HarborOne Bancorp (HONE) 8-K HarborOne Bancorp, Inc. Announces 2020 Second Quarter Earnings

Exhibit 99.1

HarborOne Bancorp, Inc. Announces 2020 Second Quarter Earnings

Contact: Linda Simmons, SVP, CFO

Brockton, Massachusetts (July 23, 2020): HarborOne Bancorp, Inc. (the “Company” or “HarborOne”) (NASDAQ: HONE), the holding company for HarborOne Bank (the “Bank”), announced net income of $10.6 million, or $0.19 per basic and diluted share, for the second quarter of 2020, compared to $4.7 million, or $0.09 per basic and diluted share, for the preceding quarter and $4.8 million, or $0.08 per basic and diluted share, for the same period last year. For the six months ended June 30, 2020 net income was $15.3 million, or $0.28 per basic and diluted share, compared to $6.8 million, or $0.12 per basic and diluted share, for the same period last year. The three and six months ended June 30, 2020 reflect charges of $5.7 million and $7.2 million, respectively, to the provision for loan losses and $1.4 million and $1.7 million, respectively to non-interest expense related to the COVID-19 pandemic. Additionally, in the second quarter, we waived $1.0 million in deposit account fees in response to customer needs related to the COVID-19 pandemic.

Selected Second Quarter Financial Highlights:

● Net interest income increased $2.7 million, or 10.3%, quarter over quarter and the net interest margin increased 9 basis points.

● The annualized quarterly return on average assets was 0.99% and the annualized quarterly return on average equity was 6.22%.

● Provision for loan losses of $10.0 million, including $5.7 million in additional reserves for the impact of the COVID-19 pandemic.

● Record residential real estate mortgage closings for the quarter of $856.5 million, resulting in an increase in mortgage banking income of $23.4 million to $33.9 million.

● Commercial loan growth excluding Paycheck Protection Program loans amounted to $129.7 million.

● Total deposits amounted to $3.3 billion, up $287.5 million, or 10.0%, with marked improvement in mix and cost of funds.

● Announced the initiation of a $0.03 per share cash dividend.

“The strength of our second quarter performance is a testament to our ability to execute in the face of extreme change. We’ve kept our focus on customers and how we support them, while keeping staff safe and healthy. Our customers are telling us how they want to bank moving forward, and we will continue to listen, learn, and transform how we operate to meet those needs.” said James Blake, CEO. “Our digital banking enrollment grew 8% and mobile deposit volume grew 33% as compared to the first quarter, as we continue to focus on helping customers get the most out of our digital banking tools.  That said, as a community bank we remain committed to providing the in-person service that some situations demand, and we will continue to invest in the infrastructure that will enhance alternative channels,” added Joseph F. Casey, President and COO.   

Net Interest Income

The Company’s net interest and dividend income was $29.4 million for the quarter ended June 30, 2020, up $2.7 million, or 10.3%, from $26.7 million for the quarter ended March 31, 2020 and up $2.7 million, or 10.2%, from $26.7 million for the quarter ended June 30, 2019. The tax-equivalent interest rate spread and net interest margin were 2.75% and 3.00%, respectively, for the quarter ended June 30, 2020 compared to 2.58% and 2.91%, respectively, for the quarter ended March 31, 2020, and 2.91% and 3.19%, respectively, for the quarter ended June 30, 2019. Margin pressure continues to be a concern as the economic impact of the COVID-19 pandemic is realized. It is expected that the interest rate and economic environments will continue to be volatile.

