Company discovered a clerical error in the Plan documents that resulted in the number of stock options awarded in 2017 being overstated by 442,752. As a result, the beginning balance of the stock option awards outstanding in the table above have been decreased from the amount previously reported at December 31, 2017. Restricted Stock Shares issued upon vesting may be either authorized but unissued shares or reacquired shares held by the Company. Any shares not issued because vesting requirements are not met will again be available for issuance under the plan. The fair market value of shares awarded, based on the market price at the date of grant, is unearned compensation to be amortized over the applicable vesting period. The following table presents the activity in non-vested stock awards under the Equity Plan for the year ended December 31, 2018: Restricted Weighted Average Stock Awards Grant Price Non-vested stock awards at January 1, 2018 541,415 $ 18.35 Vested (180,465) 18.35 Granted 4,900 19.03 Forfeited (22,034) 18.35 Non-vested stock awards at December 31, 2018 343,816 $ 18.36 Unrecognized cost inclusive of directors' awards $ 5,136,167 Weighted average remaining recognition period (years) 1.65 |
STOCKHOLDERS_ EQUITY
STOCKHOLDERS’ EQUITY | 12 Months Ended |
Dec. 31, 2018 | |
STOCKHOLDERS’ EQUITY | |
STOCKHOLDERS’ EQUITY | 21. Minimum Regulatory Capital Requirements The Company and Bank are subject to various regulatory capital requirements administered by the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation (the “FDIC”). Failure to meet minimum capital requirements can result in mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s Consolidated Financial Statements. Under the capital rules, risk-based capital ratios are calculated by dividing Tier 1 and total risk-based capital, respectively, by risk-weighted assets. Assets and off-balance sheet credit equivalents are assigned to one of several risk-weight categories, based primarily on relative risk. The rules require banks and bank holding companies to maintain a minimum common equity Tier 1 capital ratio of 4.5%, a minimum Tier 1 capital ratio of 6.0%, a total capital ratio of 8.0% and a leverage ratio of 4.0%. Additionally, subject to a transition schedule, the capital rules require a bank holding company to establish a capital conservation buffer of common equity Tier 1 capital in an amount above the minimum risk-based capital requirements equal to 2.5% of total risk weighted assets, or face restrictions on the ability to pay dividends, pay discretionary bonuses, and to engage in share repurchases. The FDIC has amended its prompt corrective action rules to reflect the revisions made by the revised capital rules described above. Under the FDIC’s revised rules, which became effective January 1, 2015, an insured state nonmember bank is considered “well capitalized” if it (i) has a total risk-based capital ratio of 10.0% or greater; (ii) a Tier 1 risk-based capital ratio of 8.0% or greater; (iii) a common Tier 1 equity ratio of 6.5% or greater, (iv) a leverage capital ratio of 5.0% or greater; and (v) is not subject to any written agreement, order, capital directive, or prompt corrective action directive to meet and maintain a specific capital level for any capital measure. A bank holding company is considered “well capitalized” if the bank holding company (i) has a total risk-based capital ratio of at least 10.0%, (ii) has a Tier 1 risk-based capital ratio of at least 6.0%, and (iii) is not subject to any written agreement order, capital directive or prompt corrective action directive to meet and maintain a specific capital level for any capital measure. Prompt corrective action provisions are not applicable to bank holding companies. At December 31, 2018, the capital levels of both the Company and the Bank exceeded all regulatory capital requirements and their regulatory capital ratios were above the minimum levels required to be considered well capitalized for regulatory purposes and also exceeded the minimum capital requirements including the applicable capital conservation buffer of 1.875% (which increased to 2.5% on January 1, 2019 and thereafter). The Company’s and Bank’s regulatory capital ratios as of December 31, 2018 and 2017 are presented in the table below. Minimum Required to be Considered "Well Capitalized" Minimum Required for Under Prompt Corrective Actual Capital Adequacy Purposes Action Provisions Amount Ratio Amount Ratio Amount Ratio (dollars in thousands) HarborOne Bancorp, Inc. December 31, 2018 Common equity Tier 1 capital to risk-weighted assets $ 283,738 9.9 % $ 129,246 4.5 % N/A N/A Tier 1 capital to risk-weighted assets 283,738 9.9 172,328 6.0 N/A N/A Total capital to risk-weighted assets 339,393 11.8 229,771 8.0 N/A N/A Tier 1 capital to average assets 283,738 8.2 137,919 4.0 N/A N/A December 31, 2017 Common equity Tier 1 capital to risk-weighted assets $ 330,514 15.1 % $ 98,292 4.5 % N/A N/A Tier 1 capital to risk-weighted assets 330,514 15.1 131,056 6.0 N/A N/A Total capital to risk-weighted assets 349,002 16.0 174,741 8.0 N/A N/A Tier 1 capital to average assets 330,514 12.5 105,423 4.0 N/A N/A HarborOne Bank December 31, 2018 Common equity Tier 1 capital to risk-weighted assets $ 296,738 10.3 % $ 129,250 4.5 % $ 186,694 6.5 % Tier 1 capital to risk-weighted assets 296,738 10.3 172,333 6.0 229,778 8.0 Total capital to risk-weighted assets 317,393 11.1 229,778 8.0 287,222 10.0 Tier 1 capital to average assets 296,738 8.6 137,784 4.0 172,230 5.0 December 31, 2017 Common equity Tier 1 capital to risk-weighted assets $ 249,532 11.4 % $ 98,266 4.5 % $ 141,939 6.5 % Tier 1 capital to risk-weighted assets 249,532 11.4 131,021 6.0 174,695 8.0 Total capital to risk-weighted assets 268,021 12.3 174,695 8.0 218,368 10.0 Tier 1 capital to average assets 249,532 9.6 104,264 4.0 130,329 5.0 Dividend Restrictions The Bank is subject to dividend restrictions imposed by various regulators, including a limitation on the total of all dividends that the Bank may pay to the Company in any calendar year. The total of all dividends shall not exceed the Bank’s net income for the current year (as defined by statute), plus the Bank’s net income retained for the two previous years, without regulatory approval. Dividends from the Bank are an important source of funds to the Company to make dividend payments on its common stock and for its other cash needs. The ability of the Company and the Bank to pay dividends is dependent on regulatory policies and regulatory capital requirements. The ability to pay such dividends in the future may be adversely affected by new legislation or regulations, or by changes in regulatory policies relating to capital, safety and soundness, and other regulatory concerns. Preferred Stock The Company has 1,000,000 zero par value, preferred shares authorized and none issued or outstanding. |
COMPREHENSIVE INCOME (LOSS)
COMPREHENSIVE INCOME (LOSS) | 12 Months Ended |
Dec. 31, 2018 | |
COMPREHENSIVE INCOME (LOSS) | |
COMPREHENSIVE INCOME (LOSS) | 22. Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities are reported as a separate component of the retained earnings section of the balance sheets, such items, along with net income, are components of comprehensive income (loss). The components of accumulated other comprehensive loss, included in stockholders’ equity, are as follows: December 31, 2018 2017 (in thousands) Securities available for sale: Net unrealized loss $ (3,023) $ (811) Related tax effect 665 179 Stranded effect of tax rate changes (Note 1) — 104 Total accumulated other comprehensive loss $ (2,358) $ (528) The following tables present changes in accumulated other comprehensive loss by component for the years ended December 31, 2018, 2017 and 2016: Year Ended December 31, 2018 2017 2016 Available Available Directors' Available Directors' for Sale for Sale Retirement for Sale Retirement Securities Securities Plan Total Securities Plan Total (in thousands) Balance at beginning of year $ (528) $ (665) $ (625) $ (1,290) $ 139 $ (731) $ (592) Other comprehensive income (loss) before reclassifications (2,212) 211 — 211 (951) — (951) Reclassification of stranded effect of tax rate change (Note 1) (104) — — — — — — Amounts reclassified from accumulated other comprehensive income — — 1,162 1,162 (283) 235 (48) Gains (losses) arising during the period and prior service cost — — (146) (146) — (36) (36) Net current period other comprehensive income (loss) (2,316) 211 1,016 1,227 (1,234) 199 (1,035) Related tax effect 486 (74) (391) (465) 430 (93) 337 Balance at end of year $ (2,358) $ (528) $ — $ (528) $ (665) $ (625) $ (1,290) |
FAIR VALUE OF ASSETS AND LIABIL
FAIR VALUE OF ASSETS AND LIABILITIES | 12 Months Ended |
Dec. 31, 2018 | |
FAIR VALUE OF ASSETS AND LIABILITIES | |
FAIR VALUE OF ASSETS AND LIABILITIES | 23. Determination of Fair Value The Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The fair value of an asset or liability is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various assets or liabilities. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the asset or liability. The following methods and assumptions were used by the Company in estimating fair value disclosures: Cash and cash equivalents - The carrying amounts of cash and short-term instruments approximate fair values based on the short-term nature of the assets. Securities - All fair value measurements are obtained from a third-party pricing service and are not adjusted by management. Securities measured at fair value in Level 1 are based on quoted market prices in an active exchange market. Securities measured at fair value in Level 2 are based on pricing models that consider standard input factors such as observable market data, benchmark yields, interest rate volatilities, broker/dealer quotes, credit spreads and new issue data. Federal Home Loan Bank stock - The fair value of FHLB stock is equal to cost based on redemption provisions. Mortgage loans held for sale - Fair values are based on prevailing market prices for similar commitments. Loans - Fair values for mortgage loans and other loans are estimated using discounted cash flow analyses, using market interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Fair values for non-performing loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable. Retirement plan annuities - The carrying value of the annuities are based on their contract values which approximate fair value. Mortgage servicing rights - Fair value is based on market prices for comparable mortgage servicing contracts, when available, or alternatively, is based on a valuation model that calculates the present value of estimated future net servicing income. Deposits and mortgagors’ escrow accounts - The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings, and certain types of money market accounts) and mortgagors’ escrow accounts are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). Fair values for certificates of deposit are estimated using a discounted cash flow calculation that applies market interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits. Borrowed funds - The fair values of borrowed funds are estimated using discounted cash flow analyses based on the current incremental borrowing rates in the market for similar types of borrowing arrangements. Accrued interest - The carrying amounts of accrued interest approximate fair value. Forward loan sale commitments and derivative loan commitments - Forward loan sale commitments and derivative loan commitments are based on fair values of the underlying mortgage loans and the probability of such commitments being exercised. The assumptions for pull-through rates are derived from internal data and adjusted using management judgment. Derivative loan commitments include the non-refundable costs of originating the loan based on the Company’s internal cost analysis that is not observable and the value of servicing. The weighted average pull-through rate for derivative loan commitments was 86% at both December 31, 2018 and 2017. Interest rate swaps - The Company’s interest rate swaps are traded in over-the-counter markets where quoted market prices are not readily available. For these interest rate derivatives, fair value is determined by a third party utilizing models that use primarily market observable inputs, such as swap rates and yield curves. The pricing models used to value interest rate swaps calculate the sum of each instrument’s fixed and variable cash flows, which are then discounted using an appropriate yield curve to arrive at the fair value of each swap. The pricing models do not contain a high level of subjectivity as the methodologies used do not require significant judgment. The Company incorporates credit valuation analysis for counterparty nonperformance risk in the fair value measurement, including the impact of netting applicable credit enhancements such as available collateral. Off-balance sheet credit-related instruments - Fair values for off-balance sheet, credit related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The fair value of off-balance sheet instruments are immaterial. Fair Value Hierarchy The Company groups its assets and liabilities measured at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. Level 1 – Valuation is based on quoted prices in active markets for identical assets or liabilities. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. Level 2 – Valuation is based on observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include assets and liabilities whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as assets and liabilities for which the determination of fair value requires significant management judgment or estimation. Transfers between levels are recognized at the end of the reporting period, if applicable. Transfers did not occur in the periods presented. Assets and Liabilities Measured at Fair Value on a Recurring Basis Assets and liabilities measured at fair value on a recurring basis are summarized below: Total Level 1 Level 2 Level 3 Fair Value (in thousands) December 31, 2018 Assets Securities available for sale $ — $ 209,293 $ — $ 209,293 Loans held for sale — 42,107 — 42,107 Mortgage servicing rights — 22,217 — 22,217 Derivative loan commitments — — 1,261 1,261 Interest rate swaps — 3,193 — 3,193 $ — $ 276,810 $ 1,261 $ 278,071 Liabilities Derivative loan commitments $ — $ — $ 112 $ 112 Forward loan sale commitments — — 518 518 Interest rate swaps — 3,193 — 3,193 $ — $ 3,193 $ 630 $ 3,823 December 31, 2017 Assets Securities available for sale $ — $ 170,853 $ — $ 170,853 Loans held for sale — 59,460 — 59,460 Mortgage servicing rights — 21,092 — 21,092 Derivative loan commitments — — 1,047 1,047 Forward loan sale commitments — — 46 46 Interest rate swaps — 2,153 — 2,153 $ — $ 253,558 $ 1,093 $ 254,651 Liabilities Derivative loan commitments $ — $ — $ 27 $ 27 Forward loan sale commitments — — 92 92 Interest rate swaps — 2,153 — 2,153 $ — $ 2,153 $ 119 $ 2,272 The table below presents, for the years ended December 31, 2018, 2017 and 2016, the changes in Level 3 assets and liabilities that are measured at fair value on a recurring basis. Year Ended December 31, 2018 2017 2016 (in thousands) Assets: Derivative and Forward Loan Sale Commitments: Balance at beginning of year $ 1,093 $ 2,722 $ 1,661 Total gains (losses) included in net income (1) 168 (1,629) 1,061 Balance at end of year $ 1,261 $ 1,093 $ 2,722 Changes in unrealized gains relating to instruments at year end $ 1,261 $ 1,093 $ 2,722 Liabilities: Derivative and Forward Loan Sale Commitments: Balance at beginning of year $ (119) $ (576) $ (89) Total gains (losses) included in net income (1) (511) 457 (487) Balance at end of year $ (630) $ (119) $ (576) Changes in unrealized losses relating to instruments at year end $ (630) $ (119) $ (576) (1) Included in mortgage banking income on the Consolidated Statements of Net Income. Assets Measured at Fair Value on a Non-recurring Basis The Company may also be required, from time to time, to measure certain other financial assets on a nonrecurring basis in accordance with generally accepted accounting principles. These adjustments to fair value usually result from application of lower-of-cost-or-market accounting or write-downs of individual assets. There were no liabilities measured at fair value on a non-recurring basis at December 31, 2018 and 2017. The following table summarizes the fair value hierarchy used to determine each adjustment and the carrying value of the related individual assets. December 31, 2018 2017 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 (in thousands) Impaired loans $ — $ — $ 2,086 $ — $ — $ 3,277 Other real estate owned and repossessed assets — — 749 — — 762 $ — $ — $ 2,835 $ — $ — $ 4,039 Losses in the following table represent the amount of the fair value adjustments recorded during the period on the carrying value of the assets held at December 31, 2018 and 2017, respectively. Year Ended December 31, 2018 2017 (in thousands) Impaired loans $ 409 $ 415 Other real estate owned and repossessed assets 88 138 $ 497 $ 553 Losses applicable to write-downs of impaired loans and other real estate owned and repossessed assets are based on the appraised value of the underlying collateral less estimated costs to sell. The losses on impaired loans is not recorded directly as an adjustment to current earnings, but rather as a component in determining the allowance for loan losses. The losses on other real estate owned and repossessed assets represent adjustments in valuation recorded during the time period indicated and not for losses incurred on sales. Appraised values are typically based on a blend of (a) an income approach using observable cash flows to measure fair value, and (b) a market approach using observable market comparables. These appraised values may be discounted based on management’s historical knowledge, expertise or changes in market conditions from time of valuation. Summary of Fair Values of Financial Instruments The estimated fair values, and related carrying or notional amounts, of the Company’s financial instruments are as follows. Certain financial instruments and all nonfinancial instruments are exempt from disclosure requirements. Accordingly, the aggregate fair value amounts presented herein may not necessarily represent the underlying fair value of the Company. December 31, 2018 Carrying Fair Value Amount Level 1 Level 2 Level 3 Total (in thousands) Financial assets: Cash and cash equivalents $ 105,521 $ 105,521 $ — $ — $ 105,521 Securities available for sale 209,293 — 209,293 — 209,293 Securities held to maturity 44,688 — 44,706 — 44,706 Federal Home Loan Bank stock 24,969 — — 24,969 24,969 Loans held for sale 42,107 — 42,107 — 42,107 Loans, net 2,964,852 — — 2,959,333 2,959,333 Retirement plan annuities 12,931 — — 12,931 12,931 Mortgage servicing rights 22,217 — 22,217 — 22,217 Accrued interest receivable 9,996 — 9,996 — 9,996 Financial liabilities: Deposits 2,685,061 — — 2,678,989 2,678,989 Borrowed funds 519,936 — 518,224 — 518,224 Subordinated debt 33,799 — — 34,338 34,338 Mortgagors' escrow accounts 4,551 — — 4,551 4,551 Accrued interest payable 1,611 — 1,611 — 1,611 Derivative loan commitments: Assets 1,261 — — 1,261 1,261 Liabilities 112 — — 112 112 Interest rate swap agreements: Assets 3,193 — 3,193 — 3,193 Liabilities 3,193 — 3,193 — 3,193 Forward loan sale commitments: Assets — — — — — Liabilities 518 — — 518 518 December 31, 2017 Carrying Fair Value Amount Level 1 Level 2 Level 3 Total (in thousands) Financial assets: Cash and cash equivalents $ 80,791 $ 80,791 $ — $ — $ 80,791 Securities available for sale 170,583 — 170,853 — 170,853 Securities held to maturity 46,869 — 47,674 — 47,674 Federal Home Loan Bank stock 15,532 — — 15,532 15,532 Mortgage loans held for sale 59,460 — 59,460 — 59,460 Loans, net 2,176,478 — — 2,175,423 2,175,423 Retirement plan annuities 12,498 — — 12,498 12,498 Mortgage servicing rights 21,092 — 21,092 — 21,092 Accrued interest receivable 6,545 — 6,545 — 6,545 Financial liabilities: Deposits 2,013,738 — — 2,010,052 2,010,052 Borrowed funds 290,365 — 288,939 — 288,939 Mortgagors' escrow accounts 5,221 — — 5,221 5,221 Accrued interest payable 518 — 518 — 518 Derivative loan commitments: Assets 1,047 — — 1,047 1,047 Liabilities 27 — — 27 27 Interest rate swap agreements: Assets 2,153 — 2,153 — 2,153 Liabilities 2,153 — 2,153 — 2,153 Forward loan sale commitments: Assets 46 — — 46 46 Liabilities 92 — — 92 92 |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2018 | |
EARNINGS PER SHARE (“EPS”) | |
EARNINGS PER SHARE (“EPS”) | 24. Basic EPS represents net income attributable to common shareholders divided by the weighted-average number of common shares outstanding during the period. Unvested restricted shares are participating securities and included in the computation of basic earnings per share. Diluted EPS is computed by dividing net income attributable to common shareholders by the weighted-average number of common shares outstanding, plus the effect of potential dilutive common stock equivalents outstanding during the period. Unallocated ESOP shares are not deemed outstanding for EPS calculations. For the years ended December 31, 2018 and 2017, earnings per common share have been computed based on the following: Year Ended December 31, 2018 2017 Net income applicable to common stock (in thousands) $ 11,394 $ 10,379 Average number of common shares outstanding 32,610,540 32,323,862 Less: Average unallocated ESOP shares (1,036,184) (1,095,545) Average number of common shares outstanding used to calculate basic earnings per common share 31,574,356 31,228,317 Common stock equivalents — — Average number of common shares outstanding used to calculate diluted earnings per common share 31,574,356 31,228,317 Earnings per common share: Basic $ 0.36 $ 0.33 Diluted $ 0.36 $ 0.33 Options for 990,520 and 883,311 shares were not included in the computation of diluted earnings per share for the years ended December 31, 2018 and December 31, 2017, respectively, because to do so would have been antidilutive. |
SEGMENT REPORTING
SEGMENT REPORTING | 12 Months Ended |
Dec. 31, 2018 | |
SEGMENT REPORTING | |
SEGMENT REPORTING | 25. The Company has two reportable segments: HarborOne Bank and HarborOne Mortgage. Revenue from HarborOne Bank consists primarily of interest earned on loans and investment securities and service charges on deposit accounts. Revenue from HarborOne Mortgage comprises interest earned on loans and fees received as a result of the residential mortgage origination, sale and servicing process. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. Segment profit and loss is measured by net income on a legal entity basis. Intercompany transactions are eliminated in consolidation. Information about the reportable segments and reconciliation to the Consolidated Financial Statements at December 31, 2018, 2017 and 2016, and for the years then ended are presented in the tables below. Year Ended December 31, 2018 HarborOne HarborOne HarborOne Bank Mortgage Bancorp, Inc. Eliminations Consolidated (in thousands) Net interest and dividend income $ 88,478 $ 1,018 $ 39,434 $ (40,000) $ 88,930 Provision for loan losses 3,828 — — — 3,828 Net interest income, after provision for loan losses 84,650 1,018 39,434 (40,000) 85,102 Mortgage banking income: Changes in mortgage servicing rights fair value (375) (1,021) — — (1,396) Other 2,024 29,981 — — 32,005 Total mortgage banking income 1,649 28,960 — — 30,609 Other noninterest income 18,587 2 — — 18,589 Total noninterest income 20,236 28,962 — — 49,198 Noninterest expense 86,586 31,639 1,868 — 120,093 Income (loss) before income taxes 18,300 (1,659) 37,566 (40,000) 14,207 Provision (benefit) for income taxes 3,463 (262) (388) — 2,813 Net income (loss) $ 14,837 $ (1,397) $ 37,954 $ (40,000) $ 11,394 Total assets at year end $ 3,657,982 $ 89,461 $ 391,692 $ (486,014) $ 3,653,121 Goodwill at year end $ 59,582 $ 10,506 $ — $ — $ 70,088 Year Ended December 31, 2017 HarborOne HarborOne HarborOne Bank Mortgage Bancorp, Inc. Eliminations Consolidated (in thousands) Net interest and dividend income $ 72,495 $ 1,707 $ 146 $ — $ 74,348 Provision for loan losses 2,416 — — — 2,416 Net interest income, after provision for loan losses 70,079 1,707 146 — 71,932 Mortgage banking income: Changes in mortgage servicing rights fair value (785) (1,271) — — (2,056) Other 2,740 36,511 — — 39,251 Total mortgage banking income 1,955 35,240 — — 37,195 Other noninterest income 17,295 44 — — 17,339 Total noninterest income 19,250 35,284 — — 54,534 Noninterest expense 74,460 34,181 773 — 109,414 Income (loss) before income taxes 14,869 2,810 (627) — 17,052 Provision (benefit) for income taxes 7,382 (998) 289 — 6,673 Net income (loss) $ 7,487 $ 3,808 $ (916) $ — $ 10,379 Total assets at year end $ 2,647,510 $ 96,462 $ 343,896 $ (402,948) $ 2,684,920 Goodwill at year end $ 3,186 $ 10,179 $ — $ — $ 13,365 Year Ended December 31, 2016 HarborOne HarborOne HarborOne Bank Mortgage Bancorp Inc. Eliminations Consolidated (in thousands) Net interest and dividend income $ 59,122 $ 1,873 $ — $ — $ 60,995 Provision for loan losses 4,172 — — — 4,172 Net interest income, after provision for loan losses 54,950 1,873 — — 56,823 Mortgage banking income: Changes in mortgage servicing rights fair value — — (1,130) Other 4,857 47,272 — — 52,129 Total mortgage banking income 4,079 46,920 — — 50,999 Other noninterest income 16,091 13 — — 16,104 Total noninterest income 20,170 46,933 — — 67,103 Noninterest expense 68,255 41,663 4,780 — 114,698 Income (loss) before income taxes 6,865 7,143 (4,780) — 9,228 Provision (benefit) for income taxes 2,195 3,076 (1,974) — 3,297 Net income (loss) $ 4,670 $ 4,067 $ (2,806) $ — $ 5,931 Total assets at year end $ 2,446,613 $ 121,585 $ 329,409 $ (449,297) $ 2,448,310 Goodwill at year end $ 3,186 $ 10,179 $ — $ — $ 13,365 |
CONDENSED FINANCIAL STATEMENTS
CONDENSED FINANCIAL STATEMENTS OF PARENT COMPANY | 12 Months Ended |