The components of the quarter over quarter increase in net interest and dividend income reflected a decrease of $3.3 million, or 31.5%, in total interest expense, partially offset by a $548,000, or 1.5%, decrease in interest and dividend income. Interest on loans in the second quarter included $1.3 million in accretion income from the fair value discount on loans acquired from Coastway Bancorp, Inc. (“Coastway”) and $18,000 in prepayment penalties on commercial loans. Accretion income and prepayment penalties in the previous quarter were $614,000 and $69,000, respectively. The yield on loans was 4.06% for the quarter ended June 30, 2020, down from 4.33% for the quarter ended March 31, 2020. The increase in accretion income reflects increased loan payoffs due to low mortgage loan rates. The decrease in interest and dividend income primarily reflected a decrease in interest rates, as adjustable rate loans repriced, resulting in a 51 basis point decrease in the yield on commercial loans. The yield on residential real estate loans was flat, supported by the recognition of fair value marks on loan payoffs. The decrease in interest expense primarily reflected a decrease in interest rates, resulting in a 48 basis point decrease in the cost of interest-bearing deposits and a shift in the deposit mix. The average balance of certificates of deposit accounts decreased quarter over quarter by $64.1 million, while the savings account average balance increased $156.5 million from the preceding quarter. Average FHLB advances increased $17.4 million and the cost of those funds decreased 78 basis points, resulting in a decrease of $408,000 in interest expense on FHLB borrowings. During the second quarter an interest rate swap agreement with a notional amount of $100.0 million, designated as a cash flow hedge of certain LIBOR-based debt, provided a $149,000 gain that was offset against FHLB interest expense.

The increase in net interest and dividend income from the prior year quarter reflected a decrease of $4.4 million, or 38.0%, in total interest expense, partially offset by a $1.7 million, or 4.3%, decrease in total interest and dividend income. The decreases reflect offsetting rate and volume changes in both interest-bearing assets and liabilities. The cost of interest-bearing liabilities decreased 69 basis points while the average balance increased $167.5 million. The yield on interest earning assets decreased 85 basis points while the average balance increased $592.8 million

Noninterest Income

Noninterest income increased $19.8 million, or 104.8%, to $38.6 million for the quarter ended June 30, 2020 from $18.9 million for the quarter ended March 31, 2020. Record breaking mortgage demand spurred by low mortgage rates continued to provide higher than normal mortgage origination activity and other mortgage banking income for HarborOne Mortgage, LLC (“HarborOne Mortgage”). The $856.5 million in mortgage loan closings resulted in a gain on loan sales of $30.8 million for the quarter ended June 30, 2020 as compared to 12.3 million for the preceding quarter. Other mortgage banking income increased $1.5 million, primarily due to increased origination fees. Residential mortgage loan payoffs resulted in accelerated amortization of mortgage servicing rights in the amount of $1.1 million for the three months ended June 30, 2020 and $576,000 for the three months ended March 31, 2020. The 10-year Treasury Constant Maturity rate decreased 4 basis points in the second quarter of 2020 and 126 basis points from year end 2019 and negatively impacted the fair value of the mortgage servicing rights, resulting in a decrease in fair value of $3.8 million in the first quarter of 2020. The 2020 results for HarborOne Mortgage are uncertain in light of the COVID-19 pandemic. The low mortgage interest rate environment spurred increased purchase and refinance activity in the first half of the year, continuing into the third quarter of 2020 with a locked residential mortgage pipeline at June 30, 2020 of $497.7 million; however, economic uncertainty and increased unemployment rates may have a negative impact on mortgage loan originations in the second half of 2020.  

Noninterest income increased $22.9 million, or 145.8%, as compared to the quarter ended June 30, 2019, primarily due to a $25.2 million, or 291.2%, increase in mortgage banking income. Mortgage banking income increased compared to the same period last year, due to the increase in mortgage origination volume. Mortgage originations increased primarily as a result of lower residential mortgage interest rates and increased refinancing volume. Bank-owned life insurance income increased $301,000 due to a $41.4 million increase in bank-owned life insurance from June 30, 2019 to June 30, 2020.

Noninterest Expense

Noninterest expenses were $43.8 million for the quarter ended June 30, 2020, an increase of $8.5 million, or 23.9%, from the quarter ended March 31, 2020, primarily driven by a $6.3 million increase in compensation and benefits, a $1.3 million increase in loan expense, and a $719,000 increase in other expenses. The increases were partially offset by a decrease of $411,000 in occupancy and equipment expenses. The increase in compensation and benefits and loan expenses primarily reflect increases consistent with the volume increase in residential mortgage originations. The increase in other expenses reflects an increase in COVID-19 pandemic-related expenses, primarily for compensation to branch personnel and sick time. For the three months ended June 30, 2020, the expenses amounted to $1.4 million and compared to $329,000 in the preceding quarter. We anticipate additional COVID-19 pandemic expenses throughout 2020 for personnel, cleaning and other initiatives to support our employees and customers.