Dec. 31, 2018 | |
CONDENSED FINANCIAL STATEMENTS OF PARENT COMPANY | |
CONDENSED FINANCIAL STATEMENTS OF PARENT COMPANY | 26. Condensed financial information relative to HarborOne Bancorp, Inc.’s balance sheet at December 31, 2018 and 2017 and the related statements of net income and cash flows for the years ended December 31, 2018, 2017 and 2016 are presented below. The statement of stockholders’ equity is not presented below as the parent company’s stockholders’ equity is that of the consolidated company. Balance Sheet December 31, 2018 2017 (in thousands) Assets Cash and due from banks $ 9,952 $ 69,414 Investment in common stock of HarborOne Bank 370,574 262,504 Loan receivable - ESOP 10,440 10,844 Other assets 726 1,134 Total assets $ 391,692 $ 343,896 Liabilities and Stockholders' Equity Subordinated debt $ 33,799 $ — Other liabilities and accrued expenses 180 412 Due to subsidiary 139 — Stockholders' equity 357,574 343,484 Total liabilities and stockholders' equity $ 391,692 $ 343,896 Statement of Net Income Year Ended December 31, 2018 2017 2016 (in thousands) Dividends from subsidiary $ 40,000 $ — $ — Interest from bank deposits 163 63 — Interest on short-term investments 12 83 — Interest on ESOP loan 488 422 211 Total income 40,663 568 211 Interest expense 741 — — Operating expenses 2,356 1,195 4,991 Total expenses 3,097 1,195 4,991 Income (loss) before income taxes and equity in undistributed net income of HarborOne Bank 37,566 (627) (4,780) Income tax provision (benefit) (388) 289 (1,974) Income (loss) before equity in income of subsidiaries 37,954 (916) (2,806) Equity in undistributed net income (loss) of HarborOne Bank (26,560) 11,295 8,737 Net income $ 11,394 $ 10,379 $ 5,931 Statement of Cash Flows Year Ended December 31, 2018 2017 2016 (in thousands) Cash flows from operating activities: Net income $ 11,394 $ 10,379 $ 5,931 Adjustments to reconcile net income to net cash used by operating activities: Equity in undistributed net (income) loss of HarborOne Bank 26,560 (11,295) (8,737) Issuance of common stock to the HarborOne Foundation — — 3,855 Deferred income tax provision (benefit) 440 445 (1,548) Share-based compensation 1,568 600 — Net change in other assets (841) 1,065 (1,096) Net change in other liabilities 577 385 25 Net cash provided (used) by operating activities 39,698 1,579 (1,570) Cash flows from investing activities: Investment in HarborOne Bank (10,000) — (60,000) Repayment of ESOP loan 404 417 611 Cash paid for acquisitions, net of cash acquired (122,235) — — Net cash provided (used) by investing activities (131,831) 417 (59,389) Cash flows from financing activities: Issuance of common stock — — 140,529 Repurchase of common stock (1,267) (280) — Purchase of shares by ESOP — — (11,872) Proceeds from advance from subsidiary 139 — — Proceeds from subordinated debt issuance 33,720 — — Amortization of subordinated debt issuance costs 79 — — Net cash provided (used) by financing activities 32,671 (280) 128,657 Net change in cash and cash equivalents (59,462) 1,716 67,698 Cash and cash equivalents at beginning of year 69,414 67,698 — Cash and cash equivalents at end of year $ 9,952 $ 69,414 $ 67,698 |
SELECTED QUARTERLY FINANCIAL DA
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | 12 Months Ended |
Dec. 31, 2018 | |
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | |
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | 27. First Quarter Second Quarter Third Quarter Fourth Quarter 2018 2017 2018 2017 2018 2017 2018 (1) 2017 (in thousands, except share data) Interest and dividend income $ 24,685 $ 21,149 $ 26,251 $ 21,912 $ 27,849 $ 23,414 $ 36,923 $ 23,809 Interest expense 4,561 3,717 5,356 3,697 6,728 4,145 10,133 4,377 Net interest and dividend income 20,124 17,432 20,895 18,215 21,121 19,269 26,790 19,432 Provision for loan losses 808 265 886 470 632 921 1,502 760 Other noninterest income 11,349 11,454 12,557 14,299 13,640 14,627 11,647 14,154 Realized securities gains and impairment losses, net — — — — — — 5 — Total noninterest income 11,349 11,454 12,557 14,299 13,640 14,627 11,652 14,154 Total noninterest expenses 27,599 24,405 28,518 26,878 27,383 28,438 36,593 29,693 Provision (benefit) for income taxes 814 1,481 945 1,953 818 1,699 236 1,540 Net income (loss) $ 2,252 $ 2,735 $ 3,103 $ 3,213 $ 5,928 $ 2,838 $ 111 $ 1,593 Basic earnings per share $ 0.07 $ $ $ $ $ $ — $ Diluted earnings per share $ 0.07 $ $ $ $ $ $ — $ Weighted average common shares, basic 31,569,811 30,998,163 31,578,961 31,013,002 31,575,210 31,303,281 31,571,467 31,582,069 Weighted average common shares, diluted 31,569,811 30,998,163 31,578,961 31,013,002 31,575,811 31,303,281 31,571,467 31,582,069 (1) Increases in income and expenses are primarily due to the acquisition of Coastway Bank on October 5, 2018, including the related merger expenses. |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 12 Months Ended |
Dec. 31, 2018 | |
SUBSEQUENT EVENT | |
SUBSEQUENT EVENT | 28. On March 5, 2019, the Board of Trustees of HarborOne Mutual Bancshares (“HarborOne Mutual”) and the Boards of Directors of the Company and the Bank adopted a Plan of Conversion (the “Plan”). Pursuant to the Plan, HarborOne Mutual will convert from the mutual holding company form of organization to the fully public form. HarborOne Mutual will be merged into the Company, and HarborOne Mutual will no longer exist. The Company will then merge into a new Massachusetts corporation named HarborOne NorthEast Bancorp, Inc., which will change its name to HarborOne Bancorp., Inc. upon completion of conversion. As part of the conversion, HarborOne Mutual’s ownership interest in the Company will be offered for sale in a public offering. The existing publicly held shares of the Company, which represent the remaining ownership interest in the Company, will be exchanged for new shares of common stock of HarborOne NorthEast Bancorp, Inc., the new Massachusetts corporation. The exchange ratio will ensure that immediately after the conversion and public offering, the public shareholders of the Company will own the same aggregate percentage of common stock of the new Massachusetts corporation that they owned immediately prior to the completion of the conversion and public offering (excluding shares purchased in the stock offering and cash received in lieu of fractional shares), giving effect to certain assets held by HarborOne Mutual. When the conversion and public offering are completed, all of the capital stock of the Bank will be owned by the new Massachusetts corporation. The Plan provides for the establishment, upon the completion of the conversion, of special “liquidation accounts” for the benefit of certain depositors of the Bank in an amount equal to HarborOne Mutual’s ownership interest in the equity of the Company as of the date of the latest balance sheet contained in the prospectus plus the value of the net assets of HarborOne Mutual as of the date of the latest statement of financial condition of HarborOne Mutual prior to the consummation of the conversion (excluding its ownership of the Company). Following the completion of the conversion, HarborOne Bancorp, Inc. and the Bank will not be permitted to pay dividends on their capital stock if HarborOne Bancorp, Inc.’s shareholders’ equity or the Bank’s shareholder’s equity would be reduced below the amount of HarborOne Bancorp, Inc.’s or the Bank’s liquidation account, as applicable. The liquidation accounts will be reduced annually to the extent that eligible account holders have reduced their qualifying deposits. Subsequent increases will not restore an eligible account holder’s interest in the liquidation accounts. Direct costs of the conversion and public offering will be deferred and reduce the proceeds from the shares sold in the public offering. Direct costs incurred totaling $207,000 have been deferred as of March 5, 2019 related to the conversion. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Bais of Presentation and Consolidation | Basis of Presentation and Consolidation HarborOne Bancorp, Inc. (the “Company”) is a mid-tier stock holding company whose principal subsidiary is HarborOne Bank (the “Bank”). The Bank is a state-chartered co-operative bank whose primary subsidiary is a residential mortgage banking company, HarborOne Mortgage, LLC (“HarborOne Mortgage”). HarborOne Mortgage was acquired as Merrimack Mortgage, LLC on July 1, 2015 and effective April 3, 2018 became HarborOne Mortgage. The Consolidated Financial Statements include the accounts of the Company, the Company’s subsidiaries Legion Parkway Company LLC, a security corporation formed on July 13, 2016 and HarborOne Bank; and the Bank’s wholly-owned subsidiaries. In addition to HarborOne Mortgage, the Bank has two security corporation subsidiaries and one passive investment subsidiary. The security corporations were established for the purpose of buying, holding and selling securities on their own behalf. The Company established Legion Parkway Company LLC for the same purpose. All significant intercompany balances and transactions have been eliminated in consolidation. |
Stock Conversion | Stock Conversion On June 29, 2016, the Bank reorganized into a two-tier mutual holding company structure with a mid-tier stock holding company. The Company sold 14,454,396 shares of common stock at $10.00 per share, including 1,187,188 shares purchased by the Company’s Employee Stock Ownership Plan (“ESOP”). In addition, the Company issued 17,281,034 shares to HarborOne Mutual Bancshares, the Company’s mutual holding company parent (the “MHC”) and 385,450 shares to The HarborOne Foundation (the “Foundation”), a charitable foundation that was formed in connection with the stock offering and is dedicated to supporting charitable organizations operating in the Bank’s local community. A total of 32,120,880 shares of common stock were outstanding following the completion of the stock offering. The direct costs of the Company’s stock offering of $3.9 million were deferred and deducted from the proceeds of the offering. Upon the completion of the stock offering, a special “liquidation account” was established for the benefit of certain depositors of the Bank in an amount equal to the percentage ownership interest in the equity of the Company held by persons other than the MHC as of the date of the latest balance sheet contained in the prospectus. The Company is not permitted to pay dividends on its capital stock if the Company’s shareholders’ equity would be reduced below the amount of the liquidation account. The liquidation account is reduced annually to the extent that eligible account holders have reduced their qualifying deposits. Subsequent increases in an eligible account holder’s qualifying deposits do not restore such holder’s interest in the liquidation account. |
Nature of Operations | Nature of Operations The Company, originally established in 1917 as a state-chartered credit union, converted to a state-chartered co-operative bank on July 1, 2013. The Company provides a variety of financial services to individuals and businesses through its 24 full-service bank branches in Massachusetts and Rhode Island, one limited-service bank branch, and a commercial lending office in each of Boston, Massachusetts and Providence, Rhode Island. HarborOne Mortgage maintains 34 offices in Massachusetts, Rhode Island, New Hampshire, Maine, and New Jersey and is also licensed to lend in five additional states. The Company’s primary deposit products are checking, money market, savings and term certificate of deposit accounts while its primary lending products are commercial real estate, commercial, residential mortgages and consumer loans, including indirect automobile lease loans. The Company also originates, sells and services residential mortgage loans primarily through HarborOne Mortgage. |
Use of Estimates | Use of Estimates In preparing the Consolidated Financial Statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses and the valuations of mortgage servicing rights, derivatives, goodwill and deferred tax assets. |
Business Combinations | Business Combinations The Company accounts for business combinations under the acquisition method of accounting whereby the Company records the fair value of the assets acquired and liabilities assumed, immediately expenses transaction costs and accounts for restructuring plans separately from the business combination. There is no separate recognition of the acquired allowance for loan losses on the company’s balance sheet as credit related factors are incorporated directly into the fair value of the loans recorded at the acquisition date. The excess of the cost of the acquisition over the fair value of the net tangible and intangible assets acquired is recorded as goodwill. Alternatively, a bargain purchase gain is recorded equal to the amount by which the fair value of assets purchased exceeds the fair value of liabilities assumed and consideration paid. Results of operations of the acquired business are included on the Consolidated Statements of Operations from the effective date of acquisition. Fair values are subject to refinement for up to a year after the closing date of an acquisition as information relative to closing date fair values becomes available. Adjustments recorded to the acquired assets and liabilities are applied prospectively. |
Significant Group Concentration of Credit Risk | Significant Group Concentration of Credit Risk The Company has cash and federal fund balances on deposit at correspondent banks that exceed insurable limits. The Company has not experienced any losses on such amounts. At December 31, 2018, the Company had a concentration of cash on deposit at the Federal Reserve Bank amounting to $77.8 million. Most of the Company’s lending activities are with borrowers located within south eastern New England. The ability and willingness of residential and consumer borrowers to honor their repayment commitments is generally dependent on the level of overall economic activity within the borrowers’ geographic area and real estate values. Note 7 provides the detail of the Company’s loan portfolio and Note 5 provides the detail of the Company’s investment portfolio. The Company does not have any significant concentrations to any one industry or customer. |
Reclassifications | Reclassifications Certain previously reported amounts have been reclassified to conform to the current year’s presentation. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash equivalents include amounts due from banks and short-term investments with original maturities of less than 90 days at time of purchase. Short-term investments mature daily or on demand and are stated at cost, which approximates fair value. |
Securities | Securities Debt securities that management has the positive intent and ability to hold to maturity are classified as held to maturity and are carried at amortized cost, adjusted for the amortization of premiums or the accretion of discounts. Securities not classified as held to maturity are classified as available for sale and recorded at fair value, with unrealized gains and losses excluded from earnings and reported in other comprehensive income (loss). Gains or losses on disposition of securities are recorded on the trade date and are determined using the specific identification method. Premiums and discounts are recognized in interest income using the effective interest method over the terms of the securities, except for premiums on callable securities, which are amortized to the earliest call date . Each reporting period, the Company evaluates all securities with a decline in fair value below the amortized cost of the investment to determine whether or not the impairment is deemed to be other-than-temporary (“OTTI”). OTTI is required to be recognized if (1) the Company intends to sell the security; (2) it is “more likely than not” that the Company will be required to sell the security before recovery of its amortized cost basis; or (3) the present value of expected cash flows is not sufficient to recover the entire amortized cost basis. For all impaired debt securities that the Company intends to sell, or more likely than not will be required to sell, the full amount of the depreciation is recognized as OTTI through earnings. Credit-related OTTI for all other impaired debt securities is recognized through earnings. Non-credit related OTTI for such debt securities is recognized in other comprehensive income (loss), net of applicable taxes. |
Federal Home Loan Bank Stock | Federal Home Loan Bank Stock The Company, as a member of the Federal Home Loan Bank (“FHLB”) system, is required to maintain an investment in capital stock of the FHLB of Boston. Based on redemption provisions of the FHLB, the stock has no quoted market value and is carried at cost. At its discretion, the FHLB may declare dividends on the stock. The Company reviews FHLB stock for impairment based on the ultimate recoverability of the cost basis. As of December 31, 2018, no impairment has been recognized. |
Mortgage Loans Held for Sale | Mortgage Loans Held for Sale Residential mortgage loans originated with the intent to sell are classified as held-for-sale and are carried at fair value. Loan origination costs for loans held for sale that the Company accounts for under the fair value option are recognized in noninterest expense when incurred. Changes in fair value are recognized in mortgage banking income. Interest income on mortgage loans held for sale is recorded in interest income. |
Loans | Loans Loans held for investment are reported at their outstanding unpaid principal balances adjusted for charge-offs, the allowance for loan losses, and any unamortized deferred origination fees and costs. Loan origination fees are offset with related direct incremental loan origination costs and the resulting net amount is deferred and amortized to interest income using the level-yield method over the remaining life of the loan. Accrual of interest on loans is discontinued when collectability of principal or interest is uncertain or when payments of principal or interest have become contractually past due 90 days or more. Past due status is based on contractual terms of the loan. However, a loan may remain on accrual status if both the value of any collateral securing the loan is sufficient to cover principal and accrued interest thereon, and the loan is in the process of collection. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful. Interest received on nonaccrual loans is either applied against principal or reported as income according to management’s judgment as to the collectability of principal. Interest accruals are resumed on such loans only when they are brought current with respect to interest and principal and when, in the judgment of management, the loans are estimated to be fully collectible as to both principal and interest. The Company’s loan portfolio includes residential real estate, commercial real estate, construction, commercial and consumer segments. Residential real estate loans include classes for one- to four-family and second mortgages and equity lines of credit. Consumer loans include classes for auto and personal loans. The Company’s acquired loans are recorded at fair value with no carryover of the allowance for loan losses. Net discount on performing loans acquired are recognized as interest income over the remaining life of the loan. Acquired loans determined to have evidence of deterioration in credit quality and when it is probable, at acquisition, that all contractually required payments will not be collected, are deemed to be purchased credit impaired ("PCI") loans. For PCI loans, the excess of cash flows expected to be collected over the carrying amount of the loans, referred to as the "accretable yield", is accreted into interest income over the life of the loans using the effective yield method. The Company monitors actual cash flows to determine any deterioration from those forecasted at the acquisition date, which is evaluated and recorded through the allowance for loan losses. |
Allowance for Loan Losses | Allowance for Loan Losses The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed and generally do not exceed the time frame provided in The Uniform Retail Credit Classification and Account Management Policy. Subsequent recoveries, if any, are credited to the allowance. The allowance for loan losses is evaluated on a regular basis by management. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The allowance consists of general, allocated and unallocated components, as further described below. General component The general component of the allowance for loan losses is based on historical and peer loss experience adjusted for qualitative factors stratified by the Company’s loan segments. Each portfolio segment is further segregated by purchased loans not deemed impaired. Management uses a rolling average of historical losses based on a time frame appropriate to capture relevant loss data for each loan segment except commercial real estate and commercial loans. Due to the lack of historical loss experience for our commercial real estate and commercial loan portfolio, we utilize peer loss data. Adjustments to loss rates are considered for the following qualitative factors: levels/trends in delinquencies; trends in volume and terms of loans; effects of changes in risk selection and underwriting standards and other changes in lending policies, procedures and practices; experience/ability/depth of lending management and staff; and national and local economic trends and conditions. There were no changes in the Company’s policies or methodology pertaining to the general component of the allowance for loan losses during the year ended December 31, 2018. The qualitative factors are determined based on the various risk characteristics of each loan segment. Risk characteristics relevant to each portfolio segment are as follows: Residential real estate – The Company generally does not originate portfolio loans with a loan-to-value ratio greater than 80 percent without obtaining private mortgage insurance and does not generally grant loans that would be classified as subprime upon origination. The Company generally has first or second liens on property securing equity lines of credit. Loans in this segment are generally collateralized by residential real estate and repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, can have an effect on the credit quality in this segment. Residential construction –Residential construction loans include loans to build one- to four-family owner-occupied properties, which are subject to the same credit quality factors as residential real estate loans. Commercial real estate – Loans in this segment are primarily secured by income-producing properties and owner occupied commercial properties in southeastern New England. The underlying cash flows generated by the properties and operations can be adversely impacted by a downturn in the local economy, which can lead to increased vacancy rates and diminished cash flows, which in turn, could have an effect on the credit quality in this segment. Management obtains financial statements annually and continually monitors the cash flows of these loans. Commercial construction –Commercial construction loans may include speculative real estate development loans for which payment is derived from lease or sale of the property. Credit risk is affected by cost overruns, time to lease or sell at an adequate price, and market conditions. Commercial – Loans in this segment are made to businesses and are generally secured by assets of the business. Repayment is expected from the cash flows of the business. A weakened economy, and resultant decreased consumer or business spending, could have an effect on the credit quality in this segment. Consumer – Loans in this segment are generally secured by automobiles or are unsecured and repayment is dependent on the credit quality of the individual borrower. Allocated component The allocated component relates to loans that are classified as impaired. Residential real estate, commercial, commercial real estate and construction loans are evaluated for impairment on a loan-by-loan basis. Impairment is determined by nonaccrual status, whether a loan is subject to a troubled debt restructuring (“TDR”) agreement or in the case of certain loans, based on the internal credit rating. Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, except for TDR, the Company does not separately identify individual consumer loans for impairment evaluation. A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. The Company periodically may agree to modify the contractual terms of loans. When a loan is modified and a concession is made to a borrower experiencing financial difficulty, the modification is considered a TDR. All TDRs are initially classified as impaired. Impairment is measured by either the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent. An allowance is established when the discounted cash flows or collateral value of the impaired loan is lower than the carrying value of that loan. Unallocated component The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating allocated and general reserves in the portfolio. The unallocated component is maintained to cover uncertainties that could affect management’s estimate of probable losses. Additionally the Company's unseasoned commercial portfolio and use of peer group data to establish general reserves for the commercial portfolio adds another element of imprecision to management's estimates. |
Property and Equipment | Property and Equipment Land is carried at cost. Buildings, leasehold improvements, and furniture and equipment are carried at cost, less accumulated depreciation and amortization, computed on the straight-line method over the estimated useful lives of the assets or the terms of the leases, if shorter. Expected terms include lease option periods to the extent that the exercise of such options is reasonably assured. Maintenance and repairs are charged to expense as incurred and improvements are capitalized. |
Retirement Plan Annuities | Retirement Plan Annuities Retirement plan annuities are reflected on the Consolidated Balance Sheets at the face amount of the policies. Changes in recorded value are reflected in income on retirement plan annuities on the Consolidated Statements of Operations. |
Bank-owned life insurance | Bank-owned life insurance Bank-owned life insurance policies are reflected on the Consolidated Balance Sheets at net cash surrender value. Changes in the net cash surrender value of the policies, as well as insurance proceeds received, are reflected in bank-owned life insurance income on the Consolidated Statements of Operations and are not subject to income taxes. The Company is the beneficiary on these life insurance policies which are purchased for select employees of the Company. |
Employee Stock Ownership Plan | Employee Stock Ownership Plan Compensation expense for the Company’s ESOP is recorded at an amount equal to the shares committed to be allocated by the ESOP multiplied by the average fair market value of the shares during the year. The Company recognizes compensation expense ratably over the year based upon the Company’s estimate of the number of shares committed to be allocated by the ESOP. The difference between the average fair market value and the cost of the shares committed to be allocated by the ESOP is recorded as an adjustment to additional paid-in capital. |
Mortgage Servicing Rights | Mortgage Servicing Rights The Company services mortgage loans for others. Mortgage servicing assets are recognized as separate assets when rights are acquired through purchase or through sale of financial assets and are carried at fair value. For all mortgage servicing assets, fair value is estimated using market prices when available or, alternatively, using a third party valuation model that calculates the present value of estimated future cash flows based on current prepayment assumptions. |
Derivative Financial Instruments | Derivative Financial Instruments The Company is party to a variety of derivative transactions, including derivative loan commitments, forward loan sale commitments and interest rate swap contracts. The Company enters into derivative contracts in order to meet the financing needs of its customers. The Company also enters into derivative contracts as a means of reducing its interest rate risk and market risk. Derivative Loan Commitments Mortgage loan commitments qualify as derivative loan commitments if the loan that will result from exercise of the commitment will be held for sale upon funding. Loan commitments that are derivatives are recognized at fair value on the Consolidated Balance Sheets in other assets and other liabilities with changes in their fair values recorded in mortgage banking income. Forward Loan Sale Commitments To protect against the price risk inherent in derivative loan commitments, the Company utilizes both “mandatory delivery” and “best efforts” forward loan sale commitments to mitigate the risk of potential decreases in the values of loans that would result from the exercise of the derivative loan commitments. Mandatory delivery contracts are accounted for as derivative instruments. Generally, the Company’s best efforts contracts meet the definition of derivative instruments when the loans to the underlying borrowers close, and are accounted for as derivative instruments at that time. Forward loan sale commitments are recognized at fair value on the Consolidated Balance Sheets in other assets and other liabilities with changes in their fair values recorded in mortgage banking income. Interest Rate Swaps The Company’s interest rate swap contracts are transacted to meet the financing needs of the Company’s commercial customers. Offsetting swap agreements are simultaneously transacted to effectively eliminate the Company’s market and interest rate risk associated with the swaps. Interest rate swaps are recognized on the Consolidated Balance Sheets in other assets and other liabilities with changes in their fair values recorded in other income. |
Transfers of Financial Assets | Transfers of Financial Assets Transfers of an entire financial asset, a group of entire financial assets, or a participating interest in an entire financial asset are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets. During the normal course of business, the Company may transfer a portion of a financial asset, for example, a participation loan or the government guaranteed portion of a loan. In order to be eligible for sale treatment, the transfer of the portion of the loan must meet the criteria of a participating interest. If it does not meet the criteria of a participating interest, the transfer must be accounted for as a secured borrowing. In order to meet the criteria for a participating interest, all cash flows from the loan must be divided proportionately, the rights of each loan holder must have the same priority, the loan holders must have no recourse to the transferor other than standard representations and warranties and no loan holder has the right to pledge or exchange the entire loan. |
Other Real Estate Owned and Repossessed Assets | Other Real Estate Owned and Repossessed Assets Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value less estimated costs to sell when legal title is obtained, establishing a new cost basis. Subsequently, valuations are periodically updated by management and the assets are carried at the lower of carrying amount or fair value less estimated costs to sell. The excess (deficiency) of any consideration received as compared to the carrying value of other real estate owned is recorded as a gain (loss) on sale of other real estate owned. Revenues and expenses from operations and changes in the valuation allowance and any direct write-downs are included in foreclosed and repossessed assets expense. Repossessed assets includes automobiles to be sold which are recorded at estimated fair value, less costs to sell, with the initial charge to the allowance for loan losses and the subsequent gain or loss on sale recorded to foreclosed and repossessed assets expense. |
Goodwill and Identifiable Intangible Assets | Goodwill and Identifiable Intangible Assets The assets (including identifiable intangible assets) and liabilities acquired in a business combination are recorded at fair value at the date of acquisition. Goodwill is recognized for the excess of the acquisition cost over the fair values of the net assets acquired and is not subsequently amortized. Identifiable intangible assets include core deposit premium and non-compete contracts and are being amortized over their estimated lives. Management assesses the recoverability of goodwill at least on an annual basis and all intangible assets whenever events or changes in circumstances indicate that their carrying value may not be recoverable. The impairment test uses a combined qualitative and quantitative approach. The initial qualitative approach assesses whether the existence of events or circumstances led to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after this assessment, the Company determines that it is more likely than not that the fair value is less than the carrying value, a quantitative impairment test is performed. The quantitative impairment test compares book value to the fair value of the reporting unit. If the carrying amount exceeds fair value, an impairment charge is recorded through earnings. Management has identified two reporting units for purposes of testing goodwill for impairment. The Company’s reporting units are the same as the segments used for segment reporting - the Bank, including the two security corporations, one passive investment company, and HarborOne Mortgage. No impairment has been recognized as of December 31, 2018. |
Advertising Costs | Advertising Costs Advertising costs are expensed as incurred. |
Income Taxes | Income Taxes Deferred tax assets and liabilities are determined using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the book and tax bases of the various balance sheet assets and liabilities and gives current recognition to changes in tax rates and laws in the period on enactment. Accordingly, changes resulting from the Tax Act of 2017 enacted on December 22, 2017 have been recognized in the Consolidated Financial Statements as of and for the year ended December 31, 2017 (see Note 15). A valuation allowance is established against deferred tax assets when, based upon the available evidence including historical and projected taxable income, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company elected to early adopt Accounting Standard Update (“ASU”) 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, therefore excess tax benefits or deficiencies are recorded in the consolidated statement of operations as part of the provision for income taxes on a prospective basis. For interim reporting purposes, the excess tax benefits or deficiencies are recorded as discrete items in the period in which they occur. In addition, when calculating incremental shares for earnings per share, excess tax benefits are excluded from assumed proceeds. There was no income tax benefit recorded in the provision for income taxes relating to excess tax benefits on share-based compensation for the years ended December 31, 2018 and 2017. The Company records uncertain tax positions on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The determination of whether or not a tax position has met the more likely than not recognition threshold considers the facts, circumstances and information available at the reporting date and is subject to management’s judgment. The Company records interest and penalties as part of income tax expense. |
Stock-based Compensation Plans | Share-based Compensation Plans The Company’s share-based compensation plans provide for awards of stock options, restricted stock and other stock-based compensation to directors, officers and employees. The cost of employee services received in exchange for awards of equity instruments is based on the grant-date fair value of those awards. Compensation cost is recognized over the requisite service period as a component of compensation expense. The Company uses the Black-Scholes option-pricing model to determine the fair value of stock options granted, while the market price of the Company’s common stock at the date of grant is used for restricted stock awards. The Company has elected to recognize forfeitures of awards as they occur (e.g., when an award does not vest because the employee leaves the Company or does not meet specific performance measures). |
Earnings Per Share | Earnings Per Share Basic earnings per share represents income available to common shareholders divided by the weighted-average number of common shares outstanding during the period. Unallocated ESOP shares are not deemed outstanding for earnings per share calculations. The restricted stock awards are participating securities; therefore unvested awards are included as common shares outstanding in the computation of basic earnings per share. Diluted earnings per share reflects additional common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that may be issued by the Company relate to outstanding stock options awards and are determined using the treasury stock method. |
Treasury Stock | Treasury Stock Any shares repurchased under the Company’s share repurchase programs were purchased in open-market transactions and are held as treasury stock. All treasury stock is held at cost. The Company adopted a share repurchase program on October 27, 2017. The Company may repurchase up to 1,633,155 shares of the Company’s common stock, or approximately 5% of the Company’s then current issued and outstanding shares. As of December 31, 2018, the Company had repurchased 81,676 shares, including 42,076 shares acquired by the Company in connection with the satisfaction of tax obligations on vested restricted stock issued pursuant to the Stock Option and Incentive Plan in August 2018. These shares were not repurchased as part of the repurchase plan. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements As an “emerging growth company” (“EGC”) as defined in Title 1 of the Jumpstart Our Business Startups (JOBS) Act, the Company has elected to use the extended transition period to delay the adoption of new or reissued accounting pronouncements applicable to public companies until such pronouncements are made applicable to non-public companies. As of December 31, 2018, there is no significant difference in the comparability of the financial statements as a result of this extended transition period. The Company’s EGC status is scheduled to end December 31, 2021 unless a triggering event occurs sooner. In October 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-16, Derivatives and Hedging (Topic 815) – Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedging Accounting Purposes . The purpose of ASU 2018-16 is to permit the use of the OIS rate based on SOFR as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815. The amendments in ASU 2018-16 are effective for public business entities for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years, if ASU 2017-12 has already been adopted. For non-public entities, this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020 . Early adoption is permitted in any interim period upon issuance of ASU 2018-16 if a public business entity has adopted ASU 2017-12. The amendments in ASU 2018-16 should be applied prospectively for qualifying new or redesignated hedging relationships entered into on or after the date of adoption. The Company does not have any derivatives within the scope of the ASU. In August 2018, the FASB issued ASU 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement . This ASU eliminates, adds and modifies certain disclosure requirements for fair value measurements. Among the changes, entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. ASU 2018-13 is effective for interim and annual reporting periods beginning after December 15, 2019, and early adoption is permitted. For non-public entities, this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The adoption of this standard is not expected to have a material effect on the Company’s Consolidated Financial Statements. In February 2018, the FASB issued ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income . ASU 2018-02 amends ASU Topic 220 and allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017(“Tax Act”)(See Note 15) to eliminate the stranded tax effects resulting from the Tax Act of 2017. The Company early adopted this amendment in the first quarter of 2018 and reclassified $104,000 from accumulated other comprehensive loss to retained earnings. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities. This guidance changes the recognition and presentation requirements of hedge accounting, including eliminating the requirement to separately measure and report hedge ineffectiveness and presenting all items that affect earnings in the same income statement line as the hedged item. This guidance also provides new alternatives for applying hedge accounting to additional hedging strategies, measuring the hedged item in fair value hedges of interest rate risk, reducing the complexity of applying hedge accounting by easing the requirements for effectiveness testing, hedge documentation and application of the critical terms match method, and reducing the risk of material error corrections if a company applies the shortcut method inappropriately. This update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. For non-public entities, this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company does not currently have any hedging derivatives within the scope of the ASU. In June 2016, FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326) , which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Entities will now use forward-looking information to better form their credit loss estimates. The ASU also requires enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. For public entities that are SEC filers, this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. For non-public entities, this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021. Early application will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Management has identified an implementation team that is in the process of developing an understanding of this pronouncement, evaluating the impact of this pronouncement and researching additional software resources that could assist with the implementation. The adoption of the ASU may result in an increase in the allowance for loan losses but the magnitude of the increase and its impact has not yet been quantified and depends on economic conditions at the time of adoption. In February 2016, FASB issued ASU 2016-02, Leases (Topic 842) . This update requires a lessee to record a right-to-use asset and a liability representing the obligation to make lease payments for long-term leases. For public business entities, this update is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. For non-public business entities, this update is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years beginning after December 15, 2020. While we are currently evaluating the impact of the new standard, we expect an increase to the Consolidated Balance Sheets for right-of-use assets and associated lease liabilities but no material impact to the Consolidated Statement of Operations, for arrangements previously accounted for as operating leases. In January 2016, FASB issued ASU 2016-01, Financial Instruments – Overall, (Subtopic 825-10) . The amendments in this update address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Targeted improvements to generally accepted accounting principles include the requirement for equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income, the elimination of the requirement for non-public business entities to disclose the fair value of financial instruments measured at amortized cost and the elimination of the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost. This update also requires companies to utilize and “exit price” fair value methodology when measuring the fair value of financial instruments. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. For non-public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Management currently does not expect this to have a material impact on the Company's Consolidated Financial Statements as the Company does not currently hold any equity securities. In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) . The amendments in this update create Topic 606, Revenue from Contracts with Customers, and supersede the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance throughout the Industry Topics of the Codification. The core principle of Topic 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve the core principle, a company should apply a five step approach to revenue recognition. For public business entities, this ASU is effective for annual reporting periods, including interim periods, beginning after December 15, 2017. For non-public business entities, this ASU is effective for annual reporting periods beginning after December 31, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early application is permitted, but only for annual reporting periods beginning after December 15, 2016. The Bank's primary source of revenue is interest income on financial assets and income from mortgage banking activities, which are explicitly excluded from the scope of the new guidance. As a result, adoption will not have a material impact on the Company’s Consolidated Financial Statements. |
BUSINESS COMBINATIONS (Tables)
BUSINESS COMBINATIONS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
BUSINESS COMBINATIONS | |
Schedule of assets acquired and liabilities assumed and fair value adjustments | Coastway Fair Value Fair Carrying Value Adjustment Value (in thousands) Assets Acquired Cash and cash equivalents $ 45,453 $ — $ 45,453 Loans held for sale 9,071 — 9,071 Loans, gross 727,148 (23,234) 703,914 Allowance for loan losses (3,480) 3,480 — Fixed assets 30,965 (711) 30,254 Core deposit intangible — 8,952 8,952 Deferred tax assets 1,144 3,114 4,258 Other assets 24,783 (287) 24,496 Total assets acquired $ 835,084 $ (8,686) $ 826,398 Liabilities Assumed Deposits $ 478,336 $ (1,814) $ 476,522 Borrowings 276,750 — 276,750 Other liabilities 10,082 — 10,082 Total liabilities assumed 765,168 (1,814) 763,354 Net acquired $ 69,916 $ (6,872) $ 63,044 Consideration paid 119,440 Goodwill recognized $ 56,396 |
Schedule of unaudited pro forma information | Pro Forma (unaudited) Year Ended December 31, 2018 2017 (in thousands) Net interest income, after provision for loan losses $ 101,117 $ 91,699 Noninterest income $ 54,603 $ 62,072 Net income $ 18,399 $ 11,544 |
SECURITIES (Tables)
SECURITIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
SECURITIES | |
Schedule of securities with gross unrealized gains and losses | Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value (in thousands) December 31, 2018: Securities available for sale U.S. government and government-sponsored enterprise obligations $ 27,997 $ 71 $ 527 $ 27,541 U.S. government agency and government-sponsored residential mortgage-backed securities 105,340 335 1,658 104,017 U.S. government-sponsored collateralized mortgage obligations 31,293 — 365 30,928 SBA asset-backed securities 47,686 106 985 46,807 Total securities available for sale $ 212,316 $ 512 $ 3,535 $ 209,293 Securities held to maturity U.S. government agency and government-sponsored residential mortgage-backed securities $ 15,025 $ 63 $ 481 $ 14,607 U.S. government-sponsored collateralized mortgage obligations 1,724 29 — 1,753 SBA asset-backed securities 5,818 42 41 5,819 Municipal bonds 22,121 406 — 22,527 Total securities held to maturity $ 44,688 $ 540 $ 522 $ 44,706 December 31, 2017: Securities available for sale U.S. government and government-sponsored enterprise obligations $ 17,985 $ — $ 178 $ 17,807 U.S. government agency and government-sponsored residential mortgage-backed securities 74,368 132 630 73,870 U.S. government-sponsored collateralized mortgage obligations 36,753 35 106 36,682 SBA asset-backed securities 42,558 102 166 42,494 Total securities available for sale $ 171,664 $ 269 $ 1,080 $ 170,853 Securities held to maturity U.S. government agency and government-sponsored residential mortgage-backed securities $ 17,452 $ 97 $ 214 $ 17,335 U.S. government-sponsored collateralized mortgage obligations 2,042 54 — 2,096 SBA asset-backed securities 2,991 — 14 2,977 Municipal bonds 24,384 882 — 25,266 Total securities held to maturity $ 46,869 $ 1,033 $ 228 $ 47,674 |
Schedule of debt securities by contractual maturity | Available for Sale Held to Maturity Amortized Fair Amortized Fair Cost Value Cost Value (in thousands) After 5 years through 10 years $ 27,997 $ 27,541 $ 4,394 $ 4,462 Over 10 years — — 17,727 18,065 27,997 27,541 22,121 22,527 U.S. government agency and government-sponsored residential mortgage-backed securities 105,340 104,017 15,025 14,607 U.S. government-sponsored collateralized mortgage obligations 31,293 30,928 1,724 1,753 SBA asset-backed securities 47,686 46,807 5,818 5,819 Total $ 212,316 $ 209,293 $ 44,688 $ 44,706 |
Schedule of proceeds and gross realized gains and losses related to sales and calls of securities | Year Ended December 31, 2018 2017 2016 (in thousands) Sales Proceeds (1) $ 1,015 $ — $ 8,735 Gross gains 5 — 242 Gross losses — — — Calls Proceeds $ 1,025 $ 400 $ 15,725 Gross gains — — 41 Gross losses — — — (1) 2018 proceeds include the sale of one held to maturity security due to evidence of significant deterioration of the issuer's creditworthiness. |
Schedule of securities with continuous losses | Less Than Twelve Months Twelve Months and Over Gross Gross Unrealized Fair Unrealized Fair Losses Value Losses Value (in thousands) December 31, 2018: Securities available for sale U.S. government and government-sponsored enterprise obligations $ — $ — $ 527 $ 17,460 U.S. government agency and government-sponsored residential mortgage-backed securities 55 12,714 1,603 67,060 U.S. government-sponsored collateralized mortgage obligations — — 365 30,928 SBA asset-backed securities — — 985 36,860 $ 55 $ 12,714 $ 3,480 $ 152,308 Securities held to maturity U.S. government agency and government-sponsored residential mortgage-backed securities $ — $ — $ 481 $ 12,938 SBA asset-backed securities — — 41 2,834 $ — $ — $ 522 $ 15,772 December 31, 2017: Securities available for sale U.S. government and government-sponsored enterprise obligations $ 20 $ 4,980 $ 158 $ 9,827 U.S. government agency and government-sponsored residential mortgage-backed securities 155 31,684 475 26,123 U.S. government-sponsored collateralized mortgage obligations 53 10,886 53 2,870 SBA asset-backed securities 95 24,205 71 4,730 $ 323 $ 71,755 $ 757 $ 43,550 Securities held to maturity U.S. government agency and government-sponsored residential mortgage-backed securities $ 91 $ 8,211 $ 123 $ 6,970 SBA asset-backed securities 14 2,977 — — $ 105 $ 11,188 $ 123 $ 6,970 |
LOANS HELD FOR SALE (Tables)
LOANS HELD FOR SALE (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
LOANS HELD FOR SALE | |
Schedule of fair value and contractual principal balance outstanding of mortgage loans held for sale | December 31, 2018 2017 (in thousands) Loans held for sale, fair value $ 42,107 $ 59,460 Loans held for sale, contractual principal outstanding 40,692 57,575 Fair value less unpaid principal balance $ 1,415 $ 1,885 |
LOANS - (Tables)
LOANS - (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