Total noninterest expenses increased $8.8 million, or 25.0%, from the quarter ended June 30, 2019. Compensation and benefits increased $6.9 million, loan expenses increased $1.4 million and other expenses increased $921,000. The increases were partially offset by a $310,000 decrease in deposit insurance. The increase in compensation and benefits and loan expenses primarily reflected the increased volume of residential real estate mortgage originations. The increase in other expenses reflects the COVID-19 pandemic-related expenses noted above. The decrease in deposit insurance expense reflects the reduction in assessment rate due to improved capital ratios as a result of the second step conversion.

Income Tax Provision

The effective tax rate was 25.8% for the quarter ended June 30, 2020, compared to 26.5% for the quarter ended March 31, 2020 and 14.6% for the quarter ended June 30, 2019. The effective tax rate for the quarter ended June 30, 2019 included a 2013 federal tax refund of $603,000 and a 2013 Massachusetts state tax refund of $211,000 recognized in the quarter.

Provision for Loan Losses and Asset Quality

The Company recorded a provision for loan losses of $10.0 million for the quarter ended June 30, 2020, compared to $3.7 million for the quarter ended March 31, 2020 and $1.8 million for the quarter ended June 30, 2019. Allowance for loan losses was $36.1 million, or 1.04%, of total loans at June 30, 2020, compared to $26.4 million, or 0.83%, of total loans at March 31, 2020 and $22.3 million, or 0.73%, of total loans at June 30, 2019. Changes in the provision for loan losses are based on management’s assessment of loan portfolio growth and composition changes, historical charge-off trends, and ongoing evaluation of credit quality and current economic conditions.

The provision for loan losses for the quarter ended June 30, 2020 included adjustments for our quarterly analysis of our historical and peer loss experience rates, commercial real estate loan growth, anda $5.7 million provision directly related to the estimate of inherent losses resulting from the impact of the COVID-19 pandemic.The provision for loan losses for the quarter ended March 31, 2020 included

adjustments for our quarterly analysis of our historical and peer loss experience rates, commercial real estate loan growth, an additional provision to cover a $1.2 million commercial real estate loan charge-off unrelated to the COVID-19 pandemic, anda $1.5 million provision directly related to the initial estimate of inherent losses resulting from the impact of the COVID-19 pandemic. The provision for loan losses for the quarter ended June 30, 2019 primarily reflected commercial real estate loan growth.

In estimating the provision for the COVID-19 pandemic, management considered economic factors, including unemployment rates and the interest rate environment, the volume and dollar amount of requests for payment deferrals, the loan risk profile of each loan type, and if the loans were purchased. The additional provisions provided to each category for the three months ended June 30, 2020 ranged from 14 to 26 basis points and amounted to allocations of $1.6 million to the residential real estate portfolio, $3.2 million to the commercial portfolio and $935,000 to the consumer portfolio.

Management continues to evaluate our loan portfolio, particularly the commercial loan portfolio, in light of the expected decrease in economic activity, the mitigating effects of government stimulus, and loan modification efforts designed to limit the long term impact of the COVID-19 pandemic. Our commercial loan portfolio is diversified across many sectors and is largely secured by commercial real estate loans, which make up 66.9% of the total commercial loan portfolio. Initial assessments of the impact of the COVID-19 pandemic on the commercial loan portfolio have been focused on sectors that have experienced a direct impact. Management has identified six sectors as the most susceptible to immediate increased credit risk: retail, office space, hotels, health and social services, restaurants, and recreation. The total loan portfolio of the commercial sectors identified as at risk is $930.2 million, which represents 47.2% of the commercial loan portfolio. The at-risk sectors include $682.3 million in commercial real estate loans, $191.0 million in commercial and industrial loans, and $56.9 million in commercial construction loans.

As of June 30, 2020, the retail sector was $250.6 million, or 12.7% of total commercial loans and incudes $207.2 million in commercial real estate loans, $33.4 million in commercial and industrial loans and $10.0 million in commercial construction loans. Paycheck Protection Program loans included in the sector totaled $7.1 million, and we have provided deferrals for loans in this sector with outstanding principal balances of $33.4 million. Excluding the Paycheck Protection Program loans, we originated $22.2 million loans during the second quarter that are within the retail sector. The commercial real estate loans includes $114.6 million in loans secured by retail space anchored by a diverse mix of national chains and grocery stores.

In the second quarter, we identified the office space sector as an additional at-risk sector, as the pandemic dampened demand for office space and may further impact it as work-from-home arrangements become more common-place. As of June 30, 2020, the office sector was $220.6 million, or 11.2% of total commercial loans, and included $198.0 million in commercial real estate loans, $15.9 million in commercial and industrial loans and $6.7 million in commercial construction loans. We provided deferrals for loans in the sector with outstanding principal balances of $14.2 million; however, no Paycheck Protection Program loans were originated in this sector. We originated $14.9 million loans during the second quarter that are within the office sector.

As of June 30, 2020, the hotel sector was $191.4 million, or 9.7% of total commercial loans, and included $167.2 million in commercial real estate loans, $2.7 million in commercial and industrial loans and $21.4 million in commercial construction loans. Paycheck Protection Program loans included in the sector totaled $569,000, and we have provided deferrals for loans in this sector with outstanding principal balances of $118.4 million. In the first quarter of 2020, we charged off $1.2 million on a loan acquired from Coastway, secured by a hotel property whose credit deterioration was unrelated to the COVID-19 pandemic. That credit is on nonaccrual and amounted to $3.1 million at June 30, 2020.

The health and social services sector amounted to $178.1 million, or 9.0% of total commercial loans, as of June 30, 2020 and included $84.5 million in commercial real estate loans and $93.7 million in commercial and industrial loans. Paycheck Protection Program loans included in the sector totaled $42.5 million, and we have provided deferrals for loans in this sector with outstanding principal balances of $12.8 million. Excluding the Paycheck Protection Program loans, we originated $50.6 million loans during the second quarter that are within this sector.

As of June 30, 2020, the restaurant sector amounted to $57.1 million, or 2.9% of total commercial loans, including $9.4 million in Paycheck Protection Program loans. We provided deferrals for loans in this sector with outstanding principal balances of $8.7 million. The recreation sector amounted to $32.4 million, or 1.6% of total commercial loans, including $2.8 million in Paycheck Protection Program loans. We provided deferrals for loans in this sector with outstanding principal balances of $13.8 million. Included in the recreation sector is a $9.0 million nonaccrual loan secured by an ice-skating rink for which credit deterioration began prior to the COVID-19 pandemic.

We provided access to the Paycheck Protection Program to both our existing customers and new customers, to ensure small businesses in our communities have access to this important lifeline for their businesses. As of June 30, 2020, we originated 1,071 Paycheck Protection Program loans totaling $152.6 million. As of June 30, 2020, there was $4.6 million in deferred processing fee income that will be recognized over the life of the loans. The average authorized loan size is $150,000 and the aggregate number of jobs positively impacted is approximately 15,000.  

We are also working with commercial loan customers that may need payment deferrals or other accommodations to keep their loans out of default through the COVID-19 pandemic. As of June 30, 2020, we have 157 payment deferrals on commercial loans with a total principal balance of $262.4 million, or 13.3%, of total commercial loans, of which $201.3 million are loans included in an at-risk sector. As of June 30, 2020, there were four borrowers requesting an additional three-month deferral. Two borrowers with three loans are included in the hotel sector with an outstanding principal balance of $15.7 million, one borrower with two loans is included in the recreation sector with an outstanding principal balance of $7.0 million and one borrower with one loan is included in the retail sector with an outstanding principal balance of $542,000. The majority of commercial loan deferrals are scheduled to end in the third quarter unless additional requests are received and granted.

The residential loan and consumer loan portfolios have not experienced significant credit quality deterioration as of June 30, 2020; however, we anticipate that the COVID-19 pandemic will result in increases in delinquencies, charge-offs and loan modifications in these portfolios through the remainder of the year. As of June 30, 2020, we had 172 payment deferrals on residential mortgage loans with a total principal balance of $52.7 million, or 4.6% of total residential loans, and 664 payment deferrals on consumer loans with a total principal balance of $15.9 million, or 4.5%, of total consumer loans. As of June 30, 2020, we had processed a second three-month extension for 7 residential real estate loans with principal balances of $2.7 million and received extension requests for an additional 12 loans with a principal balance of $4.7 million. Requests for additional extensions on consumer loans were not significant as of June 30, 2020.