LOANS | |
Summary of balances of loans | December 31, 2018 2017 (in thousands) Residential real estate: One- to four-family $ 942,659 $ 677,837 Second mortgages and equity lines of credit 158,138 89,080 Residential real estate construction 14,659 11,904 Commercial real estate 934,420 655,419 Commercial construction 161,660 116,739 Total mortgage loans on real estate 2,211,536 1,550,979 Commercial 277,271 109,523 Consumer loans: Auto 478,863 513,728 Personal 12,582 14,092 Total consumer loans 491,445 527,820 Total loans 2,980,252 2,188,322 Allowance for loan losses (20,655) (18,489) Net deferred loan costs 5,255 6,645 Loans, net $ 2,964,852 $ 2,176,478 |
Schedule of activity in allowance for loan losses and allocation of allowance to loan segments | The following is the activity in the allowance for loan losses for the years ended December 31, 2018, 2017 and 2016 follows: Mortgage Loans Commercial Commercial Residential Real Estate Construction Commercial Consumer Unallocated Total (in thousands) Balance at December 31, 2015 $ 5,816 $ 4,365 $ 581 $ 1,454 $ 830 $ 654 $ 13,700 Provision (credit) for loan losses (720) 2,785 343 484 703 577 4,172 Charge-offs (402) — — (27) (935) — (1,364) Recoveries 269 — — 9 182 — 460 Balance at December 31, 2016 $ 4,963 $ 7,150 $ 924 $ 1,920 $ 780 $ 1,231 $ 16,968 Provision (credit) for loan losses (985) 685 886 452 1,019 359 2,416 Charge-offs (144) — — (134) (1,039) — (1,317) Recoveries 166 — — 16 240 — 422 Balance at December 31, 2017 $ 4,000 $ 7,835 $ 1,810 $ 2,254 $ 1,000 $ 1,590 $ 18,489 Provision (credit) for loan losses (761) 2,318 897 1,008 746 (380) 3,828 Charge-offs (50) (94) — (990) (847) — (1,981) Recoveries 50 — — 14 255 — 319 Balance at December 31, 2018 $ 3,239 $ 10,059 $ 2,707 $ 2,286 $ 1,154 $ 1,210 $ 20,655 Allocation of the allowance to loan segments at December 31, 2018 and 2017 follows: Mortgage Loans Commercial Commercial Residential Real Estate Construction Commercial Consumer Unallocated Total (in thousands) December 31, 2018: Loans: Impaired loans $ 30,720 $ 2,502 $ — $ 3,826 $ — $ — $ 37,048 Non-impaired loans 1,084,736 931,918 161,660 273,445 491,445 — 2,943,204 Total loans $ 1,115,456 $ 934,420 $ 161,660 $ 277,271 $ 491,445 $ — $ 2,980,252 Allowance for loan losses: Impaired loans $ 1,205 $ — $ — $ 53 $ — $ — $ 1,258 Non-impaired loans 2,034 10,059 2,707 2,233 1,154 1,210 19,397 Total allowance for loan losses $ 3,239 $ 10,059 $ 2,707 $ 2,286 $ 1,154 $ 1,210 $ 20,655 December 31, 2017: Loans: Impaired loans $ 34,440 $ 312 $ - $ 3,069 $ — $ — $ 37,821 Non-impaired loans 744,381 655,107 116,739 106,454 527,820 — 2,150,501 Total loans $ 778,821 $ 655,419 $ 116,739 $ 109,523 $ 527,820 $ — $ 2,188,322 Allowance for loan losses: Impaired loans $ 1,242 $ — $ — $ 739 $ — $ — $ 1,981 Non-impaired loans 2,758 7,835 1,810 1,515 1,000 1,590 16,508 Total allowance for loan losses $ 4,000 $ 7,835 $ 1,810 $ 2,254 $ 1,000 $ 1,590 $ 18,489 |
Summary of past due and non-accrual loans | 90 Days 30-59 Days 60-89 Days or More Total Loans on Past Due Past Due Past Due Past Due Non-accrual (in thousands) December 31, 2018 Residential real estate: One- to four-family $ 1,283 $ 4,554 $ 6,516 $ 12,353 $ 12,120 Second mortgages and equity lines of credit 846 237 754 1,837 1,649 Commercial real estate — — 298 298 298 Commercial 34 550 2,575 3,159 3,087 Consumer: Auto 2,099 446 452 2,997 541 Personal 41 56 5 102 16 Total $ 4,303 $ 5,843 $ 10,600 $ 20,746 $ 17,711 December 31, 2017 Residential real estate: One- to four-family $ 3,269 $ 1,116 $ 5,267 $ 9,652 $ 13,308 Second mortgages and equity lines of credit 256 110 296 662 876 Commercial real estate — 312 — 312 312 Commercial construction — — — — 130 Commercial 2 — 260 262 3,038 Consumer: Auto 1,641 342 165 2,148 162 Personal 32 22 18 72 29 Total $ 5,200 $ 1,902 $ 6,006 $ 13,108 $ 17,855 |
Schedule of information pertaining to impaired loans | December 31, 2018 2017 Unpaid Unpaid Recorded Principal Related Recorded Principal Related Investment Balance Allowance Investment Balance Allowance (in thousands) Impaired loans without a valuation allowance: Residential $ 11,518 $ 12,054 $ — $ 12,561 $ 13,171 $ — Commercial real estate 2,502 2,596 — 312 312 — Commercial construction — — — 130 130 — Commercial 3,761 4,672 — — — — Total 17,781 19,322 — 13,003 13,613 — Impaired loans with a valuation allowance: Residential 19,202 19,634 1,205 21,749 22,457 1,242 Commercial real estate — — — — — — Commercial 65 65 53 3,069 3,153 739 Total 19,267 19,699 1,258 24,818 25,610 1,981 Total impaired loans $ 37,048 $ 39,021 $ 1,258 $ 37,821 $ 39,223 $ 1,981 Year Ended December 31, 2018 2017 2016 Interest Interest Interest Average Interest Income Average Interest Income Average Interest Income Recorded Income Recognized Recorded Income Recognized Recorded Income Recognized Investment Recognized on Cash Basis Investment Recognized on Cash Basis Investment Recognized on Cash Basis (in thousands) Residential $ 32,186 $ 1,764 $ 1,379 $ 38,931 $ 2,146 $ 1,699 $ 48,541 $ 2,599 $ 2,458 Commercial real estate 744 — — 78 — — 121 — — Commercial construction 26 — — 132 13 13 135 9 9 Commercial 2,729 35 32 3,629 122 121 2,056 59 58 Total $ 35,685 $ 1,799 $ 1,411 $ 42,770 $ 2,281 $ 1,833 $ 50,853 $ 2,667 $ 2,525 |
Schedule of loans by risk rating | December 31, 2018 2017 Commercial Commercial Commercial Commercial Real Estate Commercial Construction Real Estate Commercial Construction (in thousands) Loans rated 1 - 6 $ 919,305 $ 268,280 $ 147,124 $ 652,625 $ 105,888 $ 116,739 Loans rated 7 10,595 5,165 14,536 — 818 — Loans rated 8 2,502 1,896 — — 1,990 — Loans rated 9 — 1,930 — — 827 — Loans rated 10 — — — — — — Loans not rated 2,018 — — 2,794 — — $ 934,420 $ 277,271 $ 161,660 $ 655,419 $ 109,523 $ 116,739 |
MORTGAGE LOAN SERVICING (Tables
MORTGAGE LOAN SERVICING (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
MORTGAGE LOAN SERVICING | |
Tabular disclosure of assumptions used in the calculation of fair value of MSR | December 31, 2018 2017 Prepayment speed 9.45 % 9.79 % Discount rate 9.32 9.26 Default rate 2.06 2.23 |
Schedule of summarized changes to mortgage servicing rights | Year Ended December 31, 2018 2017 2016 (in thousands) Balance, beginning of year $ 21,092 $ 20,333 $ 12,958 Additions 2,521 2,815 8,505 Changes in fair value due to: Reductions from loans paid off during the year (1,795) (1,686) (1,779) Changes in valuation inputs or assumptions 399 (370) 649 Balance, end of year $ 22,217 $ 21,092 $ 20,333 |
OTHER REAL ESTATE LOANS AND R_2
OTHER REAL ESTATE LOANS AND REPOSSESSED ASSETS (Table) | 12 Months Ended |
Dec. 31, 2018 | |
OTHER REAL ESTATE LOANS AND REPOSSESSED ASSETS | |
Schedule of expenses applicable to foreclosed and repossessed assets | Year Ended December 31, 2018 2017 2016 (in thousands) Gain on sales of real estate, net $ (126) $ (40) $ (343) Net loss on sales of repossessed assets 106 81 59 Write-downs of real estate 5 57 212 Operating expenses 110 (36) 239 $ 95 $ 62 $ 167 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
PROPERTY AND EQUIPMENT | |
Summary of the cost and accumulated depreciation of property and equipment | December 31, 2018 2017 (in thousands) Land $ 12,605 $ 5,466 Buildings and leasehold improvements 51,076 29,553 Furniture, equipment and vehicles 25,246 20,437 Fixed assets in process 2,883 554 91,810 56,010 Less accumulated depreciation and amortization (34,765) (31,523) Property and equipment, net $ 57,045 $ 24,487 |
Schedule of future minimum lease payments under operating leases | Pursuant to the terms of noncancelable operating lease agreements in effect at December 31, 2018, pertaining to property and equipment, future minimum lease payments under various operating leases are as follows: Years Ending December 31, (in thousands) 2019 $ 2,045 2020 1,569 2021 1,303 2022 992 2023 829 Thereafter 2,990 $ 9,728 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Schedules of changes in carrying value of goodwill | Year Ended December 31, 2018 2017 (in thousands) Balance, beginning of year $ 13,365 $ 13,365 Goodwill acquired - Coastway 56,396 — Goodwill acquired - Cumberland Mortgage 327 — Balance, end of year $ 70,088 $ 13,365 |
Schedule of intangible assets | Year Ended December 31, 2018 (in thousands) Gross amount of CDI: Balance, beginning of year $ — Additions due to acquisitions 8,952 Balance, end of year 8,952 Accumulated amortization: Balance, beginning of year — Amortization (618) Balance, end of year (618) Net CDI, end of year $ 8,334 |
DEPOSITS (Tables)
DEPOSITS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
DEPOSITS | |
Summary of deposit balances, by type | December 31, 2018 2017 (in thousands) NOW and demand deposit accounts $ 556,517 $ 395,153 Regular savings and club accounts 482,088 356,300 Money market deposit accounts 758,933 721,021 Total non-certificate accounts 1,797,538 1,472,474 Term certificate accounts greater than $250,000 180,305 78,165 Term certificate accounts less than or equal to $250,000 629,710 389,609 Brokered deposits 77,508 73,490 Total certificate accounts 887,523 541,264 Total deposits $ 2,685,061 $ 2,013,738 |
Summary of certificate accounts by maturity | Weighted Average Amount Rate (dollars in thousands) Within 1 year $ 646,130 2.06 % Over 1 year to 2 years 124,312 2.11 Over 2 years to 3 years 84,875 1.91 Over 3 years to 4 years 25,002 1.96 Over 4 years to 5 years 8,954 2.10 Total certificate deposits 889,273 2.05 % Less unaccreted acquisition discount (1,750) Total certificate deposits, net $ 887,523 |
FHLB BORROWINGS (Tables)
FHLB BORROWINGS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
FHLB BORROWINGS | |
Schedule of borrowed funds by maturity and call date | December 31, 2018 2017 Amount by Weighted Amount by Weighted Scheduled Amount by Average Scheduled Amount by Average Maturity* Call Date (1) Rate (2) Maturity* Call Date (1) Rate (2) (dollars in thousands) Year ending December 31: 2018 $ — $ — — % $ 111,250 $ 111,250 1.47 % 2019 90,000 120,000 2.06 60,000 60,000 2020 77,000 87,000 2.25 50,000 50,000 2021 41,750 21,750 1.95 20,000 20,000 2022 — — — — — — 2023 20,199 199 1.56 5,115 5,115 0.65 2024 and thereafter 987 987 — — — — $ 229,936 $ 229,936 2.05 % $ 246,365 $ 246,365 % * Includes an amortizing advance requiring monthly principal and interest payments. (1) Callable FHLB advances are shown in the respective periods assuming that the callable debt is redeemed at the call date, while all other advances are shown in the periods corresponding to their scheduled maturity date. There were no callable advances at December 31, 2017. (2) Weighted average rates are based on scheduled maturity dates. |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
INCOME TAXES | |
Schedule of allocation of federal and state income taxes between current and deferred portions | 2018 2017 2016 (in thousands) Current tax provision: Federal $ 2,576 $ 6,000 $ 3,571 State 1,377 1,371 988 3,953 7,371 4,559 Deferred tax benefit: Federal (740) (442) (1,099) State (400) (256) (163) (1,140) (698) (1,262) Income tax provision $ 2,813 $ 6,673 $ 3,297 |
Schedule of difference between the statutory federal income tax and the actual income tax provision (benefit) | 2018 2017 2016 (dollars in thousands) Statutory tax rate 21% 35% 34% Statutory tax provision $ 2,983 $ 5,968 $ 3,138 Increase (decrease) resulting from: State taxes, net of federal tax benefit 772 694 545 Bank-owned life insurance (358) (359) (370) Non-deductible merger expenses 196 — — Non-deductible stock offering expenses — — 100 Employee Stock Ownership Plan expenses 106 195 122 Tax exempt income (180) (303) (302) Effect of tax rate change — 243 — Reduction in uncertain tax positions (801) — — Other, net 95 235 64 Income tax provision $ 2,813 $ 6,673 $ 3,297 |
Schedule of tax effects give rise to deferred taxes | 2018 2017 (in thousands) Deferred tax assets: Allowance for loan losses $ 5,776 $ 5,197 Employee benefit plans 5,288 3,322 Mark-to-market loans 4,728 540 Accrued expenses not deducted for tax purposes 976 181 HarborOne Mortgage loan repurchase reserve 212 193 Charitable contribution and other carryforwards 380 1,046 Net unrealized loss on securities available for sale 665 179 Other 661 179 18,686 10,837 Deferred tax liabilities: Deferred income annuities (1,352) (1,237) Depreciation and amortization (294) (167) Deferred loan fees (1,742) (2,661) Mortgage servicing rights (6,241) (5,929) Core deposit intangible (2,330) — (11,959) (9,994) Net deferred tax asset $ 6,727 $ 843 |
Schedule of change in net deferred tax asset (liability) | 2018 2017 2016 (in thousands) Balance at beginning of year $ 843 $ 610 $ (989) Deferred tax benefit 1,140 698 1,262 Coastway net deferred tax asset acquired 4,258 - - Change in directors' retirement plan — (391) (93) Change in securities available for sale 486 (74) 430 Balance at end of year $ 6,727 $ 843 $ 610 |
Schedule of unrecognized tax benefits, the amount of interest accrued and range of reasonably possible changes | December 31, 2018 2017 (in thousands) Unrecognized tax benefits $ 3,635 $ 4,570 Accrued interest on unrecognized tax benefits 134 34 Portion that, if recognized, would reduce tax expense and effective tax rate 3,769 4,604 Reasonably possible reduction to the balance of unrecognized tax in subsequent year 1,032 1,959 Portion that, if recognized, would reduce tax expense and effective tax rate 1,032 1,959 |
OTHER COMMITMENTS AND CONTING_2
OTHER COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
OTHER COMMITMENTS AND CONTINGENCIES | |
Schedule of financial instruments with off-balance sheet credit risk | December 31, 2018 2017 (in thousands) Commitments to grant loans $ 47,958 $ 86,790 Unadvanced funds on home equity lines of credit 138,227 77,117 Unadvanced funds on revolving lines of credit 125,257 71,151 Unadvanced funds on construction loans 111,333 144,918 |
DERIVATIVES (Tables)
DERIVATIVES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
DERIVATIVES | |
Schedule of the fair values of derivative instruments in the Consolidated Balance Sheets | Assets Liabilities Balance Balance Notional Sheet Fair Sheet Fair Amount Location Value Location Value (in thousands) December 31, 2018: Derivative loan commitments $ 71,325 Other assets $ 1,261 Other liabilities $ 112 Forward loan sale commitments 54,500 Other assets — Other liabilities 518 Interest rate swaps 285,541 Other assets 3,193 Other liabilities 3,193 Risk participation agreements 80,418 Other assets — Other liabilities — Total $ 4,454 $ 3,823 December 31, 2017: Derivative loan commitments $ 81,604 Other assets $ 1,047 Other liabilities $ 27 Forward loan sale commitments 95,680 Other assets 46 Other liabilities 92 Interest rate swaps 246,704 Other assets 2,153 Other liabilities 2,153 Risk participation agreements 42,856 — — Total $ 3,246 $ 2,272 |
Schedule of information pertaining to the Company's derivative instruments on the Consolidated Statements of Operations | Amount of Gain (Loss) Year Ended December 31, Location of Gain (Loss) 2018 2017 2016 (in thousands) Derivative loan commitments Mortgage banking income $ 129 $ (1,211) 799 Forward loan sale commitments Mortgage banking income (472) 39 (225) Total $ (343) $ (1,172) 574 |
COMPENSATION AND BENEFIT PLANS
COMPENSATION AND BENEFIT PLANS (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
COMPENSATION AND BENEFIT PLANS | |
Schedule of share information held by the ESOP | December 31, 2018 2017 Allocated shares 118,719 59,359 Shares committed to be allocated 59,359 59,359 Unallocated shares 1,009,110 1,068,470 Total shares 1,187,188 1,187,188 Fair value of unallocated shares $ 16,035,000 $ 20,472,000 |
Schedule of funded status of plan and components of net periodic cost, based on actuarial analysis | Year Ended December 31, 2018 2017 2016 (in thousands) Change in projected benefit obligation: Benefit obligation at beginning of year $ 1,837 $ 1,536 $ 1,369 Service cost — 87 75 Interest cost 76 69 56 Loss — 145 36 Benefits paid (37) — — Benefit obligation and funded status at end of year $ 1,876 $ 1,837 $ 1,536 Accumulated benefit obligation $ 1,876 $ 1,837 $ 1,380 Service cost $ — $ 87 $ 75 Interest cost 76 69 56 Loss recognized — 200 3 Prior service cost recognized — 962 232 Net periodic cost $ 76 $ 1,318 $ 366 |
Schedule of assumption used to determine benefit obligation and net periodic cost | 2018 2017 2016 Discount rate 4.14 % 4.00 % 4.00 % Rate of compensation increase N/A N/A % 3.00 % |
Schedule of benefit payments expected to be paid | Years Ending December 31, (in thousands) 2019 $ 37 2020 385 2021 226 2022 226 2023 226 2024-2028 1,009 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
STOCK-BASED COMPENSATION | |
Schedule of pre-tax expense associated with stock options and restricted stock awards and related benefit | Year Ended December 31, 2018 2017 (in thousands) Stock-based compensation expense Stock options $ 694 $ 600 Restricted stock awards 2,360 895 Directors' fee expense Stock options 629 246 Restricted stock awards 910 355 Total stock-based award expense $ 4,593 $ 2,096 Related tax benefits recognized in earnings $ 965 $ 589 |
Schedule of stock options, valuation assumptions | Year Ended December 31, 2018 2018 2017 Date of grant 11/26/2018 9/26/2018 8/17/2017 Options granted 148,398 13,062 883,311 Vesting period (years) Expiration date 11/26/2028 9/26/2028 8/17/2027 Expected volatility 22 % 24 % 24 % Expected life (years) 6 Expected dividend yield — % — % — % Risk free interest rate 2.93 % 2.98 % 1.88 % Fair value per option $ $ $ |
Schedule of stock option activity | Outstanding Nonvested Weighted Average Weighted Weighted Remaining Aggregate Average Stock Option Average Contractual Intrinsic Stock Option Grant Date Awards Exercise Price Term (years) Value Awards Fair Value Balance at January 1, 2018 (1) 883,311 $ 18.35 883,311 $ 5.07 Granted 161,460 17.68 161,460 5.08 Vested (294,427) 5.07 Forfeited (54,251) 18.35 (54,251) 5.07 Balance at December 31, 2018 990,520 $ 18.24 8.60 $ — 696,093 $ 5.07 Exercisable at December 31, 2018 294,427 $ 18.35 7.85 $ — Unrecognized cost inclusive of directors' awards $ 2,989,000 Weighted average remaining recognition period (years) 1.96 (1) During the quarter ended September 30, 2018, the Company discovered a clerical error in the Plan documents that resulted in the number of stock options awarded in 2017 being overstated by 442,752. As a result, the beginning balance of the stock option awards outstanding in the table above have been decreased from the amount previously reported at December 31, 2017. |
Schedule of non-vested stock award activity | Restricted Weighted Average Stock Awards Grant Price Non-vested stock awards at January 1, 2018 541,415 $ 18.35 Vested (180,465) 18.35 Granted 4,900 19.03 Forfeited (22,034) 18.35 Non-vested stock awards at December 31, 2018 343,816 $ 18.36 Unrecognized cost inclusive of directors' awards $ 5,136,167 Weighted average remaining recognition period (years) 1.65 |
STOCKHOLDERS_ EQUITY (Tables)
STOCKHOLDERS’ EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
STOCKHOLDERS’ EQUITY | |
Summary of bank's actual capital levels and minimum required levels | Minimum Required to be Considered "Well Capitalized" Minimum Required for Under Prompt Corrective Actual Capital Adequacy Purposes Action Provisions Amount Ratio Amount Ratio Amount Ratio (dollars in thousands) HarborOne Bancorp, Inc. December 31, 2018 Common equity Tier 1 capital to risk-weighted assets $ 283,738 9.9 % $ 129,246 4.5 % N/A N/A Tier 1 capital to risk-weighted assets 283,738 9.9 172,328 6.0 N/A N/A Total capital to risk-weighted assets 339,393 11.8 229,771 8.0 N/A N/A Tier 1 capital to average assets 283,738 8.2 137,919 4.0 N/A N/A December 31, 2017 Common equity Tier 1 capital to risk-weighted assets $ 330,514 15.1 % $ 98,292 4.5 % N/A N/A Tier 1 capital to risk-weighted assets 330,514 15.1 131,056 6.0 N/A N/A Total capital to risk-weighted assets 349,002 16.0 174,741 8.0 N/A N/A Tier 1 capital to average assets 330,514 12.5 105,423 4.0 N/A N/A HarborOne Bank December 31, 2018 Common equity Tier 1 capital to risk-weighted assets $ 296,738 10.3 % $ 129,250 4.5 % $ 186,694 6.5 % Tier 1 capital to risk-weighted assets 296,738 10.3 172,333 6.0 229,778 8.0 Total capital to risk-weighted assets 317,393 11.1 229,778 8.0 287,222 10.0 Tier 1 capital to average assets 296,738 8.6 137,784 4.0 172,230 5.0 December 31, 2017 Common equity Tier 1 capital to risk-weighted assets $ 249,532 11.4 % $ 98,266 4.5 % $ 141,939 6.5 % Tier 1 capital to risk-weighted assets 249,532 11.4 131,021 6.0 174,695 8.0 Total capital to risk-weighted assets 268,021 12.3 174,695 8.0 218,368 10.0 Tier 1 capital to average assets 249,532 9.6 104,264 4.0 130,329 5.0 |
COMPREHENSIVE INCOME (LOSS) (Ta
COMPREHENSIVE INCOME (LOSS) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
COMPREHENSIVE INCOME (LOSS) | |
Schedule of components of accumulated other comprehensive loss | December 31, 2018 2017 (in thousands) Securities available for sale: Net unrealized loss $ (3,023) $ (811) Related tax effect 665 179 Stranded effect of tax rate changes (Note 1) — 104 Total accumulated other comprehensive loss $ (2,358) $ (528) |
Summary of components of OCI | Year Ended December 31, 2018 2017 2016 Available Available Directors' Available Directors' for Sale for Sale Retirement for Sale Retirement Securities Securities Plan Total Securities Plan Total (in thousands) Balance at beginning of year $ (528) $ (665) $ (625) $ (1,290) $ 139 $ (731) $ (592) Other comprehensive income (loss) before reclassifications (2,212) 211 — 211 (951) — (951) Reclassification of stranded effect of tax rate change (Note 1) (104) — — — — — — Amounts reclassified from accumulated other comprehensive income — — 1,162 1,162 (283) 235 (48) Gains (losses) arising during the period and prior service cost — — (146) (146) — (36) (36) Net current period other comprehensive income (loss) (2,316) 211 1,016 1,227 (1,234) 199 (1,035) Related tax effect 486 (74) (391) (465) 430 (93) 337 Balance at end of year $ (2,358) $ (528) $ — $ (528) $ (665) $ (625) $ (1,290) |
FAIR VALUE OF ASSETS AND LIAB_2
FAIR VALUE OF ASSETS AND LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
FAIR VALUE OF ASSETS AND LIABILITIES | |
Schedule of assets and liabilities measured at fair value on a recurring basis | Total Level 1 Level 2 Level 3 Fair Value (in thousands) December 31, 2018 Assets Securities available for sale $ — $ 209,293 $ — $ 209,293 Loans held for sale — 42,107 — 42,107 Mortgage servicing rights — 22,217 — 22,217 Derivative loan commitments — — 1,261 1,261 Interest rate swaps — 3,193 — 3,193 $ — $ 276,810 $ 1,261 $ 278,071 Liabilities Derivative loan commitments $ — $ — $ 112 $ 112 Forward loan sale commitments — — 518 518 Interest rate swaps — 3,193 — 3,193 $ — $ 3,193 $ 630 $ 3,823 December 31, 2017 Assets Securities available for sale $ — $ 170,853 $ — $ 170,853 Loans held for sale — 59,460 — 59,460 Mortgage servicing rights — 21,092 — 21,092 Derivative loan commitments — — 1,047 1,047 Forward loan sale commitments — — 46 46 Interest rate swaps — 2,153 — 2,153 $ — $ 253,558 $ 1,093 $ 254,651 Liabilities Derivative loan commitments $ — $ — $ 27 $ 27 Forward loan sale commitments — — 92 92 Interest rate swaps — 2,153 — 2,153 $ — $ 2,153 $ 119 $ 2,272 |
Schedule of changes in Level 3 assets measured at fair value on a recurring basis | Year Ended December 31, 2018 2017 2016 (in thousands) Assets: Derivative and Forward Loan Sale Commitments: Balance at beginning of year $ 1,093 $ 2,722 $ 1,661 Total gains (losses) included in net income (1) 168 (1,629) 1,061 Balance at end of year $ 1,261 $ 1,093 $ 2,722 Changes in unrealized gains relating to instruments at year end $ 1,261 $ 1,093 $ 2,722 |
Schedule of changes in Level 3 liabilities measured at fair value on a recurring basis | Liabilities: Derivative and Forward Loan Sale Commitments: Balance at beginning of year $ (119) $ (576) $ (89) Total gains (losses) included in net income (1) (511) 457 (487) Balance at end of year $ (630) $ (119) $ (576) Changes in unrealized losses relating to instruments at year end $ (630) $ (119) $ (576) (1) Included in mortgage banking income on the Consolidated Statements of Net Income. |
Schedule of assets measured at fair value on a non-recurring basis | The following table summarizes the fair value hierarchy used to determine each adjustment and the carrying value of the related individual assets. December 31, 2018 2017 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 (in thousands) Impaired loans $ — $ — $ 2,086 $ — $ — $ 3,277 Other real estate owned and repossessed assets — — 749 — — 762 $ — $ — $ 2,835 $ — $ — $ 4,039 Losses in the following table represent the amount of the fair value adjustments recorded during the period on the carrying value of the assets held at December 31, 2018 and 2017, respectively. Year Ended December 31, 2018 2017 (in thousands) Impaired loans $ 409 $ 415 Other real estate owned and repossessed assets 88 138 $ 497 $ 553 |