Net charge-offs totaled $286,000 for the quarter ended June 30, 2020, or 0.03% of average loans outstanding on an annualized basis, compared to $1.4 million, or 0.18% of average loans outstanding on an annualized basis, for the quarter ended March 31, 2020 and $771,000, or 0.10% of average loans outstanding on an annualized basis, for the quarter ended June 30, 2019.

Total nonperforming assets were $38.6 million at June 30, 2020 compared to $32.1 million at March 31, 2020 and $17.2 million at June 30, 2019. Nonperforming assets as a percentage of total assets were 0.86% at June 30, 2020, 0.78% at March 31, 2020 and 0.46% at June 30, 2019. The increase from the preceding quarter is primarily due to 3 loans to one commercial loan borrower that amounted to $5.8 million. The increase in nonperforming assets from the prior year quarter was primarily in the commercial loan portfolio.

Balance Sheet

Total assets increased $363.7 million, or 8.9%, to $4.46 billion at June 30, 2020 from $4.10 billion at March 31, 2020. The increase primarily reflects an increase of $280.4 million in net loans and $40.6 million in loans held for sale.

Net loans increased $280.4 million, or 8.9%, to $3.44 billion at June 30, 2020 from $3.16 billion at March 31, 2020. The net increase in loans for the three months ended June 30, 2020 was primarily due to increases in commercial real estate loans of $105.5 million, commercial and industrial loans of $138.6 million, $33.6 million of commercial construction loans and $49.2 million in residential real estate loans, partially offset by a decrease in consumer loans of $36.7 million. The increase in commercial and industrial loans primarily reflects loans originated as part of the Paycheck Protection Program. Loans held for sale increased $40.6 million, or 34.3%, to $158.9 million at June 30, 2020 from $118.3 million at March 31, 2020.

Total deposits increased $287.5 million, or 9.5%, to $3.31 billion at June 30, 2020 from $3.02 billion at March 31, 2020. Compared to the prior quarter, non-certificate accounts increased $381.8 million and term CDs decreased $94.4 million. FHLB borrowings increased $56.0 million, or 19.6%, to $341.1 million at June 30, 2020 from $285.1 million at March 31, 2020.

Total stockholders’ equity was $684.4 million at June 30, 2020 compared to $675.1 million at March 31, 2020 and $371.1 million at June 30, 2019. The tangible common equity to tangible assets ratio was 13.88% at June 30, 2020, 14.90% at March 31, 2020 and 8.04% at June 30, 2019. The increase in stockholders’ equity and ratios from June 30, 2019 to June 30, 2020 primarily reflects the results of the Company’s second step offering, net of the additional ESOP funding. At June 30, 2020, the Company and the Bank had strong capital positions and exceeded all regulatory capital requirements.

About HarborOne Bancorp, Inc.

HarborOne Bancorp, Inc. is the holding company for HarborOne Bank, a Massachusetts-chartered savings bank. HarborOne Bank serves the financial needs of consumers, businesses, and municipalities throughout Eastern Massachusetts and Rhode Island through a network of 25 full-service branches located in Massachusetts and Rhode Island, one limited service branch and a commercial lending office in each of Boston, Massachusetts and Providence, Rhode Island. The Bank also provides a range of educational services through “HarborOne U,” with classes on small business, financial literacy and personal enrichment at two campuses located adjacent to our Brockton and Mansfield locations. HarborOne Mortgage, LLC, a subsidiary of HarborOne Bank, is a full-service mortgage lender with more than 30 offices in Massachusetts, Rhode Island, New Hampshire, Maine, New Jersey and Florida and is licensed to lend in four additional states.