Schedule of estimated fair values and related carrying amounts of financial instruments | December 31, 2018 Carrying Fair Value Amount Level 1 Level 2 Level 3 Total (in thousands) Financial assets: Cash and cash equivalents $ 105,521 $ 105,521 $ — $ — $ 105,521 Securities available for sale 209,293 — 209,293 — 209,293 Securities held to maturity 44,688 — 44,706 — 44,706 Federal Home Loan Bank stock 24,969 — — 24,969 24,969 Loans held for sale 42,107 — 42,107 — 42,107 Loans, net 2,964,852 — — 2,959,333 2,959,333 Retirement plan annuities 12,931 — — 12,931 12,931 Mortgage servicing rights 22,217 — 22,217 — 22,217 Accrued interest receivable 9,996 — 9,996 — 9,996 Financial liabilities: Deposits 2,685,061 — — 2,678,989 2,678,989 Borrowed funds 519,936 — 518,224 — 518,224 Subordinated debt 33,799 — — 34,338 34,338 Mortgagors' escrow accounts 4,551 — — 4,551 4,551 Accrued interest payable 1,611 — 1,611 — 1,611 Derivative loan commitments: Assets 1,261 — — 1,261 1,261 Liabilities 112 — — 112 112 Interest rate swap agreements: Assets 3,193 — 3,193 — 3,193 Liabilities 3,193 — 3,193 — 3,193 Forward loan sale commitments: Assets — — — — — Liabilities 518 — — 518 518 December 31, 2017 Carrying Fair Value Amount Level 1 Level 2 Level 3 Total (in thousands) Financial assets: Cash and cash equivalents $ 80,791 $ 80,791 $ — $ — $ 80,791 Securities available for sale 170,583 — 170,853 — 170,853 Securities held to maturity 46,869 — 47,674 — 47,674 Federal Home Loan Bank stock 15,532 — — 15,532 15,532 Mortgage loans held for sale 59,460 — 59,460 — 59,460 Loans, net 2,176,478 — — 2,175,423 2,175,423 Retirement plan annuities 12,498 — — 12,498 12,498 Mortgage servicing rights 21,092 — 21,092 — 21,092 Accrued interest receivable 6,545 — 6,545 — 6,545 Financial liabilities: Deposits 2,013,738 — — 2,010,052 2,010,052 Borrowed funds 290,365 — 288,939 — 288,939 Mortgagors' escrow accounts 5,221 — — 5,221 5,221 Accrued interest payable 518 — 518 — 518 Derivative loan commitments: Assets 1,047 — — 1,047 1,047 Liabilities 27 — — 27 27 Interest rate swap agreements: Assets 2,153 — 2,153 — 2,153 Liabilities 2,153 — 2,153 — 2,153 Forward loan sale commitments: Assets 46 — — 46 46 Liabilities 92 — — 92 92 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
EARNINGS PER SHARE (“EPS”) | |
Schedule of basic and diluted earnings per share | Year Ended December 31, 2018 2017 Net income applicable to common stock (in thousands) $ 11,394 $ 10,379 Average number of common shares outstanding 32,610,540 32,323,862 Less: Average unallocated ESOP shares (1,036,184) (1,095,545) Average number of common shares outstanding used to calculate basic earnings per common share 31,574,356 31,228,317 Common stock equivalents — — Average number of common shares outstanding used to calculate diluted earnings per common share 31,574,356 31,228,317 Earnings per common share: Basic $ 0.36 $ 0.33 Diluted $ 0.36 $ 0.33 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
SEGMENT REPORTING | |
Summary of reportable segments | Year Ended December 31, 2018 HarborOne HarborOne HarborOne Bank Mortgage Bancorp, Inc. Eliminations Consolidated (in thousands) Net interest and dividend income $ 88,478 $ 1,018 $ 39,434 $ (40,000) $ 88,930 Provision for loan losses 3,828 — — — 3,828 Net interest income, after provision for loan losses 84,650 1,018 39,434 (40,000) 85,102 Mortgage banking income: Changes in mortgage servicing rights fair value (375) (1,021) — — (1,396) Other 2,024 29,981 — — 32,005 Total mortgage banking income 1,649 28,960 — — 30,609 Other noninterest income 18,587 2 — — 18,589 Total noninterest income 20,236 28,962 — — 49,198 Noninterest expense 86,586 31,639 1,868 — 120,093 Income (loss) before income taxes 18,300 (1,659) 37,566 (40,000) 14,207 Provision (benefit) for income taxes 3,463 (262) (388) — 2,813 Net income (loss) $ 14,837 $ (1,397) $ 37,954 $ (40,000) $ 11,394 Total assets at year end $ 3,657,982 $ 89,461 $ 391,692 $ (486,014) $ 3,653,121 Goodwill at year end $ 59,582 $ 10,506 $ — $ — $ 70,088 Year Ended December 31, 2017 HarborOne HarborOne HarborOne Bank Mortgage Bancorp, Inc. Eliminations Consolidated (in thousands) Net interest and dividend income $ 72,495 $ 1,707 $ 146 $ — $ 74,348 Provision for loan losses 2,416 — — — 2,416 Net interest income, after provision for loan losses 70,079 1,707 146 — 71,932 Mortgage banking income: Changes in mortgage servicing rights fair value (785) (1,271) — — (2,056) Other 2,740 36,511 — — 39,251 Total mortgage banking income 1,955 35,240 — — 37,195 Other noninterest income 17,295 44 — — 17,339 Total noninterest income 19,250 35,284 — — 54,534 Noninterest expense 74,460 34,181 773 — 109,414 Income (loss) before income taxes 14,869 2,810 (627) — 17,052 Provision (benefit) for income taxes 7,382 (998) 289 — 6,673 Net income (loss) $ 7,487 $ 3,808 $ (916) $ — $ 10,379 Total assets at year end $ 2,647,510 $ 96,462 $ 343,896 $ (402,948) $ 2,684,920 Goodwill at year end $ 3,186 $ 10,179 $ — $ — $ 13,365 Year Ended December 31, 2016 HarborOne HarborOne HarborOne Bank Mortgage Bancorp Inc. Eliminations Consolidated (in thousands) Net interest and dividend income $ 59,122 $ 1,873 $ — $ — $ 60,995 Provision for loan losses 4,172 — — — 4,172 Net interest income, after provision for loan losses 54,950 1,873 — — 56,823 Mortgage banking income: Changes in mortgage servicing rights fair value — — (1,130) Other 4,857 47,272 — — 52,129 Total mortgage banking income 4,079 46,920 — — 50,999 Other noninterest income 16,091 13 — — 16,104 Total noninterest income 20,170 46,933 — — 67,103 Noninterest expense 68,255 41,663 4,780 — 114,698 Income (loss) before income taxes 6,865 7,143 (4,780) — 9,228 Provision (benefit) for income taxes 2,195 3,076 (1,974) — 3,297 Net income (loss) $ 4,670 $ 4,067 $ (2,806) $ — $ 5,931 Total assets at year end $ 2,446,613 $ 121,585 $ 329,409 $ (449,297) $ 2,448,310 Goodwill at year end $ 3,186 $ 10,179 $ — $ — $ 13,365 |
CONDENSED FINANCIAL STATEMENT_2
CONDENSED FINANCIAL STATEMENTS OF PARENT COMPANY (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
CONDENSED FINANCIAL STATEMENTS OF PARENT COMPANY | |
Schedule of condensed financial statements | Balance Sheet December 31, 2018 2017 (in thousands) Assets Cash and due from banks $ 9,952 $ 69,414 Investment in common stock of HarborOne Bank 370,574 262,504 Loan receivable - ESOP 10,440 10,844 Other assets 726 1,134 Total assets $ 391,692 $ 343,896 Liabilities and Stockholders' Equity Subordinated debt $ 33,799 $ — Other liabilities and accrued expenses 180 412 Due to subsidiary 139 — Stockholders' equity 357,574 343,484 Total liabilities and stockholders' equity $ 391,692 $ 343,896 Statement of Net Income Year Ended December 31, 2018 2017 2016 (in thousands) Dividends from subsidiary $ 40,000 $ — $ — Interest from bank deposits 163 63 — Interest on short-term investments 12 83 — Interest on ESOP loan 488 422 211 Total income 40,663 568 211 Interest expense 741 — — Operating expenses 2,356 1,195 4,991 Total expenses 3,097 1,195 4,991 Income (loss) before income taxes and equity in undistributed net income of HarborOne Bank 37,566 (627) (4,780) Income tax provision (benefit) (388) 289 (1,974) Income (loss) before equity in income of subsidiaries 37,954 (916) (2,806) Equity in undistributed net income (loss) of HarborOne Bank (26,560) 11,295 8,737 Net income $ 11,394 $ 10,379 $ 5,931 Statement of Cash Flows Year Ended December 31, 2018 2017 2016 (in thousands) Cash flows from operating activities: Net income $ 11,394 $ 10,379 $ 5,931 Adjustments to reconcile net income to net cash used by operating activities: Equity in undistributed net (income) loss of HarborOne Bank 26,560 (11,295) (8,737) Issuance of common stock to the HarborOne Foundation — — 3,855 Deferred income tax provision (benefit) 440 445 (1,548) Share-based compensation 1,568 600 — Net change in other assets (841) 1,065 (1,096) Net change in other liabilities 577 385 25 Net cash provided (used) by operating activities 39,698 1,579 (1,570) Cash flows from investing activities: Investment in HarborOne Bank (10,000) — (60,000) Repayment of ESOP loan 404 417 611 Cash paid for acquisitions, net of cash acquired (122,235) — — Net cash provided (used) by investing activities (131,831) 417 (59,389) Cash flows from financing activities: Issuance of common stock — — 140,529 Repurchase of common stock (1,267) (280) — Purchase of shares by ESOP — — (11,872) Proceeds from advance from subsidiary 139 — — Proceeds from subordinated debt issuance 33,720 — — Amortization of subordinated debt issuance costs 79 — — Net cash provided (used) by financing activities 32,671 (280) 128,657 Net change in cash and cash equivalents (59,462) 1,716 67,698 Cash and cash equivalents at beginning of year 69,414 67,698 — Cash and cash equivalents at end of year $ 9,952 $ 69,414 $ 67,698 |
SELECTED QUARTERLY FINANCIAL _2
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) | |
Schedule of selected quarterly financial data | First Quarter Second Quarter Third Quarter Fourth Quarter 2018 2017 2018 2017 2018 2017 2018 (1) 2017 (in thousands, except share data) Interest and dividend income $ 24,685 $ 21,149 $ 26,251 $ 21,912 $ 27,849 $ 23,414 $ 36,923 $ 23,809 Interest expense 4,561 3,717 5,356 3,697 6,728 4,145 10,133 4,377 Net interest and dividend income 20,124 17,432 20,895 18,215 21,121 19,269 26,790 19,432 Provision for loan losses 808 265 886 470 632 921 1,502 760 Other noninterest income 11,349 11,454 12,557 14,299 13,640 14,627 11,647 14,154 Realized securities gains and impairment losses, net — — — — — — 5 — Total noninterest income 11,349 11,454 12,557 14,299 13,640 14,627 11,652 14,154 Total noninterest expenses 27,599 24,405 28,518 26,878 27,383 28,438 36,593 29,693 Provision (benefit) for income taxes 814 1,481 945 1,953 818 1,699 236 1,540 Net income (loss) $ 2,252 $ 2,735 $ 3,103 $ 3,213 $ 5,928 $ 2,838 $ 111 $ 1,593 Basic earnings per share $ 0.07 $ $ $ $ $ $ — $ Diluted earnings per share $ 0.07 $ $ $ $ $ $ — $ Weighted average common shares, basic 31,569,811 30,998,163 31,578,961 31,013,002 31,575,210 31,303,281 31,571,467 31,582,069 Weighted average common shares, diluted 31,569,811 30,998,163 31,578,961 31,013,002 31,575,811 31,303,281 31,571,467 31,582,069 (1) Increases in income and expenses are primarily due to the acquisition of Coastway Bank on October 5, 2018, including the related merger expenses. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | Jun. 29, 2016USD ($)$ / sharesshares | Jun. 30, 2016shares | Dec. 31, 2018USD ($)companyitemstateshares | Dec. 31, 2017USD ($)shares |
Number of passive investment subsidiaries. | $ | $ 1 | |||
Shares issued | 14,454,396 | |||
Shares issued (in dollars per share) | $ / shares | $ 10 | |||
Unallocated Stock Held During Period Shares Employee Stock Ownership Plan | 1,187,188 | |||
Shares in ESOP | 1,187,188 | 1,187,188 | ||
Common stock, shares outstanding | 32,120,880 | 32,563,485 | 32,647,395 | |
Offering costs | $ | $ 3,900,000 | |||
Number of full-service bank offices | item | 24 | |||
Number of limited-service bank offices | item | 1 | |||
Impairment of federal home loan bank stock | $ | $ 0 | |||
Number of reporting units | item | 2 | |||
Number of security corporations | item | 2 | |||
Impairment recognized of goodwill and intangible assets | $ | $ 0 | |||
Shares available for repurchase | 1,633,155 | |||
Shares acquired in connection with satisfaction of tax obligations | 42,076 | |||
Shares repurchased | 81,676 | 14,900 | ||
Shares of issued and outstanding stock which can be repurchased (as a percent) | 5.00% | |||
Tax benefit | $ | $ 0 | $ 0 | ||
Cash | Cash concentration | ||||
Concentration risk, amount | $ | $ 77,800,000 | |||
Merrimack Mortgage | ||||
Number of offices | item | 34 | |||
Additional states licensed to lend | state | 5 | |||
HarborOne Mutual Bancshares | ||||
Shares issued | 17,281,034 | |||
HarborOne Foundation | ||||
Shares issued | 385,450 | 385,450 | ||
HarborOne Bank | ||||
Number of security corporation subsidiaries | company | 2 | |||
Residential | LTV 80 to 100 Percent | ||||
Loan To Value Ratio | 80.00% |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Recent Accounting Pronouncements (Details) - USD ($) | Dec. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Accumulated other comprehensive loss | $ (2,358,000) | $ (528,000) | |
Retained earnings | $ 219,088,000 | $ 207,590,000 | |
Adjustments for New Accounting Principle, Early Adoption | ASU 2018-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Accumulated other comprehensive loss | $ (104,000) | ||
Retained earnings | $ 104,000 |
BUSINESS COMBINATIONS - Acquisi
BUSINESS COMBINATIONS - Acquisition of Coastway Bancorp, Inc. (Details) - USD ($) | Oct. 05, 2018 | Dec. 31, 2018 | Jan. 12, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Liabilities Assumed | |||||
Goodwill recognized | $ 70,088,000 | $ 13,365,000 | $ 13,365,000 | ||
Coastway | |||||
Business Acquisition [Line Items] | |||||
Gross loans | $ 736,200,000 | ||||
Right to receive cash per share (in dollars per share) | $ 28.25 | ||||
Adjustment period (in years) | 1 year | ||||
Liabilities Assumed | |||||
Fair value adjustment of loan and write-off of deferred loans costs | $ 5,400,000 | ||||
Unpaid principal balance of non-impaired loans | 716,400,000 | ||||
Fair value of non-impaired loans | 698,800,000 | ||||
Fair value adjustment of non-impaired loans | 17,500,000 | ||||
Unpaid principal balance of purchased credit impaired loans | 5,400,000 | ||||
Fair value of purchased credit impaired loans | 5,100,000 | ||||
Coastway | Carrying Amount | |||||
Assets Acquired | |||||
Cash and cash equivalents | 45,453,000 | ||||
Loans held for sale | 9,071,000 | ||||
Loans, gross | 727,148,000 | ||||
Allowance for loan losses | (3,480,000) | ||||
Fixed assets | 30,965,000 | ||||
Deferred tax assets | 1,144,000 | ||||
Other assets | 24,783,000 | ||||
Total assets acquired | 835,084,000 | ||||
Liabilities Assumed | |||||
Deposits | 478,336,000 | ||||
Borrowings | 276,750,000 | ||||
Other liabilities | 10,082,000 | ||||
Total liabilities assumed | 765,168,000 | ||||
Net acquired | 69,916,000 | ||||
Coastway | Fair Value Adjustment | |||||
Assets Acquired | |||||
Loans, gross | (23,234,000) | ||||
Allowance for loan losses | 3,480,000 | ||||
Fixed assets | (711,000) | ||||
Core deposit intangible | 8,952,000 | ||||
Deferred tax assets | 3,114,000 | ||||
Other assets | (287,000) | ||||
Total assets acquired | (8,686,000) | ||||
Liabilities Assumed | |||||
Deposits | (1,814,000) | ||||
Total liabilities assumed | (1,814,000) | ||||
Net acquired | (6,872,000) | ||||
Coastway | Fair Value | |||||
Assets Acquired | |||||
Cash and cash equivalents | 45,453,000 | ||||
Loans held for sale | 9,071,000 | ||||
Loans, gross | 703,914,000 | ||||
Fixed assets | 30,254,000 | ||||
Core deposit intangible | 8,952,000 | ||||
Deferred tax assets | 4,258,000 | ||||
Other assets | 24,496,000 | ||||
Total assets acquired | 826,398,000 | ||||
Liabilities Assumed | |||||
Deposits | 476,522,000 | ||||
Borrowings | 276,750,000 | ||||
Other liabilities | 10,082,000 | ||||
Total liabilities assumed | 763,354,000 | ||||
Net acquired | 63,044,000 | ||||
Consideration paid | 119,440,000 | ||||
Goodwill recognized | $ 56,396,000 | ||||
HarborOne Mortgage | Cumberland Mortgage | |||||
Liabilities Assumed | |||||
Goodwill recognized | $ 327,000 |
BUSINESS COMBINATIONS - Pro For
BUSINESS COMBINATIONS - Pro Forma Information (Details) - Coastway - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Business Acquisition [Line Items] | ||
Estimated tax rate (as a percent) | 28.00% | 28.00% |
Merger-related costs, net of tax | $ 6,700 | |
Business Acquisition, Pro Forma Information [Abstract] | ||
Net interest income, after provision for loan losses | 101,117 | $ 91,699 |
Noninterest income | 54,603 | 62,072 |
Net income | $ 18,399 | $ 11,544 |
CASH AND DUE FROM BANKS (Detail
CASH AND DUE FROM BANKS (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Federal Reserve Bank | ||
Cash and due from banks | ||
Reserve balance | $ 6 | $ 2.3 |
SHORT-TERM INVESTMENTS (Details
SHORT-TERM INVESTMENTS (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
SHORT-TERM INVESTMENTS | ||
Short-term investments | $ 77,835 | $ 64,443 |
SECURITIES - Gross unrealized g
SECURITIES - Gross unrealized gains and losses (Details) $ in Thousands | Dec. 31, 2018USD ($)item | Dec. 31, 2017USD ($)item |
Securities available for sale | ||
Amortized Cost | $ 212,316 | $ 171,664 |
Gross Unrealized Gains | 512 | 269 |
Gross Unrealized Losses | 3,535 | 1,080 |
Fair Value | 209,293 | 170,853 |
Securities held to maturity | ||
Amortized Cost | 44,688 | 46,869 |
Gross Unrealized Gains | 540 | 1,033 |
Gross Unrealized Losses | 522 | 228 |
Fair Value | $ 44,706 | $ 47,674 |
Number of securities pledged | item | 0 | 0 |
U.S. government and government-sponsored enterprise obligations | ||
Securities available for sale | ||
Amortized Cost | $ 27,997 | $ 17,985 |
Gross Unrealized Gains | 71 | |
Gross Unrealized Losses | 527 | 178 |
Fair Value | 27,541 | 17,807 |
U.S. government agency and government-sponsored residential mortgage-backed securities | ||
Securities available for sale | ||
Amortized Cost | 105,340 | 74,368 |
Gross Unrealized Gains | 335 | 132 |
Gross Unrealized Losses | 1,658 | 630 |
Fair Value | 104,017 | 73,870 |
Securities held to maturity | ||
Amortized Cost | 15,025 | 17,452 |
Gross Unrealized Gains | 63 | 97 |
Gross Unrealized Losses | 481 | 214 |
Fair Value | 14,607 | 17,335 |
U.S. government-sponsored collateralized mortgage obligations | ||
Securities available for sale | ||
Amortized Cost | 31,293 | 36,753 |
Gross Unrealized Gains | 35 | |
Gross Unrealized Losses | 365 | 106 |
Fair Value | 30,928 | 36,682 |
Securities held to maturity | ||
Amortized Cost | 1,724 | 2,042 |
Gross Unrealized Gains | 29 | 54 |
Fair Value | 1,753 | 2,096 |
SBA asset-backed securities | ||
Securities available for sale | ||
Amortized Cost | 47,686 | 42,558 |
Gross Unrealized Gains | 106 | 102 |
Gross Unrealized Losses | 985 | 166 |
Fair Value | 46,807 | 42,494 |
Securities held to maturity | ||
Amortized Cost | 5,818 | 2,991 |
Gross Unrealized Gains | 42 | |
Gross Unrealized Losses | 41 | 14 |
Fair Value | 5,819 | 2,977 |
Municipal bonds | ||
Securities held to maturity | ||
Amortized Cost | 22,121 | 24,384 |
Gross Unrealized Gains | 406 | 882 |
Fair Value | $ 22,527 | $ 25,266 |
SECURITIES - Contractual maturi
SECURITIES - Contractual maturity (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018USD ($)security | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Amortized Cost-Available-for-Sale | |||
After 5 years through 10 years | $ 27,997 | ||
Total for contractual maturity | 27,997 | ||
Amortized Cost | 212,316 | $ 171,664 | |
Fair Value-Available-for-Sale | |||
After 5 years through 10 years | 27,541 | ||
Total for contractual maturity | 27,541 | ||
Total | 209,293 | 170,853 | |
Amortized Cost-Held-to-Maturity | |||
After 5 years through 10 years | 4,394 | ||
Over 10 years | 17,727 | ||
Total for contractual maturity | 22,121 | ||
Amortized Cost | 44,688 | 46,869 | |
Fair Value-Held-to-Maturity | |||
After 5 years through 10 years | 4,462 | ||
Over 10 years | 18,065 | ||
Total for contractual maturity | 22,527 | ||
Total | 44,706 | 47,674 | |
Sales | |||
Sales | 1,015 | ||
Sales | $ 8,735 | ||
Gross gains | 5 | 242 | |
Calls | |||
Proceeds | $ 1,025 | 400 | 15,725 |
Gross gains | $ 41 | ||
HTM securities | |||
Fair Value-Held-to-Maturity | |||
Number of securities | security | 1 | ||
Minimum | |||
Fair Value-Held-to-Maturity | |||
Maturity period | 4 years | ||
Maximum | |||
Fair Value-Held-to-Maturity | |||
Maturity period | 29 years | ||
U.S. government agency and government-sponsored residential mortgage-backed securities | |||
Amortized Cost-Available-for-Sale | |||
No single maturity date | $ 105,340 | ||
Amortized Cost | 105,340 | 74,368 | |
Fair Value-Available-for-Sale | |||
No single maturity date | 104,017 | ||
Total | 104,017 | 73,870 | |
Amortized Cost-Held-to-Maturity | |||
No single maturity date | 15,025 | ||
Amortized Cost | 15,025 | 17,452 | |
Fair Value-Held-to-Maturity | |||
No single maturity date | 14,607 | ||
Total | 14,607 | 17,335 | |
U.S. government-sponsored collateralized mortgage obligations | |||
Amortized Cost-Available-for-Sale | |||
No single maturity date | 31,293 | ||
Amortized Cost | 31,293 | 36,753 | |
Fair Value-Available-for-Sale | |||
No single maturity date | 30,928 | ||
Total | 30,928 | 36,682 | |
Amortized Cost-Held-to-Maturity | |||
No single maturity date | 1,724 | ||
Amortized Cost | 1,724 | 2,042 | |
Fair Value-Held-to-Maturity | |||
No single maturity date | 1,753 | ||
Total | 1,753 | 2,096 | |
SBA asset-backed securities | |||
Amortized Cost-Available-for-Sale | |||
No single maturity date | 47,686 | ||
Amortized Cost | 47,686 | 42,558 | |
Fair Value-Available-for-Sale | |||
No single maturity date | 46,807 | ||
Total | 46,807 | 42,494 | |
Amortized Cost-Held-to-Maturity | |||
No single maturity date | 5,818 | ||
Amortized Cost | 5,818 | 2,991 | |
Fair Value-Held-to-Maturity | |||
No single maturity date | 5,819 | ||
Total | $ 5,819 | $ 2,977 |
SECURITIES - Gross unrealized l
SECURITIES - Gross unrealized losses aggregated by category (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018USD ($)security | Dec. 31, 2017USD ($) | |
Securities | ||
Number of debt securities with unrealized loss | security | 63 | |
Amortized cost of securities with unrealized losses | $ 184,900 | |
Aggregate depreciation of securities with unrealized losses (as a percent) | 2.19% | |
Continuous unrealized losses, Gross Unrealized Losses, Available-for-Sale | ||
Less than Twelve Months | $ 55 | $ 323 |
Twelve Months and Over | 3,480 | 757 |
Continuous unrealized losses, Fair Value, Available-for-Sale | ||
Less Than Twelve Months | 12,714 | 71,755 |
Twelve Months and Over | 152,308 | 43,550 |
Continuous unrealized losses, Gross Unrealized Losses, Held-to-Maturity | ||
Less than Twelve Months | 105 | |
Twelve Months and Over | 522 | 123 |
Continuous unrealized losses, Fair Value, Held-for-Maturity | ||
Less Than Twelve Months | 11,188 | |
Twelve Months and Over | 15,772 | 6,970 |
U.S. government and government-sponsored enterprise obligations | ||
Continuous unrealized losses, Gross Unrealized Losses, Available-for-Sale | ||
Less than Twelve Months | 20 | |
Twelve Months and Over | 527 | 158 |
Continuous unrealized losses, Fair Value, Available-for-Sale | ||
Less Than Twelve Months | 4,980 | |
Twelve Months and Over | 17,460 | 9,827 |
U.S. government agency and government-sponsored residential mortgage-backed securities | ||
Continuous unrealized losses, Gross Unrealized Losses, Available-for-Sale | ||
Less than Twelve Months | 55 | 155 |
Twelve Months and Over | 1,603 | 475 |
Continuous unrealized losses, Fair Value, Available-for-Sale | ||
Less Than Twelve Months | 12,714 | 31,684 |
Twelve Months and Over | 67,060 | 26,123 |
Continuous unrealized losses, Gross Unrealized Losses, Held-to-Maturity | ||
Less than Twelve Months | 91 | |
Twelve Months and Over | 481 | 123 |
Continuous unrealized losses, Fair Value, Held-for-Maturity | ||
Less Than Twelve Months | 8,211 | |
Twelve Months and Over | 12,938 | 6,970 |
U.S. government-sponsored collateralized mortgage obligations | ||
Continuous unrealized losses, Gross Unrealized Losses, Available-for-Sale | ||
Less than Twelve Months | 53 | |
Twelve Months and Over | 365 | 53 |
Continuous unrealized losses, Fair Value, Available-for-Sale | ||
Less Than Twelve Months | 10,886 | |
Twelve Months and Over | 30,928 | 2,870 |
SBA asset-backed securities | ||
Continuous unrealized losses, Gross Unrealized Losses, Available-for-Sale | ||
Less than Twelve Months | 95 | |
Twelve Months and Over | 985 | 71 |
Continuous unrealized losses, Fair Value, Available-for-Sale | ||
Less Than Twelve Months | 24,205 | |
Twelve Months and Over | 36,860 | 4,730 |
Continuous unrealized losses, Gross Unrealized Losses, Held-to-Maturity | ||
Less than Twelve Months | 14 | |
Twelve Months and Over | 41 | |
Continuous unrealized losses, Fair Value, Held-for-Maturity | ||
Less Than Twelve Months | $ 2,977 | |
Twelve Months and Over | $ 2,834 |
LOANS HELD FOR SALE - (Details)
LOANS HELD FOR SALE - (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Fair value and contractual principal outstanding: | |||
Mortgage loans held for sale, fair value | $ 42,107,000 | $ 59,460,000 | |
Mortgage loans held for sale, contractual principal outstanding | 40,692,000 | 57,575,000 | |
Fair value less unpaid principal | 1,415,000 | 1,885,000 | |
Gain on sale of mortgage loans held for sale | 23,200,000 | 30,500,000 | $ 43,000,000 |
90 Days or More | |||
Loans held for sale | $ 0 | $ 0 |
LOANS - Summary of Balances of
LOANS - Summary of Balances of Loans (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Loans | ||||
Total loans | $ 2,980,252 | $ 2,188,322 | ||
Less: Allowance for loan losses | (20,655) | (18,489) | $ (16,968) | $ (13,700) |
Net deferred loan costs | 5,255 | 6,645 | ||
Net loans | 2,964,852 | 2,176,478 | ||
Mortgage loans on real estate | ||||
Loans | ||||
Total loans | 2,211,536 | 1,550,979 | ||
Residential | ||||
Loans | ||||
Total loans | 1,115,456 | 778,821 | ||
Less: Allowance for loan losses | (3,239) | (4,000) | (4,963) | (5,816) |
Residential | 1-4 family | ||||
Loans | ||||
Total loans | 942,659 | 677,837 | ||
Residential | Second mortgages and equity lines of credit | ||||
Loans | ||||
Total loans | 158,138 | 89,080 | ||
Residential | Residential Construction | ||||
Loans | ||||
Total loans | 14,659 | 11,904 | ||
Commercial real estate | ||||
Loans | ||||
Total loans | 934,420 | 655,419 | ||
Less: Allowance for loan losses | (10,059) | (7,835) | (7,150) | (4,365) |
Commercial Construction | ||||
Loans | ||||
Total loans | 161,660 | 116,739 | ||
Less: Allowance for loan losses | (2,707) | (1,810) | (924) | (581) |
Commercial | ||||
Loans | ||||
Total loans | 277,271 | 109,523 | ||
Less: Allowance for loan losses | (2,286) | (2,254) | (1,920) | (1,454) |
Consumer loans | ||||
Loans | ||||
Total loans | 491,445 | 527,820 | ||
Less: Allowance for loan losses | (1,154) | (1,000) | $ (780) | $ (830) |
Consumer loans | Auto | ||||
Loans | ||||
Total loans | 478,863 | 513,728 | ||
Consumer loans | Personal | ||||
Loans | ||||
Total loans | $ 12,582 | $ 14,092 |
LOANS - Loans Sold or Transferr
LOANS - Loans Sold or Transferred (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Loans | |||
Transfer of loans to loans held for sale | $ 105,823,000 | $ 5,088,000 | |
Loans held for sale, at fair value | 42,107,000 | 59,460,000 | |
Auto | |||
Loans | |||
Amount of loans sold | 0 | 5,000,000 | $ 10,000,000 |
Unpaid principal balance of loans serviced for others | 12,400,000 | 22,400,000 | |
Commercial - real estate | |||
Loans | |||
Unpaid principal balance of loans serviced for others | 140,900,000 | 85,200,000 | |
Residential | |||
Loans | |||
Amount of loans sold | 0 | 29,500,000 | |
Loans held for sale, at fair value | 105,400,000 | ||
Gain on sale of loans | $ 395,000 | 572,000 | |
Consumer loans | |||
Loans | |||
Gain on sale of loans | $ 78,000 | $ 79,000 |
LOANS - Allowance for Loan Loss
LOANS - Allowance for Loan Losses Activity and Allocation to Loan Segments (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2018 | Oct. 05, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Activity in the allowance for loan losses | |||||||||||||||
Balance | $ 18,489,000 | $ 16,968,000 | $ 18,489,000 | $ 16,968,000 | $ 13,700,000 | ||||||||||
Provision (credit) for loan losses | $ 1,502,000 | $ 632,000 | $ 886,000 | 808,000 | $ 760,000 | $ 921,000 | $ 470,000 | 265,000 | 3,828,000 | 2,416,000 | 4,172,000 | ||||
Charge-offs | (1,981,000) | (1,317,000) | (1,364,000) | ||||||||||||
Recoveries | 319,000 | 422,000 | 460,000 | ||||||||||||
Balance | 20,655,000 | 18,489,000 | 20,655,000 | 18,489,000 | 16,968,000 | ||||||||||
Allocation of the allowance to loan segments | |||||||||||||||
Total loans | $ 2,980,252,000 | $ 2,188,322,000 | |||||||||||||
Total allowance for loan losses | 20,655,000 | 18,489,000 | 18,489,000 | 16,968,000 | 18,489,000 | 16,968,000 | 13,700,000 | 20,655,000 | 18,489,000 | $ 16,968,000 | |||||
Recorded investment of troubled debt restructurings | 22,000,000 | 26,400,000 | |||||||||||||
Impaired loans | |||||||||||||||
Activity in the allowance for loan losses | |||||||||||||||
Balance | 1,981,000 | 1,981,000 | |||||||||||||
Balance | 1,258,000 | 1,981,000 | 1,258,000 | 1,981,000 | |||||||||||
Allocation of the allowance to loan segments | |||||||||||||||
Total loans | 37,048,000 | 37,821,000 | |||||||||||||
Total allowance for loan losses | 1,258,000 | 1,981,000 | 1,981,000 | 1,981,000 | 1,981,000 | 1,258,000 | 1,981,000 | ||||||||
Non-impaired loans | |||||||||||||||
Activity in the allowance for loan losses | |||||||||||||||
Balance | 16,508,000 | 16,508,000 | |||||||||||||
Balance | 19,397,000 | 16,508,000 | 19,397,000 | 16,508,000 | |||||||||||
Allocation of the allowance to loan segments | |||||||||||||||
Total loans | 2,943,204,000 | 2,150,501,000 | |||||||||||||
Total allowance for loan losses | 19,397,000 | 16,508,000 | 16,508,000 | 16,508,000 | 16,508,000 | 19,397,000 | 16,508,000 | ||||||||
Residential | |||||||||||||||
Activity in the allowance for loan losses | |||||||||||||||
Balance | 4,000,000 | 4,963,000 | 4,000,000 | 4,963,000 | 5,816,000 | ||||||||||
Provision (credit) for loan losses | (761,000) | (985,000) | (720,000) | ||||||||||||
Charge-offs | (50,000) | (144,000) | (402,000) | ||||||||||||
Recoveries | 50,000 | 166,000 | 269,000 | ||||||||||||
Balance | 3,239,000 | 4,000,000 | 3,239,000 | 4,000,000 | 4,963,000 | ||||||||||
Allocation of the allowance to loan segments | |||||||||||||||
Total loans | 1,115,456,000 | 778,821,000 | |||||||||||||
Total allowance for loan losses | 3,239,000 | 4,000,000 | 4,000,000 | 4,963,000 | 4,000,000 | 4,963,000 | 5,816,000 | 3,239,000 | 4,000,000 | 4,963,000 | |||||
Residential | Impaired loans | |||||||||||||||
Activity in the allowance for loan losses | |||||||||||||||
Balance | 1,242,000 | 1,242,000 | |||||||||||||
Balance | 1,205,000 | 1,242,000 | 1,205,000 | 1,242,000 | |||||||||||
Allocation of the allowance to loan segments | |||||||||||||||
Total loans | 30,720,000 | 34,440,000 | |||||||||||||
Total allowance for loan losses | 1,205,000 | 1,242,000 | 1,242,000 | 1,242,000 | 1,242,000 | 1,205,000 | 1,242,000 | ||||||||
Residential | Non-impaired loans | |||||||||||||||
Activity in the allowance for loan losses | |||||||||||||||
Balance | 2,758,000 | 2,758,000 | |||||||||||||
Balance | 2,034,000 | 2,758,000 | 2,034,000 | 2,758,000 | |||||||||||
Allocation of the allowance to loan segments | |||||||||||||||
Total loans | 1,084,736,000 | 744,381,000 | |||||||||||||
Total allowance for loan losses | 2,034,000 | 2,758,000 | 2,758,000 | 2,758,000 | 2,758,000 | 2,034,000 | 2,758,000 | ||||||||
Commercial real estate | |||||||||||||||
Activity in the allowance for loan losses | |||||||||||||||
Balance | 7,835,000 | 7,150,000 | 7,835,000 | 7,150,000 | 4,365,000 | ||||||||||
Provision (credit) for loan losses | 2,318,000 | 685,000 | 2,785,000 | ||||||||||||
Charge-offs | (94,000) | ||||||||||||||
Balance | 10,059,000 | 7,835,000 | 10,059,000 | 7,835,000 | 7,150,000 | ||||||||||
Allocation of the allowance to loan segments | |||||||||||||||
Total loans | 934,420,000 | 655,419,000 | |||||||||||||
Total allowance for loan losses | 10,059,000 | 7,835,000 | 7,835,000 | 7,150,000 | 7,835,000 | 7,150,000 | 4,365,000 | 10,059,000 | 7,835,000 | 7,150,000 | |||||
Commercial real estate | Impaired loans | |||||||||||||||
Allocation of the allowance to loan segments | |||||||||||||||
Total loans | 2,502,000 | 312,000 | |||||||||||||
Commercial real estate | Non-impaired loans | |||||||||||||||
Activity in the allowance for loan losses | |||||||||||||||
Balance | 7,835,000 | 7,835,000 | |||||||||||||
Balance | 10,059,000 | 7,835,000 | 10,059,000 | 7,835,000 | |||||||||||
Allocation of the allowance to loan segments | |||||||||||||||
Total loans | 931,918,000 | 655,107,000 | |||||||||||||
Total allowance for loan losses | 10,059,000 | 7,835,000 | 7,835,000 | 7,835,000 | 7,835,000 | 10,059,000 | 7,835,000 | ||||||||
Commercial Construction | |||||||||||||||
Activity in the allowance for loan losses | |||||||||||||||
Balance | 1,810,000 | 924,000 | 1,810,000 | 924,000 | 581,000 | ||||||||||
Provision (credit) for loan losses | 897,000 | 886,000 | 343,000 | ||||||||||||
Balance | 2,707,000 | 1,810,000 | 2,707,000 | 1,810,000 | 924,000 | ||||||||||
Allocation of the allowance to loan segments | |||||||||||||||
Total loans | 161,660,000 | 116,739,000 | |||||||||||||
Total allowance for loan losses | 2,707,000 | 1,810,000 | 1,810,000 | 924,000 | 1,810,000 | 924,000 | 581,000 | 2,707,000 | 1,810,000 | 924,000 | |||||
Commercial Construction | Non-impaired loans | |||||||||||||||
Activity in the allowance for loan losses | |||||||||||||||
Balance | 1,810,000 | 1,810,000 | |||||||||||||
Balance | 2,707,000 | 1,810,000 | 2,707,000 | 1,810,000 | |||||||||||
Allocation of the allowance to loan segments | |||||||||||||||
Total loans | 161,660,000 | 116,739,000 | |||||||||||||
Total allowance for loan losses | 2,707,000 | 1,810,000 | 1,810,000 | 1,810,000 | 1,810,000 | 2,707,000 | 1,810,000 | ||||||||
Commercial | |||||||||||||||
Activity in the allowance for loan losses | |||||||||||||||
Balance | 2,254,000 | 1,920,000 | 2,254,000 | 1,920,000 | 1,454,000 | ||||||||||
Provision (credit) for loan losses | 1,008,000 | 452,000 | 484,000 | ||||||||||||
Charge-offs | (990,000) | (134,000) | (27,000) | ||||||||||||
Recoveries | 14,000 | 16,000 | 9,000 | ||||||||||||
Balance | 2,286,000 | 2,254,000 | 2,286,000 | 2,254,000 | 1,920,000 | ||||||||||
Allocation of the allowance to loan segments | |||||||||||||||
Total loans | 277,271,000 | 109,523,000 | |||||||||||||
Total allowance for loan losses | 2,286,000 | 2,254,000 | 2,254,000 | 1,920,000 | 2,254,000 | 1,920,000 | 1,454,000 | 2,286,000 | 2,254,000 | 1,920,000 | |||||
Recorded investment of troubled debt restructurings | 2,300,000 | ||||||||||||||
Commercial | Impaired loans | |||||||||||||||
Activity in the allowance for loan losses | |||||||||||||||
Balance | 739,000 | 739,000 | |||||||||||||
Balance | 53,000 | 739,000 | 53,000 | 739,000 | |||||||||||
Allocation of the allowance to loan segments | |||||||||||||||
Total loans | 3,826,000 | 3,069,000 | |||||||||||||
Total allowance for loan losses | 53,000 | 739,000 | 739,000 | 739,000 | 739,000 | 53,000 | 739,000 | ||||||||
Commercial | Non-impaired loans | |||||||||||||||
Activity in the allowance for loan losses | |||||||||||||||
Balance | 1,515,000 | 1,515,000 | |||||||||||||
Balance | 2,233,000 | 1,515,000 | 2,233,000 | 1,515,000 | |||||||||||
Allocation of the allowance to loan segments | |||||||||||||||
Total loans | 273,445,000 | 106,454,000 | |||||||||||||
Total allowance for loan losses | 2,233,000 | 1,515,000 | 1,515,000 | 1,515,000 | 1,515,000 | 2,233,000 | 1,515,000 | ||||||||
Consumer loans | |||||||||||||||
Activity in the allowance for loan losses | |||||||||||||||
Balance | 1,000,000 | 780,000 | 1,000,000 | 780,000 | 830,000 | ||||||||||
Provision (credit) for loan losses | 746,000 | 1,019,000 | 703,000 | ||||||||||||
Charge-offs | (847,000) | (1,039,000) | (935,000) | ||||||||||||
Recoveries | 255,000 | 240,000 | 182,000 | ||||||||||||
Balance | 1,154,000 | 1,000,000 | 1,154,000 | 1,000,000 | 780,000 | ||||||||||
Allocation of the allowance to loan segments | |||||||||||||||
Total loans | 491,445,000 | 527,820,000 | |||||||||||||
Total allowance for loan losses | 1,154,000 | 1,000,000 | 1,000,000 | 780,000 | 1,000,000 | 780,000 | 830,000 | 1,154,000 | 1,000,000 | 780,000 | |||||
Consumer loans | Non-impaired loans | |||||||||||||||
Activity in the allowance for loan losses | |||||||||||||||
Balance | 1,000,000 | 1,000,000 | |||||||||||||
Balance | 1,154,000 | 1,000,000 | 1,154,000 | 1,000,000 | |||||||||||
Allocation of the allowance to loan segments | |||||||||||||||
Total loans | 491,445,000 | 527,820,000 | |||||||||||||
Total allowance for loan losses | 1,154,000 | 1,000,000 | 1,000,000 | 1,000,000 | 1,000,000 | 1,154,000 | 1,000,000 | ||||||||
Unallocated | |||||||||||||||
Activity in the allowance for loan losses | |||||||||||||||
Balance | 1,590,000 | 1,231,000 | 1,590,000 | 1,231,000 | 654,000 | ||||||||||
Provision (credit) for loan losses | (380,000) | 359,000 | 577,000 | ||||||||||||
Balance | 1,210,000 | 1,590,000 | 1,210,000 | 1,590,000 | 1,231,000 | ||||||||||
Allocation of the allowance to loan segments | |||||||||||||||
Total allowance for loan losses | 1,210,000 | 1,590,000 | 1,590,000 | $ 1,231,000 | 1,590,000 | 1,231,000 | $ 654,000 | 1,210,000 | 1,590,000 | $ 1,231,000 | |||||
Unallocated | Non-impaired loans | |||||||||||||||
Activity in the allowance for loan losses | |||||||||||||||
Balance | 1,590,000 | 1,590,000 | |||||||||||||
Balance | 1,210,000 | 1,590,000 | 1,210,000 | 1,590,000 | |||||||||||
Allocation of the allowance to loan segments | |||||||||||||||
Total allowance for loan losses | $ 1,210,000 | $ 1,590,000 | $ 1,590,000 | 1,590,000 | $ 1,590,000 | 1,210,000 | $ 1,590,000 | ||||||||
Coastway | |||||||||||||||
Allocation of the allowance to loan segments | |||||||||||||||
Unpaid principal balance of purchased credit impaired loans | $ 5,400,000 | ||||||||||||||
Coastway | Residential | |||||||||||||||
Allocation of the allowance to loan segments | |||||||||||||||
Contractual amount of purchased credit impaired loans | 4,700,000 | ||||||||||||||
Carrying value of purchased credit impaired loans | 4,600,000 | ||||||||||||||
Expected cash flow of acquired loans pool | 5,300,000 | ||||||||||||||
Accretable yield | 186,000 | ||||||||||||||
Interest income | $ 34,000 | ||||||||||||||
Purchased credit impaired loans included in delinquency | 2,200,000 | ||||||||||||||
Purchased credit impaired loans included in nonaccrual | $ 500,000 |
LOANS - Summary of Past Due and
LOANS - Summary of Past Due and Non-Accrual Loans (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Summary of past due and non-accrual loans | ||
Past Due | $ 20,746 | $ 13,108 |
Loans on Non-accrual | 17,711 | 17,855 |
Loans past due 90 days or more and still accruing | 0 | 0 |
30 to 59 Days | ||
Summary of past due and non-accrual loans | ||
Past Due | 4,303 | 5,200 |
60 to 89 Days | ||
Summary of past due and non-accrual loans | ||
Past Due | 5,843 | 1,902 |
90 Days or More | ||
Summary of past due and non-accrual loans | ||
Past Due | 10,600 | 6,006 |
Residential | 1-4 family | ||
Summary of past due and non-accrual loans | ||
Past Due | 12,353 | 9,652 |
Loans on Non-accrual | 12,120 | 13,308 |
Residential | 1-4 family | 30 to 59 Days | ||
Summary of past due and non-accrual loans | ||
Past Due | 1,283 | 3,269 |
Residential | 1-4 family | 60 to 89 Days | ||
Summary of past due and non-accrual loans | ||
Past Due | 4,554 | 1,116 |
Residential | 1-4 family | 90 Days or More | ||
Summary of past due and non-accrual loans | ||
Past Due | 6,516 | 5,267 |
Residential | Second mortgages and equity lines of credit | ||
Summary of past due and non-accrual loans | ||
Past Due | 1,837 | 662 |
Loans on Non-accrual | 1,649 | 876 |
Residential | Second mortgages and equity lines of credit | 30 to 59 Days | ||
Summary of past due and non-accrual loans | ||
Past Due | 846 | 256 |
Residential | Second mortgages and equity lines of credit | 60 to 89 Days | ||
Summary of past due and non-accrual loans | ||
Past Due | 237 | 110 |
Residential | Second mortgages and equity lines of credit | 90 Days or More | ||
Summary of past due and non-accrual loans | ||
Past Due | 754 | 296 |
Commercial real estate | ||
Summary of past due and non-accrual loans | ||
Past Due | 298 | 312 |
Loans on Non-accrual | 298 | 312 |
Commercial real estate | 60 to 89 Days | ||
Summary of past due and non-accrual loans | ||
Past Due | 312 | |
Commercial real estate | 90 Days or More | ||
Summary of past due and non-accrual loans | ||
Past Due | 298 | |
Commercial Construction | ||
Summary of past due and non-accrual loans | ||
Loans on Non-accrual | 130 | |
Commercial | ||
Summary of past due and non-accrual loans | ||
Past Due | 3,159 | 262 |
Loans on Non-accrual | 3,087 | 3,038 |
Commercial | 30 to 59 Days | ||
Summary of past due and non-accrual loans | ||
Past Due | 34 | 2 |
Commercial | 60 to 89 Days | ||
Summary of past due and non-accrual loans | ||
Past Due | 550 | |
Commercial | 90 Days or More | ||
Summary of past due and non-accrual loans | ||
Past Due | 2,575 | 260 |
Consumer loans | Auto | ||
Summary of past due and non-accrual loans | ||
Past Due | 2,997 | 2,148 |
Loans on Non-accrual | 541 | 162 |
Consumer loans | Auto | 30 to 59 Days | ||
Summary of past due and non-accrual loans | ||
Past Due | 2,099 | 1,641 |
Consumer loans | Auto | 60 to 89 Days | ||
Summary of past due and non-accrual loans | ||
Past Due | 446 | 342 |
Consumer loans | Auto | 90 Days or More | ||
Summary of past due and non-accrual loans | ||
Past Due | 452 | 165 |
Consumer loans | Personal | ||
Summary of past due and non-accrual loans | ||
Past Due | 102 | 72 |
Loans on Non-accrual | 16 | 29 |
Consumer loans | Personal | 30 to 59 Days | ||
Summary of past due and non-accrual loans | ||
Past Due | 41 | 32 |
Consumer loans | Personal | 60 to 89 Days | ||
Summary of past due and non-accrual loans | ||
Past Due | 56 | 22 |
Consumer loans | Personal | 90 Days or More | ||
Summary of past due and non-accrual loans | ||
Past Due | $ 5 | $ 18 |
LOANS - Impaired Loans (Details
LOANS - Impaired Loans (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Recorded Investment | |||
Impaired loans without a valuation allowance | $ 17,781,000 | $ 13,003,000 | |
Impaired loans with a valuation allowance | 19,267,000 | 24,818,000 | |
Total impaired loans | 37,048,000 | 37,821,000 | |
Unpaid Principal Balance | |||
Impaired loans without a valuation allowance | 19,322,000 | 13,613,000 | |
Impaired loans with a valuation allowance | 19,699,000 | 25,610,000 | |
Total impaired loans | 39,021,000 | 39,223,000 | |
Activity in the allowance for loan losses | |||
Allowance for loan losses for impaired loans | 1,258,000 | 1,981,000 | |
Impaired loans | |||
Average Recorded Investment | 35,685,000 | 42,770,000 | $ 50,853,000 |
Interest Income Recognized | 1,799,000 | 2,281,000 | 2,667,000 |
Interest Income Recognized on Cash Basis | 1,411,000 | 1,833,000 | 2,525,000 |
Additional funds committed to be advanced in connection with impaired loans | 0 | ||
Residential | |||
Recorded Investment | |||
Impaired loans without a valuation allowance | 11,518,000 | 12,561,000 | |
Impaired loans with a valuation allowance | 19,202,000 | 21,749,000 | |
Unpaid Principal Balance | |||
Impaired loans without a valuation allowance | 12,054,000 | 13,171,000 | |
Impaired loans with a valuation allowance | 19,634,000 | 22,457,000 | |
Activity in the allowance for loan losses | |||
Allowance for loan losses for impaired loans | 1,205,000 | 1,242,000 | |
Impaired loans | |||
Average Recorded Investment | 32,186,000 | 38,931,000 | 48,541,000 |
Interest Income Recognized | 1,764,000 | 2,146,000 | 2,599,000 |
Interest Income Recognized on Cash Basis | 1,379,000 | 1,699,000 | 2,458,000 |
Commercial real estate | |||
Recorded Investment | |||
Impaired loans without a valuation allowance | 2,502,000 | 312,000 | |
Unpaid Principal Balance | |||
Impaired loans without a valuation allowance | 2,596,000 | 312,000 | |
Impaired loans | |||
Average Recorded Investment | 744,000 | 78,000 | 121,000 |
Commercial Construction | |||
Recorded Investment | |||
Impaired loans without a valuation allowance | 130,000 | ||
Unpaid Principal Balance | |||
Impaired loans without a valuation allowance | 130,000 | ||
Impaired loans | |||
Average Recorded Investment | 26,000 | 132,000 | 135,000 |
Interest Income Recognized | 13,000 | 9,000 | |
Interest Income Recognized on Cash Basis | 13,000 | 9,000 | |
Commercial | |||
Recorded Investment | |||
Impaired loans without a valuation allowance | 3,761,000 | ||
Impaired loans with a valuation allowance | 65,000 | 3,069,000 | |
Unpaid Principal Balance | |||
Impaired loans without a valuation allowance | 4,672,000 | ||
Impaired loans with a valuation allowance | 65,000 | 3,153,000 | |
Activity in the allowance for loan losses | |||
Allowance for loan losses for impaired loans | 53,000 | 739,000 | |
Impaired loans | |||
Average Recorded Investment | 2,729,000 | 3,629,000 | 2,056,000 |
Interest Income Recognized | 35,000 | 122,000 | 59,000 |
Interest Income Recognized on Cash Basis | $ 32,000 | $ 121,000 | $ 58,000 |
LOANS - Troubled Debt Restructu
LOANS - Troubled Debt Restructurings (Details) $ in Millions | 3 Months Ended | 12 Months Ended | 36 Months Ended | ||
Jun. 30, 2017item | Dec. 31, 2018USD ($)item | Dec. 31, 2016USD ($)item | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Troubled debt restructurings | |||||
Recorded investment of troubled debt restructurings | $ 22 | $ 22 | $ 26.4 | ||
Recorded investment of troubled debt restructurings that were nonaccruing | $ 4.3 | $ 4.3 | $ 6.1 | ||
Minimum | |||||
Troubled debt restructurings | |||||
Payment in arrears before considered in default | item | 2 | ||||
Residential | Rate reduction | Minimum | |||||
Troubled debt restructurings | |||||
Interest (as a percent) | 0.50% | ||||
Period | 2 years | ||||
Residential | Rate reduction | Maximum | |||||
Troubled debt restructurings | |||||
Interest (as a percent) | 5.625% | ||||
Period | 28 years | ||||
Residential | Interest only | Minimum | |||||
Troubled debt restructurings | |||||
Period | 2 months | ||||
Residential | Interest only | Maximum | |||||
Troubled debt restructurings | |||||
Period | 36 months | ||||
Residential | Extension of maturity | Minimum | |||||
Troubled debt restructurings | |||||
Period | 18 months | ||||
Residential | Extension of maturity | Maximum | |||||
Troubled debt restructurings | |||||
Period | 28 years | ||||
Commercial | |||||
Troubled debt restructurings | |||||
Troubled debt restructurings during the period | item | 2 | 1 | |||
Recorded investment of troubled debt restructurings | $ 2.3 |
LOANS - Risk Rating (Details)
LOANS - Risk Rating (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018USD ($)grade | Dec. 31, 2017USD ($) | |
Loans by risk rating | ||
Number of grades utilized in internal loan rating system | grade | 10 | |
Total loans | $ 2,980,252 | $ 2,188,322 |
Commercial real estate | ||
Loans by risk rating | ||
Total loans | 934,420 | 655,419 |
Commercial real estate | Loans rated 1 - 6, pass | ||
Loans by risk rating | ||
Total loans | 919,305 | 652,625 |
Commercial real estate | Loans rated 7, special mention | ||
Loans by risk rating | ||
Total loans | 10,595 | |
Commercial real estate | Loans rated 8, substandard | ||
Loans by risk rating | ||
Total loans | 2,502 | |
Commercial real estate | Loans not rated | ||
Loans by risk rating | ||
Total loans | 2,018 | 2,794 |
Commercial | ||
Loans by risk rating | ||
Total loans | 277,271 | 109,523 |
Commercial | Loans rated 1 - 6, pass | ||
Loans by risk rating | ||
Total loans | 268,280 | 105,888 |
Commercial | Loans rated 7, special mention | ||
Loans by risk rating | ||
Total loans | 5,165 | 818 |
Commercial | Loans rated 8, substandard | ||
Loans by risk rating | ||
Total loans | 1,896 | 1,990 |
Commercial | Loans rated 9, doubtful | ||
Loans by risk rating | ||
Total loans | 1,930 | 827 |
Commercial Construction | ||
Loans by risk rating | ||
Total loans | 161,660 | 116,739 |
Commercial Construction | Loans rated 1 - 6, pass | ||
Loans by risk rating | ||
Total loans | 147,124 | $ 116,739 |
Commercial Construction | Loans rated 7, special mention | ||
Loans by risk rating | ||
Total loans | $ 14,536 |
MORTGAGE LOAN SERVICING - Key A
MORTGAGE LOAN SERVICING - Key Assumptions (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Unpaid Principal Balance | ||
Unpaid principal balances of mortgage loans serviced | $ 1,990 | $ 1,930 |
Prepayment speed (weighted average) | 9.45% | 9.79% |
Discount rate (weighted average) | 9.32% | 9.26% |
Default rate | 2.06% | 2.23% |
MORTGAGE LOAN SERVICING - Fair
MORTGAGE LOAN SERVICING - Fair value of MSR (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Changes to the fair value of Mortgage Servicing Rights | |||
Mortgage servicing rights, at fair value, beginning of period | $ 21,092 | $ 20,333 | $ 12,958 |
Additions | 2,521 | 2,815 | 8,505 |
Changes in fair value due to : | |||
Reductions from loans paid off during the period | (1,795) | (1,686) | (1,779) |
Changes in valuation inputs or assumptions | 399 | (370) | 649 |
Mortgage servicing rights, at fair value, end of period | 22,217 | 21,092 | 20,333 |
Fees and commissions, mortgage banking and servicing | $ 5,400 | $ 5,200 | $ 4,100 |
OTHER REAL ESTATE LOANS AND R_3
OTHER REAL ESTATE LOANS AND REPOSSESSED ASSETS (Details) | 12 Months Ended | ||
Dec. 31, 2018USD ($)item | Dec. 31, 2017USD ($)item | Dec. 31, 2016USD ($) | |
OTHER REAL ESTATE LOANS AND REPOSSESSED ASSETS | |||
Gain on sale of real estate, net | $ (126,000) | $ (40,000) | $ (343,000) |
Net loss on sales of repossessed assets | 106,000 | 81,000 | 59,000 |
Write-downs of real estate | 5,000 | 57,000 | 212,000 |
Operating expenses | 110,000 | (36,000) | 239,000 |
Expenses applicable to foreclosed and repossessed assets | $ 95,000 | $ 62,000 | $ 167,000 |
Number of real estate properties foreclosed and repossessed | item | 2 | 4 | |
Foreclosed and repossessed assets, residential real estate properties | $ 556,000 | $ 665,000 | |
Foreclosed and repossessed assets, automobiles | 193,000 | 97,000 | |
Mortgage loans in the process of foreclosure | $ 4,800,000 | $ 4,500,000 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
PROPERTY AND EQUIPMENT | |||
Property and equipment, gross | $ 91,810 | $ 56,010 | |
Less accumulated depreciation and amortization | (34,765) | (31,523) | |
Property and equipment, net | 57,045 | 24,487 | |
Depreciation and amortization of premises and equipment | 3,241 | 2,892 | $ 2,551 |
Future Minimum lease payments under the noncancelable operating lease agreements | |||
2019 | 2,045 | ||
2020 | 1,569 | ||
2021 | 1,303 | ||
2022 | 992 | ||
2023 | 829 | ||
Thereafter | 2,990 | ||
Total | 9,728 | ||
Rent expense | $ 2,000 | 1,700 | $ 1,600 |
Minimum | |||
Future Minimum lease payments under the noncancelable operating lease agreements | |||
Extension term | 3 years | ||
Maximum | |||
Future Minimum lease payments under the noncancelable operating lease agreements | |||
Extension term | 25 years | ||
Land | |||
PROPERTY AND EQUIPMENT | |||
Property and equipment, gross | $ 12,605 | 5,466 | |
Buildings and leasehold improvements | |||
PROPERTY AND EQUIPMENT | |||
Property and equipment, gross | 51,076 | 29,553 | |
Furniture, equipment and vehicles | |||
PROPERTY AND EQUIPMENT | |||
Property and equipment, gross | 25,246 | 20,437 | |
Fixed assets in process | |||
PROPERTY AND EQUIPMENT | |||
Property and equipment, gross | $ 2,883 | $ 554 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS - Goodwill (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Dec. 31, 2018 | Dec. 31, 2018 | |
Goodwill [Roll Forward] | ||
Balance, beginning of year | $ 13,365,000 | |
Balance, end of year | $ 70,088,000 | 70,088,000 |
Impairment recognized of goodwill and intangible assets | 0 | |
Goodwill impairment | $ 0 | |
Coastway | ||
Goodwill [Roll Forward] | ||
Goodwill acquired | 56,396,000 | |
Cumberland Mortgage | ||
Goodwill [Roll Forward] | ||
Goodwill acquired | $ 327,000 |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS - Intangible Assets (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Accumulated amortization and net amount of intangible assets | |||
Amortization | $ (706,000) | $ (88,000) | $ (89,000) |
Core deposit intangibles | |||
Gross amount of intangible assets | |||
Additions due to acquisitions | 8,952,000 | ||
Gross amount, end of year | 8,952,000 | ||
Accumulated amortization and net amount of intangible assets | |||
Amortization | (618,000) | ||
Accumulated amortization, end of year | (618,000) | ||
Net CDI, end of year | 8,334,000 | ||
Estimated future amortization expense | |||
2019 | 2,300,000 | ||
2020 | 1,700,000 | ||
2021 | 1,200,000 | ||
2022 | 900,000 | ||
2023 | $ 800,000 | ||
Weighted average original amortization period | 7 years 3 months 18 days |
GOODWILL AND OTHER INTANGIBLE_5
GOODWILL AND OTHER INTANGIBLE ASSETS - Other Intangible Assets (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Finite-Lived Intangible Assets [Line Items] | |||
Amortization expense | $ 706,000 | $ 88,000 | $ 89,000 |
Non-compete intangible asset | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization period | 4 years | ||
Amortization expense | $ 88,000 | $ 88,000 | $ 89,000 |
2019 | $ 45,000 |
DEPOSITS - Summary of deposits
DEPOSITS - Summary of deposits (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
DEPOSITS | ||
NOW and demand deposit accounts | $ 556,517 | $ 395,153 |
Regular savings and club accounts | 482,088 | 356,300 |
Money market deposit accounts | 758,933 | 721,021 |
Total non-certificate accounts | 1,797,538 | 1,472,474 |
Term certificate accounts greater than $250,000 | 180,305 | 78,165 |
Term certificate accounts less than or equal to $250,000 | 629,710 | 389,609 |
Brokered deposits | 77,508 | 73,490 |
Total certificate deposits, net | 887,523 | 541,264 |
Total deposits | 2,685,061 | 2,013,738 |
Total reciprocal deposits | $ 110,400 | $ 174,200 |
DEPOSITS - Maturity of deposits
DEPOSITS - Maturity of deposits (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Summary of certificate accounts by maturity | ||
Within 1 year | $ 646,130 | |
Over 1 year to 2 years | 124,312 | |
Over 2 years to 3 years | 84,875 | |
Over 3 years to 4 years | 25,002 | |
Over 4 years to 5 years | 8,954 | |
Total certificate deposits | 889,273 | |
Less unaccreted acquisition discount | (1,750) | |
Total certificate deposits, net | $ 887,523 | $ 541,264 |
Summary of certificate accounts by maturity | ||
Within 1 year | 2.06% | |
Over 1 year to 2 years | 2.11% | |
Over 2 years to 3 years | 1.91% | |
Over 3 years to 4 years | 1.96% | |
Over 4 years to 5 years | 2.10% | |
Weighted average interest rate | 2.05% |
FHLB BORROWINGS - FHLB Advances
FHLB BORROWINGS - FHLB Advances (Details) $ in Thousands | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) |
Short-term borrowed funds | $ 290,000 | $ 44,000 |
Scheduled Maturity | ||
2018 | 111,250 | |
2019 | 90,000 | 60,000 |
2020 | 77,000 | 50,000 |
2021 | 41,750 | 20,000 |
2023 | 20,199 | 5,115 |
2024 and thereafter | 987 | |
Total | 229,936 | 246,365 |
Redeemable at Call Date | ||
2018 | 111,250 | |
2019 | 120,000 | 60,000 |
2020 | 87,000 | 50,000 |
2021 | 21,750 | 20,000 |
2023 | 199 | 5,115 |
2024 and thereafter | 987 | |
Total | $ 229,936 | $ 246,365 |
Weighted Average Rate | ||
Short-term advances, weighted average rate | 2.65 | 1.50 |
Weighted Average Rate | ||
2018 | 1.47% | |
2019 | 2.06% | 1.66% |
2020 | 2.25% | 1.84% |
2021 | 1.95% | 1.79% |
2023 | 1.56% | 0.65% |
Total | 2.05% | 1.60% |
FHLB advances, callable | ||
Scheduled Maturity | ||
Total | $ 0 |
FHLB BORROWINGS - Others (Detai
FHLB BORROWINGS - Others (Details) - Federal Home Loan Bank Advances - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Borrowed funds | ||
Percentage of carrying value pledged as collateral | 75.00% | |
Amortized borrowing capacity | $ 70.6 | $ 136.1 |
Amount outstanding | $ 0 | $ 0 |
First mortgage loans on owner-occupied residential property | ||
Borrowed funds | ||
Percentage of carrying value pledged as collateral on FHLB advances | 81.00% |
SUBORDINATED DEBENTURES (Detail
SUBORDINATED DEBENTURES (Details) - Subordinated Notes due 2028 - USD ($) $ in Millions | Aug. 30, 2018 | Dec. 31, 2018 |
Notes issued | $ 35 | |
Annual fixed interest rate until September 1, 2023 | 5.625% | |
Issuance costs | $ 1.2 | |
LIBOR | ||
Basis points | 278.00% |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Current tax provision: | |||||||||||
Federal | $ 2,576 | $ 6,000 | $ 3,571 | ||||||||
State | 1,377 | 1,371 | 988 | ||||||||
Total current tax provision | 3,953 | 7,371 | 4,559 | ||||||||
Deferred tax benefit: | |||||||||||
Federal | (740) | (442) | (1,099) | ||||||||
State | (400) | (256) | (163) | ||||||||
Total deferred tax (benefit) provision | (1,140) | (698) | (1,262) | ||||||||
Income tax provision | $ 236 | $ 818 | $ 945 | $ 814 | $ 1,540 | $ 1,699 | $ 1,953 | $ 1,481 | $ 2,813 | $ 6,673 | $ 3,297 |
INCOME TAXES - Differences Betw
INCOME TAXES - Differences Between Federal Income Tax And Actual Income Tax (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
INCOME TAXES | |||||||||||
Statutory tax rate (as a percent) | 21.00% | 35.00% | 34.00% | ||||||||
Differences between the statutory federal income tax and the actual income tax provision (benefit) | |||||||||||
Statutory tax provision | $ 2,983 | $ 5,968 | $ 3,138 | ||||||||
Increase (decrease) resulting from: | |||||||||||
State taxes, net of federal tax benefit | 772 | 694 | 545 | ||||||||
Bank-owned life insurance | (358) | (359) | (370) | ||||||||
Non-deductible merger expenses | 196 | ||||||||||
Non-deductible stock offering expenses | 100 | ||||||||||
Employee Stock Ownership Plan expenses | 106 | 195 | 122 | ||||||||
Tax exempt income | (180) | (303) | (302) | ||||||||
Effect of tax rate change | 243 | ||||||||||
Reduction in uncertain tax positions | (801) | ||||||||||
Other, net | 95 | 235 | 64 | ||||||||
Income tax provision | $ 236 | $ 818 | $ 945 | $ 814 | $ 1,540 | $ 1,699 | $ 1,953 | $ 1,481 | $ 2,813 | $ 6,673 | $ 3,297 |
INCOME TAXES - Deferred taxes (
INCOME TAXES - Deferred taxes (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax assets: | |||
Allowance for loan losses | $ 5,776 | $ 5,197 | |
Employee benefit plans | 5,288 | 3,322 | |
Mark-to-market loans | 4,728 | 540 | |
Accrued expenses not deducted for tax purposes | 976 | 181 | |
HarborOne Mortgage loan repurchase reserve | 212 | 193 | |
Charitable contribution and other carryforwards | 380 | 1,046 | |
Net unrealized loss on securities available for sale | 665 | 179 | |
Other | 661 | 179 | |
Total deferred tax assets | 18,686 | 10,837 | |
Deferred tax liabilities: | |||
Deferred income annuities | (1,352) | (1,237) | |
Depreciation and amortization | (294) | (167) | |
Deferred loan fees | (1,742) | (2,661) | |
Mortgage servicing rights | (6,241) | (5,929) | |
Core deposit intangible | (2,330) | ||
Total deferred tax liabilities | (11,959) | (9,994) | |
Net deferred tax asset | $ 6,727 | $ 843 | $ 610 |
INCOME TAXES - Changes In Net D
INCOME TAXES - Changes In Net Deferred Tax Asset (Liability) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
INCOME TAXES | ||||
Net deferred tax asset balance | $ 6,727 | $ 843 | $ 610 | |
Net deferred tax liability balance | $ (989) | |||
Deferred tax benefit | 1,140 | 698 | 1,262 | |
Coastway net deferred tax asset acquired | 4,258 | |||
Change in directors' retirement plan | (391) | (93) | ||
Change in securities available for sale | 486 | (74) | 430 | |
Deferred Tax Assets, Net | $ 6,727 | $ 843 | $ 610 |
INCOME TAXES - Carryforwards (D
INCOME TAXES - Carryforwards (Details) - USD ($) | Jun. 29, 2016 | Jun. 30, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2016 |
Operating Loss Carryforwards [Line Items] | |||||||
Tax Act income tax provision amount | $ 243,000 | ||||||
Net deferred tax asset balance | $ 6,727,000 | $ 843,000 | $ 610,000 | ||||
Carryforward period | 5 years | ||||||
Carryforward percentage that may not exceed taxable income | 10.00% | ||||||
Charitable contribution and other carryforwards | $ 380,000 | 1,046,000 | |||||
Shares issued | 14,454,396 | ||||||
Temporary difference adjustment | 320,000 | ||||||
Request tax refunds | $ 3,200,000 | ||||||
Federal | |||||||
Operating Loss Carryforwards [Line Items] | |||||||
Charitable contribution and other carryforwards | 1,100,000 | ||||||
Federal tax refunds | $ 1,300,000 | $ 826,000 | |||||
HarborOne Foundation | |||||||
Operating Loss Carryforwards [Line Items] | |||||||
Shares issued | 385,450 | 385,450 | |||||
Cash | $ 965,000 | ||||||
HarborOne Bank | Maximum | |||||||
Operating Loss Carryforwards [Line Items] | |||||||
Net operating loss that can be used per year | 552,000 | ||||||
HarborOne Bank | New Hampshire | HarborOne Mortgage | |||||||
Operating Loss Carryforwards [Line Items] | |||||||
Net operating loss | 2,800,000 | ||||||
Net deferred tax asset balance | $ 22,000 |
INCOME TAXES - Unrecognized tax
INCOME TAXES - Unrecognized tax benefits (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Unrecognized tax benefits | ||
Unrecognized tax benefits | $ 3,635 | $ 4,570 |
Accrued interest on unrecognized tax benefits | 134 | 34 |
Portion that, if recognized, would reduce tax expense and effective tax rate | 3,769 | 4,604 |
Reasonably possible reduction to the balance of unrecognized tax in subsequent year | 1,032 | 1,959 |
Portion that, if recognized, would reduce tax expense and effective tax rate | $ 1,032 | $ 1,959 |
OTHER COMMITMENTS AND CONTING_3
OTHER COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
OTHER COMMITMENTS AND CONTINGENCIES | ||
Compensation to employees | $ 5,092,000 | |
Employee Agreements | ||
OTHER COMMITMENTS AND CONTINGENCIES | ||
Duration to expense costs | 12 months | |
Employee agreement term | 5 years | |
Total compensation to employees | $ 2,200,000 | |
Compensation to employees | 509,000 | |
Compensation to be recognized in 2019 | 1,700,000 | |
Obligation to Repurchase Receivables Sold | Maximum | ||
OTHER COMMITMENTS AND CONTINGENCIES | ||
Reserve | 1,600,000 | $ 1,600,000 |
Other Liabilities And Accrued Expenses | Obligation to Repurchase Receivables Sold | ||
OTHER COMMITMENTS AND CONTINGENCIES | ||
Reserve | 757,000 | 688,000 |
Recourse liability | 0 | 0 |
Commitments to grant loans | ||
OTHER COMMITMENTS AND CONTINGENCIES | ||
Financial instruments committed contract amount | 47,958,000 | 86,790,000 |
Unadvanced funds on home equity lines of credit | ||
OTHER COMMITMENTS AND CONTINGENCIES | ||
Financial instruments committed contract amount | 138,227,000 | 77,117,000 |
Unadvanced funds on revolving lines of credit | ||
OTHER COMMITMENTS AND CONTINGENCIES | ||
Financial instruments committed contract amount | 125,257,000 | 71,151,000 |
Unadvanced funds on construction loans | ||
OTHER COMMITMENTS AND CONTINGENCIES | ||
Financial instruments committed contract amount | $ 111,333,000 | $ 144,918,000 |
OTHER COMMITMENTS AND CONTING_4
OTHER COMMITMENTS AND CONTINGENCIES - Contingent Consideration (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2018 | Jul. 31, 2015 | |
HarborOne Mortgage | |||
OTHER COMMITMENTS AND CONTINGENCIES | |||
Contingent liability | $ 3.5 | ||
Contingent consideration period | 4 years | ||
Other income | |||
OTHER COMMITMENTS AND CONTINGENCIES | |||
Reduction of contingent consideration liability | $ (1.2) |
DERIVATIVES (Details)
DERIVATIVES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Derivative disclosures | |||
Gain (loss) on interest rate derivative instruments not designated as hedging instrument | $ (343) | $ (1,172) | $ 574 |
Not designated as hedging instruments | Other assets | |||
Derivative disclosures | |||
Fair Value, Assets | 4,454 | 3,246 | |
Not designated as hedging instruments | Other liabilities | |||
Derivative disclosures | |||
Fair Value, Liabilities | $ 3,823 | 2,272 | |
Commitments to grant loans | |||
Derivative disclosures | |||
Loan commitment specified period | 60 days | ||
Commitments to grant loans | Mortgage banking income | |||
Derivative disclosures | |||
Gain (loss) on interest rate derivative instruments not designated as hedging instrument | $ 129 | (1,211) | 799 |
Commitments to grant loans | Not designated as hedging instruments | |||
Derivative disclosures | |||
Notional Amount | 71,325 | 81,604 | |
Commitments to grant loans | Not designated as hedging instruments | Other assets | |||
Derivative disclosures | |||
Fair Value, Assets | 1,261 | 1,047 | |
Commitments to grant loans | Not designated as hedging instruments | Other liabilities | |||
Derivative disclosures | |||
Fair Value, Liabilities | 112 | 27 | |
Forward loan sale commitments | Mortgage banking income | |||
Derivative disclosures | |||
Gain (loss) on interest rate derivative instruments not designated as hedging instrument | (472) | 39 | $ (225) |
Forward loan sale commitments | Not designated as hedging instruments | |||
Derivative disclosures | |||
Notional Amount | 54,500 | 95,680 | |
Forward loan sale commitments | Not designated as hedging instruments | Other assets | |||
Derivative disclosures | |||
Fair Value, Assets | 46 | ||
Forward loan sale commitments | Not designated as hedging instruments | Other liabilities | |||
Derivative disclosures | |||
Fair Value, Liabilities | 518 | 92 | |
Interest rate swaps | Not designated as hedging instruments | |||
Derivative disclosures | |||
Notional Amount | 285,541 | 246,704 | |
Interest rate swaps | Not designated as hedging instruments | Other assets | |||
Derivative disclosures | |||
Fair Value, Assets | 3,193 | 2,153 | |
Interest rate swaps | Not designated as hedging instruments | Other liabilities | |||
Derivative disclosures | |||
Fair Value, Liabilities | 3,193 | 2,153 | |
Risk Participation Agreements | Not designated as hedging instruments | |||
Derivative disclosures | |||
Notional Amount | $ 80,418 | $ 42,856 |
COMPENSATION AND BENEFIT PLAN_2
COMPENSATION AND BENEFIT PLANS (Details) | 12 Months Ended | |||
Dec. 31, 2018USD ($)itemshares | Dec. 31, 2017USD ($)shares | Dec. 31, 2016USD ($)itemshares | Dec. 31, 2015USD ($) | |
Defined Benefit Plan Disclosure [Line Items] | ||||
Contribution by employer (as a percent) | 9.30% | |||
Employee's contribution (as a percent) | 5.70% | |||
Benefit plan liability | $ 1,876,000 | $ 1,837,000 | $ 1,536,000 | $ 1,369,000 |
Contributions expenses | $ 2,300,000 | $ 2,100,000 | $ 2,000,000 | |
Shares committed per year | shares | 59,359 | |||
Allocated shares | shares | 118,719 | 59,359 | ||
Shares committed to be allocated | shares | 59,359 | 59,359 | 59,359 | |
Unallocated shares | shares | 1,009,110 | 1,068,470 | ||
Total shares | shares | 1,187,188 | 1,187,188 | ||
Fair value of unallocated shares, end of period | $ 16,035,000 | $ 20,472,000 | ||
ESOP compensation expense | $ 1,097,000 | 1,143,000 | $ 951,000 | |
ESOP restoration benefit payable period | six months and a day | |||
Restoration accrual | $ 24,000 | 182,000 | 13,000 | |
Split-dollar Life Insurance Arrangements | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Expense amount | $ 73,000 | 106,000 | $ 101,000 | |
Number of agreement terminated | item | 1 | |||
Termination amount | $ 1,200,000 | |||
Deferred Compensation Plan | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Number of executive officers | item | 1 | |||
Interest rate (as a percent) | 1.50% | |||
Expense amount | $ 29,000 | 28,000 | 27,000 | |
Eligible age for medical insurance plan | 65 years | |||
Deferred Compensation Plan | Coastway | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Expense amount | $ 46,000 | |||
Deferred Compensation Plan | Other Liabilities And Accrued Expenses | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Employer obligation | 322,000 | 293,000 | 265,000 | |
Deferred Compensation Plan | Other Liabilities And Accrued Expenses | Coastway | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Benefit plan liability | 1,500,000 | |||
Deferred Compensation Plan | Other assets | Coastway | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Plan Assets | $ 1,500,000 | |||
Supplemental medical and prescription drug | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Number of executive officers | item | 2 | |||
Expense amount | $ 3,000 | 10,000 | 33,000 | |
Supplemental medical and prescription drug | Other Liabilities And Accrued Expenses | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Employer obligation | 229,000 | 226,000 | 216,000 | |
Management Incentive Program | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Expense amount | 3,300,000 | 2,000,000 | 2,900,000 | |
Supplemental Retirement Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Contributions expenses | 628,000 | 933,000 | 1,600,000 | |
Supplemental Retirement Plans | Coastway | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Expense amount | 90,000 | |||
Supplemental Retirement Plans | Other Liabilities And Accrued Expenses | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Employer obligation | 5,300,000 | 4,700,000 | 3,800,000 | |
Supplemental Retirement Plans | Other Liabilities And Accrued Expenses | Coastway | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Employer obligation | $ 3,400,000 | |||
Supplemental Retirement Plans | Executive | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Number of executive officers | item | 2 | |||
Long-Term Incentive Plan | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Expense amount | $ 56,000 | 453,000 | 474,000 | |
Long-Term Incentive Plan | Other Liabilities And Accrued Expenses | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Employer obligation | 1,300,000 | 1,300,000 | 810,000 | |
Post-Retirement Life Insurance | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Expense amount | 29,000 | 7,000 | 57,000 | |
Post-Retirement Life Insurance | Other Liabilities And Accrued Expenses | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Employer obligation | 171,000 | $ 142,000 | $ 136,000 | |
Directors Retirement Plan | Maximum | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Vesting period | 6 years | |||
Defined benefit pension plan | Coastway | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Plan Assets | 1,400,000 | |||
Benefit plan liability | 1,600,000 | |||
Defined benefit pension plan | Unfunded Plan | Other Liabilities And Accrued Expenses | Coastway | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Benefit plan liability | $ 202,000 |
COMPENSATION AND BENEFIT PLAN_3
COMPENSATION AND BENEFIT PLANS - Net Periodic Cost (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Change in projected benefit obligation: | |||
Benefit obligation at beginning of year | $ 1,837 | $ 1,536 | $ 1,369 |
Service cost | 87 | 75 | |
Interest cost | 76 | 69 | 56 |
Loss | 145 | 36 | |
Benefits paid | (37) | ||
Benefit obligation at end of year | 1,876 | 1,837 | 1,536 |
Accumulated benefit obligation | 1,876 | 1,837 | 1,380 |
Loss recognized | 200 | 3 | |
Prior service cost recognized | 962 | 232 | |
Net periodic cost | $ 76 | $ 1,318 | $ 366 |
COMPENSATION AND BENEFIT PLAN_4
COMPENSATION AND BENEFIT PLANS - Assumptions Used to Determine Benefit Obligation and Net Periodic Cost (Details) | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Assumptions used to determine benefit obligation | |||
Discount rate | 4.14% | 4.00% | 4.00% |
Rate of compensation increase | 3.00% |
COMPENSATION AND BENEFIT PLAN_5
COMPENSATION AND BENEFIT PLANS - Expected Benefit Payments (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Expected benefit payments | |
2019 | $ 37 |
2020 | 385 |
2021 | 226 |
2022 | 226 |
2023 | 226 |
2024-2028 | $ 1,009 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - HarborOne Bank - Directors and Officers - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Related Party Transaction [Line Items] | ||
Related party loan amount | $ 189,000 | $ 500,000 |
New loans granted | 0 | 0 |
Loan repayment and reduction | $ 311,000 | $ 720,000 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) - USD ($) $ in Thousands | Nov. 26, 2018 | Sep. 26, 2018 | Aug. 17, 2017 | Aug. 09, 2017 | Dec. 31, 2018 | Dec. 31, 2017 |
STOCK-BASED COMPENSATION | ||||||
Shares reserved for issuance | 2,077,577 | |||||
Contractual term of awards | 10 years | |||||
Share-based compensation | $ 4,593 | $ 2,096 | ||||
Related tax benefits recognized in earnings | $ 965 | 589 | ||||
Stock Options | ||||||
STOCK-BASED COMPENSATION | ||||||
Shares reserved for issuance | 1,483,984 | |||||
Vesting period (years) | 3 years | 3 years | 3 years | 3 years | ||
Granted | 148,398 | 13,062 | 883,311 | 161,460 | ||
Stock based compensation expense | $ 694 | 600 | ||||
Directors' fee expense | 629 | 246 | ||||
Restricted Stock | ||||||
STOCK-BASED COMPENSATION | ||||||
Shares reserved for issuance | 593,593 | |||||
Vesting period (years) | 3 years | |||||
Stock based compensation expense | 2,360 | 895 | ||||
Directors' fee expense | $ 910 | $ 355 |
STOCK-BASED COMPENSATION - Valu
STOCK-BASED COMPENSATION - Valuation assumptions (Details) - Stock Options - $ / shares | Nov. 26, 2018 | Sep. 26, 2018 | Aug. 17, 2017 | Aug. 09, 2017 | Dec. 31, 2018 |
STOCK-BASED COMPENSATION | |||||
Granted | 148,398 | 13,062 | 883,311 | 161,460 | |
Vesting period (years) | 3 years | 3 years | 3 years | 3 years | |
Expected volatility | 22.00% | 24.00% | 24.00% | ||
Expected life (years) | 6 years | 6 years | 6 years | ||
Risk free interest rate | 2.93% | 2.98% | 1.88% | ||
Fair value per option | $ 5.02 | $ 5.78 | $ 5.07 |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock options (Details) - USD ($) | Nov. 26, 2018 | Sep. 26, 2018 | Aug. 17, 2017 | Dec. 31, 2018 | Dec. 31, 2017 |
Stock Option Awards | |||||
Overstated options granted in previous period (in shares) | 442,752 | ||||
Other stock-based compensation | |||||
Related tax benefits recognized in earnings | $ 965,000 | $ 589,000 | |||
Stock Options | |||||
Stock Option Awards | |||||
Balance at the beginning of the period | 883,311 | ||||
Granted | 148,398 | 13,062 | 883,311 | 161,460 | |
Forfeited | (54,251) | ||||
Balance at the end of the period | 990,520 | 883,311 | |||
Exercisable at end of the period | 294,427 | ||||
Unrecognized cost inclusive of directors' awards | $ 2,989,000 | ||||
Weighted average remaining recognition period (years) | 1 year 11 months 16 days | ||||
Weighted Average Exercise Price | |||||
Balance at the beginning of the period | $ 18.35 | ||||
Granted | 17.68 | ||||
Forfeited | 18.35 | ||||
Balance at the end of the period | 18.24 | $ 18.35 | |||
Exercisable at end of the period | $ 18.35 | ||||
Weighted Average Remaining Contractual Term (years) | |||||
Weighted average remaining contractual term, balance (years) | 8 years 7 months 6 days | ||||
Exercisable at end of the period | 7 years 10 months 6 days | ||||
Stock Option Awards, Nonvested | |||||
Balance at the beginning of the period | 883,311 | ||||
Granted | 148,398 | 13,062 | 883,311 | 161,460 | |
Vested | (294,427) | ||||
Forfeited | (54,251) | ||||
Balance at the end of the period | 696,093 | 883,311 | |||
Weighted Average Exercise Price, Nonvested | |||||
Balance at the beginning of the period | $ 5.07 | ||||
Granted | 5.08 | ||||
Vested | 5.07 | ||||
Forfeited | 5.07 | ||||
Balance at the end of the period | $ 5.07 | $ 5.07 | |||
Other stock-based compensation | |||||
Stock based compensation expense | $ 694,000 | $ 600,000 |
STOCK-BASED COMPENSATION - Rest
STOCK-BASED COMPENSATION - Restricted stock (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Other stock-based compensation | ||
Related tax benefits recognized in earnings | $ 965,000 | $ 589,000 |
Restricted Stock | ||
Outstanding Restricted Stock Awards | ||
Non-vested stock awards, beginning balance | 541,415 | |
Vested | (180,465) | |
Granted | 4,900 | |
Forfeited | (22,034) | |
Non-vested stock awards, ending balance | 343,816 | 541,415 |
Unrecognized cost inclusive of directors' awards | $ 5,136,167 | |
Weighted average remaining recognition period (years) | 1 year 7 months 24 days | |
Weighted Average Grant Price | ||
Non-vested stock awards, beginning balance | $ 18.35 | |
Vested | 18.35 | |
Granted | 19.03 | |
Forfeited | 18.35 | |
Non-vested stock awards, ending balance | $ 18.36 | $ 18.35 |
Other stock-based compensation | ||
Stock based compensation expense | $ 2,360,000 | $ 895,000 |
STOCKHOLDERS_ EQUITY (Details)
STOCKHOLDERS’ EQUITY (Details) - USD ($) $ / shares in Units, $ in Thousands | Jan. 01, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items] | |||
Common equity Tier 1 capital conversation buffer ratio | 2.50% | ||
Applicable capital conversation buffer ratio | 1.875% | ||
Number of previous years net income is retained | 2 years | ||
Common equity Tier 1 to risk-weighted assets [Abstract] | |||
Actual, Capital amount | $ 283,738 | $ 330,514 | |
Actual, Ratio (as a percent) | 9.90% | 15.10% | |
Minimum Requirement for Capital Adequacy Purposes | $ 129,246 | $ 98,292 | |
Minimum Requirement for Capital Adequacy Purposes (as a percent) | 4.50% | 4.50% | |
Tier 1 capital to risk weighted assets | |||
Actual, Capital amount | $ 283,738 | $ 330,514 | |
Actual, Ratio (as a percent) | 9.90% | 15.10% | |
Minimum Requirement for Capital Adequacy Purposes | $ 172,328 | $ 131,056 | |
Minimum Requirement for Capital Adequacy Purposes (as a percent) | 6.00% | 6.00% | |
Total capital to risk-weighted assets | |||
Actual, Capital amount | $ 339,393 | $ 349,002 | |
Actual, Ratio (as a percent) | 11.80% | 16.00% | |
Minimum Requirement for Capital Adequacy Purposes | $ 229,771 | $ 174,741 | |
Minimum Requirement for Capital Adequacy Purposes (as a percent) | 8.00% | 8.00% | |
Tier 1 capital to average assets | |||
Actual, Capital amount | $ 283,738 | $ 330,514 | |
Actual, Ratio (as a percent) | 8.20% | 12.50% | |
Minimum Requirement for Capital Adequacy Purposes | $ 137,919 | $ 105,423 | |
Minimum Requirement for Capital Adequacy Purposes (as a percent) | 4.00% | 4.00% | |
Preferred Stock | |||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 | |
Preferred Stock, Par Value Per Share | $ 0 | $ 0 | |
Preferred Stock, shares issued | 0 | 0 | |
Preferred Stock, shares outstanding | 0 | 0 | |
Forecast | |||
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items] | |||
Applicable capital conversation buffer ratio | 2.50% | ||
HarborOne Bank | |||
Common equity Tier 1 to risk-weighted assets [Abstract] | |||
Actual, Capital amount | $ 296,738 | $ 249,532 | |
Actual, Ratio (as a percent) | 10.30% | 11.40% | |
Minimum Requirement for Capital Adequacy Purposes | $ 129,250 | $ 98,266 | |
Minimum Requirement for Capital Adequacy Purposes (as a percent) | 4.50% | 4.50% | |
Minimum Required to be Considered "Well Capitalized" Under Prompt Corrective Action Provisions | $ 186,694 | $ 141,939 | |
Minimum Required to be Considered "Well Capitalized" Under Prompt Corrective Action Provisions (as a percent) | 6.50% | 6.50% | |
Tier 1 capital to risk weighted assets | |||
Actual, Capital amount | $ 296,738 | $ 249,532 | |
Actual, Ratio (as a percent) | 10.30% | 11.40% | |
Minimum Requirement for Capital Adequacy Purposes | $ 172,333 | $ 131,021 | |
Minimum Requirement for Capital Adequacy Purposes (as a percent) | 6.00% | 6.00% | |
Minimum Required to be Considered "Well Capitalized" Under Prompt Corrective Action Provisions | $ 229,778 | $ 174,695 | |
Minimum Required to be Considered "Well Capitalized" Under Prompt Corrective Action Provisions (as a percent) | 8.00% | 8.00% | |
Total capital to risk-weighted assets | |||
Actual, Capital amount | $ 317,393 | $ 268,021 | |
Actual, Ratio (as a percent) | 11.10% | 12.30% | |
Minimum Requirement for Capital Adequacy Purposes | $ 229,778 | $ 174,695 | |
Minimum Requirement for Capital Adequacy Purposes (as a percent) | 8.00% | 8.00% | |
Minimum Required to be Considered "Well Capitalized" Under Prompt Corrective Action Provisions | $ 287,222 | $ 218,368 | |
Minimum Required to be Considered "Well Capitalized" Under Prompt Corrective Action Provisions (as a percent) | 10.00% | 10.00% | |
Tier 1 capital to average assets | |||
Actual, Capital amount | $ 296,738 | $ 249,532 | |
Actual, Ratio (as a percent) | 8.60% | 9.60% | |
Minimum Requirement for Capital Adequacy Purposes | $ 137,784 | $ 104,264 | |
Minimum Requirement for Capital Adequacy Purposes (as a percent) | 4.00% | 4.00% | |
Minimum Required to be Considered "Well Capitalized" Under Prompt Corrective Action Provisions | $ 172,230 | $ 130,329 | |
Minimum Required to be Considered "Well Capitalized" Under Prompt Corrective Action Provisions (as a percent) | 5.00% | 5.00% |
COMPREHENSIVE INCOME (LOSS) (De
COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Components of AOCI | ||
Accumulated other comprehensive income (loss) | $ (2,358) | $ (528) |
Securities available for sale | ||
Components of AOCI | ||
AOCI prior to tax impact | (3,023) | (811) |
Related tax effect | 665 | 179 |
Stranded effect of tax rate changes (Note 1) | 104 | |
Accumulated other comprehensive income (loss) | $ (2,358) | $ (528) |
COMPREHENSIVE INCOME (LOSS) - C
COMPREHENSIVE INCOME (LOSS) - Changes in AOCI (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance, beginning of period | $ 343,484 | $ 329,384 | $ 190,688 |
Gains (losses) arising during the period and prior service cost | (146) | (36) | |
Balance, end of period | 357,574 | 343,484 | 329,384 |
Accumulated Other Comprehensive Loss | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance, beginning of period | (528) | (1,290) | (592) |
Other comprehensive income (loss) before reclassifications | 211 | (951) | |
Reclassification of stranded effect of tax rate change (Note 1) | (104) | ||
Amounts reclassified from accumulated other comprehensive income | 1,162 | (48) | |
Gains (losses) arising during the period and prior service cost | (146) | (36) | |
Net current period other comprehensive income (loss) | 1,227 | (1,035) | |
Related tax effect | (465) | 337 | |
Balance, end of period | (2,358) | (528) | (1,290) |
Securities available for sale | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance, beginning of period | (528) | (665) | 139 |
Other comprehensive income (loss) before reclassifications | (2,212) | 211 | (951) |
Reclassification of stranded effect of tax rate change (Note 1) | (104) | ||
Amounts reclassified from accumulated other comprehensive income | (283) | ||
Net current period other comprehensive income (loss) | (2,316) | 211 | (1,234) |
Related tax effect | 486 | (74) | 430 |
Balance, end of period | $ (2,358) | (528) | (665) |
Directors' retirement plan | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Balance, beginning of period | (625) | (731) | |
Amounts reclassified from accumulated other comprehensive income | 1,162 | 235 | |
Gains (losses) arising during the period and prior service cost | (146) | (36) | |
Net current period other comprehensive income (loss) | 1,016 | 199 | |
Related tax effect | $ (391) | (93) | |
Balance, end of period | $ (625) |
FAIR VALUE OF ASSETS AND LIAB_3
FAIR VALUE OF ASSETS AND LIABILITIES - Derivatives (Details) | Dec. 31, 2018 | Dec. 31, 2017 |
Derivative loan commitments | ||
Assets and liabilities measured on recurring basis | ||
Weighted average pull-through rate | 86.00% | 86.00% |
FAIR VALUE OF ASSETS AND LIAB_4
FAIR VALUE OF ASSETS AND LIABILITIES - Recurring basis (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Assets | ||||
Securities available for sale | $ 209,293 | $ 170,853 | ||
Loans held for sale | 42,107 | 59,460 | ||
Mortgage loans held for sale | 42,107 | 59,460 | ||
Mortgage servicing rights | 22,217 | 21,092 | $ 20,333 | $ 12,958 |
Recurring | ||||
Assets | ||||
Securities available for sale | 209,293 | 170,853 | ||
Loans held for sale | 42,107 | 59,460 | ||
Mortgage servicing rights | 22,217 | 21,092 | ||
Assets, Fair Value Disclosure, Total | 278,071 | 254,651 | ||
Liabilities | ||||
Financial and Nonfinancial Liabilities, Fair Value Disclosure, Total | 3,823 | 2,272 | ||
Recurring | Derivative loan commitments | ||||
Assets | ||||
Derivative assets | 1,261 | 1,047 | ||
Liabilities | ||||
Derivative liabilities | 112 | 27 | ||
Recurring | Forward loan sale commitments | ||||
Assets | ||||
Derivative assets | 46 | |||
Liabilities | ||||
Derivative liabilities | 518 | 92 | ||
Recurring | Interest rate swaps | ||||
Assets | ||||
Derivative assets | 3,193 | 2,153 | ||
Liabilities | ||||
Derivative liabilities | 3,193 | 2,153 | ||
Recurring | Level 2 | ||||
Assets | ||||
Securities available for sale | 209,293 | 170,853 | ||
Loans held for sale | 42,107 | 59,460 | ||
Mortgage servicing rights | 22,217 | 21,092 | ||
Assets, Fair Value Disclosure, Total | 276,810 | 253,558 | ||
Liabilities | ||||
Financial and Nonfinancial Liabilities, Fair Value Disclosure, Total | 3,193 | 2,153 | ||
Recurring | Level 2 | Interest rate swaps | ||||
Assets | ||||
Derivative assets | 3,193 | 2,153 | ||
Liabilities | ||||
Derivative liabilities | 3,193 | 2,153 | ||
Recurring | Level 3 | ||||
Assets | ||||
Assets, Fair Value Disclosure, Total | 1,261 | 1,093 | ||
Liabilities | ||||
Financial and Nonfinancial Liabilities, Fair Value Disclosure, Total | 630 | 119 | ||
Recurring | Level 3 | Derivative loan commitments | ||||
Assets | ||||
Derivative assets | 1,261 | 1,047 | ||
Liabilities | ||||
Derivative liabilities | 112 | 27 | ||
Recurring | Level 3 | Forward loan sale commitments | ||||
Assets | ||||
Derivative assets | 46 | |||
Liabilities | ||||
Derivative liabilities | $ 518 | $ 92 |
FAIR VALUE OF ASSETS AND LIAB_5
FAIR VALUE OF ASSETS AND LIABILITIES - Level 3 (Details) - Derivative and Forward Loan Sale Commitments - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Changes in Level 3 assets | |||
Balance at beginning of period | $ 1,093 | $ 2,722 | $ 1,661 |
Total gains (losses) included in net income | 168 | (1,629) | 1,061 |
Balance at end of period | 1,261 | 1,093 | 2,722 |
Changes in unrealized gains relating to instruments at period end | 1,261 | 1,093 | 2,722 |
Changes in Level 3 liabilities | |||
Balance at beginning of period | (119) | (576) | (89) |
Total gains (losses) included in net income | (511) | 457 | (487) |
Balance at end of period | (630) | (119) | (576) |
Changes in unrealized losses relating to instruments at period end | $ (630) | $ (119) | $ (576) |
FAIR VALUE OF ASSETS AND LIAB_6
FAIR VALUE OF ASSETS AND LIABILITIES - Impaired Loans (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Assets and liabilities measured on non-recurring basis | ||
Total Losses | $ 497,000 | $ 553,000 |
Impaired loans | ||
Assets and liabilities measured on non-recurring basis | ||
Total Losses | 409,000 | 415,000 |
Other real estate owned and repossessed assets | ||
Assets and liabilities measured on non-recurring basis | ||
Total Losses | 88,000 | 138,000 |
Non-recurring | ||
Assets and liabilities measured on non-recurring basis | ||
Fair value | 0 | 0 |
Non-recurring | Level 3 | ||
Assets and liabilities measured on non-recurring basis | ||
Fair value | 2,835,000 | 4,039,000 |
Non-recurring | Level 3 | Impaired loans | ||
Assets and liabilities measured on non-recurring basis | ||
Fair value | 2,086,000 | 3,277,000 |
Non-recurring | Level 3 | Other real estate owned and repossessed assets | ||
Assets and liabilities measured on non-recurring basis | ||
Fair value | $ 749,000 | $ 762,000 |
FAIR VALUE OF ASSETS AND LIAB_7
FAIR VALUE OF ASSETS AND LIABILITIES - Balance Sheet Grouping (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Financial assets: | ||||
Cash and cash equivalents | $ 105,521 | $ 80,791 | ||
Securities available for sale | 209,293 | 170,853 | ||
Securities held to maturity, at amortized cost | 44,688 | 46,869 | ||
Federal Home Loan Bank stock | 24,969 | 15,532 | ||
Loans held for sale | 42,107 | 59,460 | ||
Mortgage loans held for sale | 42,107 | 59,460 | ||
Loans, net | 2,964,852 | 2,176,478 | ||
Retirement plan annuities | 12,931 | 12,498 | ||
Mortgage servicing rights | 22,217 | 21,092 | $ 20,333 | $ 12,958 |
Accrued interest receivable | 9,996 | 6,545 | ||
Financial liabilities: | ||||
Deposits | 2,685,061 | 2,013,738 | ||
Subordinated debt | 33,799 | |||
Mortgagors' escrow accounts | 4,551 | 5,221 | ||
Accrued interest payable | 1,611 | 518 | ||
Carrying Amount | ||||
Financial assets: | ||||
Cash and cash equivalents | 105,521 | 80,791 | ||
Securities available for sale | 209,293 | 170,583 | ||
Securities held to maturity, at amortized cost | 44,688 | 46,869 | ||
Federal Home Loan Bank stock | 24,969 | 15,532 | ||
Loans held for sale | 42,107 | |||
Mortgage loans held for sale | 59,460 | |||
Loans, net | 2,964,852 | 2,176,478 | ||
Retirement plan annuities | 12,931 | 12,498 | ||
Mortgage servicing rights | 22,217 | 21,092 | ||
Accrued interest receivable | 9,996 | 6,545 | ||
Financial liabilities: | ||||
Deposits | 2,685,061 | 2,013,738 | ||
Borrowed funds | 519,936 | 290,365 | ||
Subordinated debt | 33,799 | |||
Mortgagors' escrow accounts | 4,551 | 5,221 | ||
Accrued interest payable | 1,611 | 518 | ||
Carrying Amount | Derivative loan commitments | ||||
Derivative commitments/agreements: | ||||
Assets | 1,261 | 1,047 | ||
Liabilities | 112 | 27 | ||
Carrying Amount | Interest rate swaps | ||||
Derivative commitments/agreements: | ||||
Assets | 3,193 | 2,153 | ||
Liabilities | 3,193 | 2,153 | ||
Carrying Amount | Forward loan sale commitments | ||||
Derivative commitments/agreements: | ||||
Assets | 46 | |||
Liabilities | 518 | 92 | ||
Fair Value | ||||
Financial assets: | ||||
Cash and cash equivalents | 105,521 | 80,791 | ||
Securities available for sale | 209,293 | 170,853 | ||
Securities held to maturity, at amortized cost | 44,706 | 47,674 | ||
Federal Home Loan Bank stock | 24,969 | 15,532 | ||
Loans held for sale | 42,107 | |||
Mortgage loans held for sale | 59,460 | |||
Loans, net | 2,959,333 | 2,175,423 | ||
Retirement plan annuities | 12,931 | 12,498 | ||
Mortgage servicing rights | 22,217 | 21,092 | ||
Accrued interest receivable | 9,996 | 6,545 | ||
Financial liabilities: | ||||
Deposits | 2,678,989 | 2,010,052 | ||
Borrowed funds | 518,224 | 288,939 | ||
Subordinated debt | 34,338 | |||
Mortgagors' escrow accounts | 4,551 | 5,221 | ||
Accrued interest payable | 1,611 | 518 | ||
Fair Value | Derivative loan commitments | ||||
Derivative commitments/agreements: | ||||
Assets | 1,261 | 1,047 | ||
Liabilities | 112 | 27 | ||
Fair Value | Interest rate swaps | ||||
Derivative commitments/agreements: | ||||
Assets | 3,193 | 2,153 | ||
Liabilities | 3,193 | 2,153 | ||
Fair Value | Forward loan sale commitments | ||||
Derivative commitments/agreements: | ||||
Assets | 46 | |||
Liabilities | 518 | 92 | ||
Fair Value | Level 1 | ||||
Financial assets: | ||||
Cash and cash equivalents | 105,521 | 80,791 | ||
Fair Value | Level 2 | ||||
Financial assets: | ||||
Securities available for sale | 209,293 | 170,853 | ||
Securities held to maturity, at amortized cost | 44,706 | 47,674 | ||
Loans held for sale | 42,107 | |||
Mortgage loans held for sale | 59,460 | |||
Mortgage servicing rights | 22,217 | 21,092 | ||
Accrued interest receivable | 9,996 | 6,545 | ||
Financial liabilities: | ||||
Borrowed funds | 518,224 | 288,939 | ||
Accrued interest payable | 1,611 | 518 | ||
Fair Value | Level 2 | Interest rate swaps | ||||
Derivative commitments/agreements: | ||||
Assets | 3,193 | 2,153 | ||
Liabilities | 3,193 | 2,153 | ||
Fair Value | Level 3 | ||||
Financial assets: | ||||
Federal Home Loan Bank stock | 24,969 | 15,532 | ||
Loans, net | 2,959,333 | 2,175,423 | ||
Retirement plan annuities | 12,931 | 12,498 | ||
Financial liabilities: | ||||
Deposits | 2,678,989 | 2,010,052 | ||
Subordinated debt | 34,338 | |||
Mortgagors' escrow accounts | 4,551 | 5,221 | ||
Fair Value | Level 3 | Derivative loan commitments | ||||
Derivative commitments/agreements: | ||||
Assets | 1,261 | 1,047 | ||
Liabilities | 112 | 27 | ||
Fair Value | Level 3 | Forward loan sale commitments | ||||
Derivative commitments/agreements: | ||||
Assets | 46 | |||
Liabilities | $ 518 | $ 92 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
EARNINGS PER SHARE | ||||||||||
Net income applicable to common stock | $ 11,394 | $ 10,379 | ||||||||
Average number of common shares outstanding | 32,610,540 | 32,323,862 | ||||||||
Less: Average unallocated ESOP shares | (1,036,184) | (1,095,545) | ||||||||
Average number of common shares outstanding used to calculate basic earnings per common share | 31,571,467 | 31,575,210 | 31,578,961 | 31,569,811 | 31,582,069 | 31,303,281 | 31,013,002 | 30,998,163 | 31,574,356 | 31,228,317 |
Average number of common shares outstanding used to calculate diluted earnings per common share | 31,571,467 | 31,575,811 | 31,578,961 | 31,569,811 | 31,582,069 | 31,303,281 | 31,013,002 | 30,998,163 | 31,574,356 | 31,228,317 |
Earnings per common share, Basic | $ 0.19 | $ 0.10 | $ 0.07 | $ 0.05 | $ 0.09 | $ 0.10 | $ 0.09 | $ 0.36 | $ 0.33 | |
Earnings per common share, Diluted | $ 0.19 | $ 0.10 | $ 0.07 | $ 0.05 | $ 0.09 | $ 0.10 | $ 0.09 | $ 0.36 | $ 0.33 | |
Stock Options | ||||||||||
EARNINGS PER SHARE | ||||||||||
Antidilutive securities excluded from computation of earnings per share | 990,520 | 883,311 |
SEGMENT REPORTING (Details)
SEGMENT REPORTING (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2018USD ($)segment | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Segment Reporting Information | |||||||||||
Number of reportable segments | segment | 2 | ||||||||||
Net interest and dividend income | $ 26,790 | $ 21,121 | $ 20,895 | $ 20,124 | $ 19,432 | $ 19,269 | $ 18,215 | $ 17,432 | $ 88,930 | $ 74,348 | $ 60,995 |
Provision for loan losses | 1,502 | 632 | 886 | 808 | 760 | 921 | 470 | 265 | 3,828 | 2,416 | 4,172 |
Net interest income, after provision for loan losses | 85,102 | 71,932 | 56,823 | ||||||||
Mortgage banking income: | |||||||||||
Changes in mortgage servicing rights fair value | (1,396) | (2,056) | (1,130) | ||||||||
Other | 32,005 | 39,251 | 52,129 | ||||||||
Total mortgage banking income | 30,609 | 37,195 | 50,999 | ||||||||
Other noninterest income | 18,589 | 17,339 | 16,104 | ||||||||
Total noninterest income | 11,652 | 13,640 | 12,557 | 11,349 | 14,154 | 14,627 | 14,299 | 11,454 | 49,198 | 54,534 | 67,103 |
Noninterest expense | 36,593 | 27,383 | 28,518 | 27,599 | 29,693 | 28,438 | 26,878 | 24,405 | 120,093 | 109,414 | 114,698 |
Income (loss) before income taxes | 14,207 | 17,052 | 9,228 | ||||||||
Income tax provision (benefit) | 236 | 818 | 945 | 814 | 1,540 | 1,699 | 1,953 | 1,481 | 2,813 | 6,673 | 3,297 |
Net income | 111 | $ 5,928 | $ 3,103 | $ 2,252 | 1,593 | $ 2,838 | $ 3,213 | $ 2,735 | 11,394 | 10,379 | 5,931 |
Total assets at period end | 3,653,121 | 2,684,920 | 3,653,121 | 2,684,920 | 2,448,310 | ||||||
Balance, end of year | 70,088 | 13,365 | 70,088 | 13,365 | 13,365 | ||||||
Operating Segments | HarborOne Bank Segment | |||||||||||
Segment Reporting Information | |||||||||||
Net interest and dividend income | 88,478 | 72,495 | 59,122 | ||||||||
Provision for loan losses | 3,828 | 2,416 | 4,172 | ||||||||
Net interest income, after provision for loan losses | 84,650 | 70,079 | 54,950 | ||||||||
Mortgage banking income: | |||||||||||
Changes in mortgage servicing rights fair value | (375) | (785) | (778) | ||||||||
Other | 2,024 | 2,740 | 4,857 | ||||||||
Total mortgage banking income | 1,649 | 1,955 | 4,079 | ||||||||
Other noninterest income | 18,587 | 17,295 | 16,091 | ||||||||
Total noninterest income | 20,236 | 19,250 | 20,170 | ||||||||
Noninterest expense | 86,586 | 74,460 | 68,255 | ||||||||
Income (loss) before income taxes | 18,300 | 14,869 | 6,865 | ||||||||
Income tax provision (benefit) | 3,463 | 7,382 | 2,195 | ||||||||
Net income | 14,837 | 7,487 | 4,670 | ||||||||
Total assets at period end | 3,657,982 | 2,647,510 | 3,657,982 | 2,647,510 | 2,446,613 | ||||||
Balance, end of year | 59,582 | 3,186 | 59,582 | 3,186 | 3,186 | ||||||
Operating Segments | HarborOne Mortgage Segment | |||||||||||
Segment Reporting Information | |||||||||||
Net interest and dividend income | 1,018 | 1,707 | 1,873 | ||||||||
Net interest income, after provision for loan losses | 1,018 | 1,707 | 1,873 | ||||||||
Mortgage banking income: | |||||||||||
Changes in mortgage servicing rights fair value | (1,021) | (1,271) | (352) | ||||||||
Other | 29,981 | 36,511 | 47,272 | ||||||||
Total mortgage banking income | 28,960 | 35,240 | 46,920 | ||||||||
Other noninterest income | 2 | 44 | 13 | ||||||||
Total noninterest income | 28,962 | 35,284 | 46,933 | ||||||||
Noninterest expense | 31,639 | 34,181 | 41,663 | ||||||||
Income (loss) before income taxes | (1,659) | 2,810 | 7,143 | ||||||||
Income tax provision (benefit) | (262) | (998) | 3,076 | ||||||||
Net income | (1,397) | 3,808 | 4,067 | ||||||||
Total assets at period end | 89,461 | 96,462 | 89,461 | 96,462 | 121,585 | ||||||
Balance, end of year | 10,506 | 10,179 | 10,506 | 10,179 | 10,179 | ||||||
Operating Segments | HarborOne Bancorp Segment | |||||||||||
Segment Reporting Information | |||||||||||
Net interest and dividend income | 39,434 | 146 | |||||||||
Net interest income, after provision for loan losses | 39,434 | 146 | |||||||||
Mortgage banking income: | |||||||||||
Noninterest expense | 1,868 | 773 | 4,780 | ||||||||
Income (loss) before income taxes | 37,566 | (627) | (4,780) | ||||||||
Income tax provision (benefit) | (388) | 289 | (1,974) | ||||||||
Net income | 37,954 | (916) | (2,806) | ||||||||
Total assets at period end | 391,692 | 343,896 | 391,692 | 343,896 | 329,409 | ||||||
Eliminations | |||||||||||
Segment Reporting Information | |||||||||||
Net interest and dividend income | (40,000) | ||||||||||
Net interest income, after provision for loan losses | (40,000) | ||||||||||
Mortgage banking income: | |||||||||||
Income (loss) before income taxes | (40,000) | ||||||||||
Net income | (40,000) | ||||||||||
Total assets at period end | $ (486,014) | $ (402,948) | $ (486,014) | $ (402,948) | $ (449,297) |
CONDENSED FINANCIAL STATEMENT_3
CONDENSED FINANCIAL STATEMENTS OF PARENT COMPANY - Balance Sheet (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Assets | ||||
Cash and due from banks | $ 27,686 | $ 16,348 | ||
Other assets | 28,924 | 14,767 | ||
Total assets | 3,653,121 | 2,684,920 | $ 2,448,310 | |
Liabilities and Stockholders' Equity | ||||
Subordinated debt | 33,799 | |||
Other liabilities and accrued expenses | 50,589 | 31,594 | ||
Stockholders' equity | 357,574 | 343,484 | $ 329,384 | $ 190,688 |
Total liabilities and stockholders' equity | 3,653,121 | 2,684,920 | ||
Parent Company | Reportable Legal Entities | ||||
Assets | ||||
Cash and due from banks | 9,952 | 69,414 | ||
Investment in common stock of HarborOne Bank | 370,574 | 262,504 | ||
Loan receivable - ESOP | 10,440 | 10,844 | ||
Other assets | 726 | 1,134 | ||
Total assets | 391,692 | 343,896 | ||
Liabilities and Stockholders' Equity | ||||
Subordinated debt | 33,799 | |||
Other liabilities and accrued expenses | 180 | 412 | ||
Due to subsidiary | 139 | |||
Stockholders' equity | 357,574 | 343,484 | ||
Total liabilities and stockholders' equity | $ 391,692 | $ 343,896 |
CONDENSED FINANCIAL STATEMENT_4
CONDENSED FINANCIAL STATEMENTS OF PARENT COMPANY - Statement Of Net Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Statement of Net Income | |||||||||||
Total interest and dividend income | $ 36,923 | $ 27,849 | $ 26,251 | $ 24,685 | $ 23,809 | $ 23,414 | $ 21,912 | $ 21,149 | $ 115,708 | $ 90,284 | $ 74,756 |
Interest expense | 10,133 | 6,728 | 5,356 | 4,561 | 4,377 | 4,145 | 3,697 | 3,717 | 26,778 | 15,936 | 13,761 |
Income tax provision (benefit) | 236 | 818 | 945 | 814 | 1,540 | 1,699 | 1,953 | 1,481 | 2,813 | 6,673 | 3,297 |
Net income | $ 111 | $ 5,928 | $ 3,103 | $ 2,252 | $ 1,593 | $ 2,838 | $ 3,213 | $ 2,735 | 11,394 | 10,379 | 5,931 |
Parent Company | Reportable Legal Entities | |||||||||||
Statement of Net Income | |||||||||||
Dividends from subsidiary | 40,000 | ||||||||||
Interest from bank deposits | 163 | 63 | |||||||||
Interest on short-term investments | 12 | 83 | |||||||||
Interest on ESOP loan | 488 | 422 | 211 | ||||||||
Total interest and dividend income | 40,663 | 568 | 211 | ||||||||
Interest expense | 741 | ||||||||||
Operating expenses | 2,356 | 1,195 | 4,991 | ||||||||
Total expenses | 3,097 | 1,195 | 4,991 | ||||||||
Income (loss) before income taxes and equity in undistributed net income of HarborOne Bank | 37,566 | (627) | (4,780) | ||||||||
Income tax provision (benefit) | (388) | 289 | (1,974) | ||||||||
Income (loss) before equity in income of subsidiaries | 37,954 | (916) | (2,806) | ||||||||
Equity in undistributed net income (loss) of HarborOne Bank | (26,560) | 11,295 | 8,737 | ||||||||
Net income | $ 11,394 | $ 10,379 | $ 5,931 |
CONDENSED FINANCIAL STATEMENT_5
CONDENSED FINANCIAL STATEMENTS OF PARENT COMPANY - Statement of Cash Flows (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash flows from operating activities: | |||
Net income | $ 11,394 | $ 10,379 | $ 5,931 |
Adjustments to reconcile net income to net cash used by operating activities: | |||
Issuance of common stock to the HarborOne Foundation | 3,855 | ||
Deferred income tax provision (benefit) | (1,140) | (698) | (1,262) |
Share-based compensation | 4,593 | 2,096 | |
Net cash provided (used) by operating activities | 61,165 | 43,875 | (4,315) |
Cash flows from investing activities: | |||
Cash paid for acquisitions, net of cash acquired | (73,987) | ||
Net cash used by investing activities | (215,903) | (237,437) | (254,389) |
Cash flows from financing activities: | |||
Issuance of common stock | 140,529 | ||
Repurchase of common stock | (1,268) | (280) | |
Purchase of shares by the ESOP | (11,872) | ||
Net cash provided by financing activities | 179,468 | 224,138 | 268,267 |
Net change in cash and cash equivalents | 24,730 | 30,576 | 9,563 |
Cash and cash equivalents at beginning of year | 80,791 | 50,215 | 40,652 |
Cash and cash equivalents at end of year | 105,521 | 80,791 | 50,215 |
Parent Company | Reportable Legal Entities | |||
Cash flows from operating activities: | |||
Net income | 11,394 | 10,379 | 5,931 |
Adjustments to reconcile net income to net cash used by operating activities: | |||
Equity in undistributed net (income) loss of HarborOne Bank | 26,560 | (11,295) | (8,737) |
Issuance of common stock to the HarborOne Foundation | 3,855 | ||
Deferred income tax provision (benefit) | 440 | 445 | (1,548) |
Share-based compensation | 1,568 | 600 | |
Net change in other assets | (841) | 1,065 | (1,096) |
Net change in other liabilities | 577 | 385 | 25 |
Net cash provided (used) by operating activities | 39,698 | 1,579 | (1,570) |
Cash flows from investing activities: | |||
Investment in HarborOne Bank | (10,000) | (60,000) | |
Repayment of ESOP loan | 404 | 417 | 611 |
Cash paid for acquisitions, net of cash acquired | (122,235) | ||
Net cash used by investing activities | (131,831) | 417 | (59,389) |
Cash flows from financing activities: | |||
Issuance of common stock | 140,529 | ||
Repurchase of common stock | (1,267) | (280) | |
Purchase of shares by the ESOP | (11,872) | ||
Proceeds from advance from subsidiary | 139 | ||
Proceeds from subordinated debt issuance | 33,720 | ||
Amortization of subordinated debt issuance costs | 79 | ||
Net cash provided by financing activities | 32,671 | (280) | 128,657 |
Net change in cash and cash equivalents | (59,462) | 1,716 | 67,698 |
Cash and cash equivalents at beginning of year | 69,414 | 67,698 | |
Cash and cash equivalents at end of year | $ 9,952 | $ 69,414 | $ 67,698 |
SELECTED QUARTERLY FINANCIAL _3
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Selected Quarterly Financial Information [Abstract] | |||||||||||
Interest and dividend income | $ 36,923 | $ 27,849 | $ 26,251 | $ 24,685 | $ 23,809 | $ 23,414 | $ 21,912 | $ 21,149 | $ 115,708 | $ 90,284 | $ 74,756 |
Interest expense | 10,133 | 6,728 | 5,356 | 4,561 | 4,377 | 4,145 | 3,697 | 3,717 | 26,778 | 15,936 | 13,761 |
Net interest and dividend income | 26,790 | 21,121 | 20,895 | 20,124 | 19,432 | 19,269 | 18,215 | 17,432 | 88,930 | 74,348 | 60,995 |
Provision for loan losses | 1,502 | 632 | 886 | 808 | 760 | 921 | 470 | 265 | 3,828 | 2,416 | 4,172 |
Other noninterest income | 11,647 | 13,640 | 12,557 | 11,349 | 14,154 | 14,627 | 14,299 | 11,454 | 2,923 | 3,471 | 2,554 |
Realized securities gains and impairment losses, net | 5 | 5 | 283 | ||||||||
Total noninterest income | 11,652 | 13,640 | 12,557 | 11,349 | 14,154 | 14,627 | 14,299 | 11,454 | 49,198 | 54,534 | 67,103 |
Total noninterest expenses | 36,593 | 27,383 | 28,518 | 27,599 | 29,693 | 28,438 | 26,878 | 24,405 | 120,093 | 109,414 | 114,698 |
Income tax provision (benefit) | 236 | 818 | 945 | 814 | 1,540 | 1,699 | 1,953 | 1,481 | 2,813 | 6,673 | 3,297 |
Net income (loss) | $ 111 | $ 5,928 | $ 3,103 | $ 2,252 | $ 1,593 | $ 2,838 | $ 3,213 | $ 2,735 | $ 11,394 | $ 10,379 | $ 5,931 |
Basic earnings per share (in dollars per share) | $ 0.19 | $ 0.10 | $ 0.07 | $ 0.05 | $ 0.09 | $ 0.10 | $ 0.09 | $ 0.36 | $ 0.33 | ||
Diluted earnings per share (in dollars per share) | $ 0.19 | $ 0.10 | $ 0.07 | $ 0.05 | $ 0.09 | $ 0.10 | $ 0.09 | $ 0.36 | $ 0.33 | ||
Weighted average shares outstanding basic | 31,571,467 | 31,575,210 | 31,578,961 | 31,569,811 | 31,582,069 | 31,303,281 | 31,013,002 | 30,998,163 | 31,574,356 | 31,228,317 | |
Weighted average shares outstanding diluted | 31,571,467 | 31,575,811 | 31,578,961 | 31,569,811 | 31,582,069 | 31,303,281 | 31,013,002 | 30,998,163 | 31,574,356 | 31,228,317 |
SUBSEQUENT EVENT (Details)
SUBSEQUENT EVENT (Details) | Mar. 05, 2019USD ($) |
Subsequent Event. | |
Subsequent Event | |
Deferred direct costs | $ 207,000 |