Forward Looking Statements

Certain statements herein constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act and are intended to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by words such as “believes,” “will,” “would,” “expects,” “project,”

“may,” “could,” “developments,” “strategic,” “launching,” “opportunities,” “anticipates,” “estimates,” “intends,” “plans,” “targets” and similar expressions. These statements are based upon the current beliefs and expectations of the Company’s management and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements as a result of numerous factors. Factors that could cause such differences to exist include, but are not limited to, the negative impacts and disruptions of the COVID-19 pandemic and the measures taken to contain its spread on our employees, customers, business operations, credit quality, financial position, liquidity and results of operations; the length and extent of economic contraction as a result of the COVID-19 pandemic; the effects of continued deterioration in employment levels, general business and economic conditions on a national basis and in the local markets in which the Company operates, including changes that adversely affect borrowers’ ability to service and repay the Company’s loans; changes in customer behavior; turbulence in the capital and debt markets and the impact of such conditions on the Company’s business activities; changes in interest rates; increases in loan default and charge-off rates; decreases in the value of securities in the Company’s investment portfolio; fluctuations in real estate values; the possibility that future credit losses may be higher than currently expected due to changes in economic assumptions, customer behavior or adverse economic developments; the adequacy of loan loss reserves; decreases in deposit levels necessitating increased borrowing to fund loans and investments; competitive pressures from other financial institutions; acquisitions may not produce results at levels or within time frames originally anticipated; operational risks including, but not limited to, cybersecurity incidents, fraud, natural disasters, and future pandemics; changes in regulation; reputational risk relating to the Company’s participation in the Paycheck Protection Program and other pandemic-related legislative and regulatory initiatives and programs; changes in accounting standards and practices; the risk that goodwill and intangibles recorded in the Company’s financial statements will become impaired; demand for loans in the Company’s market area; the Company’s ability to attract and maintain deposits; risks related to the implementation of acquisitions, dispositions, and restructurings; the risk that the Company may not be successful in the implementation of its business strategy; changes in assumptions used in making such forward-looking statements and the risk factors described in the Annual Report on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission (the “SEC”), which are available at the SEC’s website, www.sec.gov. Should one or more of these risks materialize or should underlying beliefs or assumptions prove incorrect, HarborOne Bancorp, Inc.’s actual results could differ materially from those discussed. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. The Company disclaims any obligation to publicly update or revise any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes, except as required by law.

Use of Non-GAAP Measures

In addition to results presented in accordance with generally accepted accounting principles (“GAAP”), this press release contains certain non-GAAP financial measures. The Company’s management believes that the supplemental non-GAAP information, which consists of the tax equivalent basis for yields, the efficiency ratio, tangible common equity to tangible assets ratio and tangible book value per share is utilized by regulators and market analysts to evaluate a company’s financial condition and therefore, such information is useful to investors. These disclosures should not be viewed as a substitute for financial results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names.

HarborOne Bancorp, Inc.

Consolidated Balance Sheet Trend

(Unaudited)

	June 30,		March 31,		December 31,		September 30,		June 30,
(in thousands)	2020		2020		2019		2019		2019
Assets
Cash and due from banks	$	30,355	$	35,264	$	24,464	$	27,758	$	27,205
Short-term investments		218,617		200,156		187,152		210,873		51,502
Total cash and cash equivalents		248,972		235,420		211,616		238,631		78,707
Securities available for sale, at fair value		262,710		249,789		239,473		204,133		202,457
Securities held to maturity, at amortized cost		—		—		26,372		27,099		34,752
Federal Home Loan Bank stock, at cost		15,786		13,530		17,121		13,466		14,876
Asset held for sale		8,536		8,536		8,536		—		—
Loans held for sale, at fair value		158,898		118,316		110,552		102,121		84,651
Loans:
Commercial real estate		1,318,051		1,212,534		1,169,923		1,085,743		1,025,720
Commercial construction		194,549		160,993		153,907		160,549		157,130
Commercial and industrial		456,192		317,559		306,282		298,652		301,056
Total commercial loans		1,968,792		1,691,086		1,630,112		1,544,944		1,483,906
Residential real estate		1,150,700		1,101,540		1,105,565		1,118,439		1,125,381
Consumer		354,530		391,244		435,881		448,881		456,654
Loans		3,474,022		3,183,870		3,171,558		3,112,264		3,065,941
Less: Allowance for loan losses		(36,107)		(26,389)		(24,060)		(23,044)		(22,261)
Net loans		3,437,915		3,157,481		3,147,498		3,089,220		3,043,680
Mortgage servicing rights, at fair value		16,127		13,207		17,150		16,067		18,156
Goodwill		69,802		69,802		69,802		69,635		69,635
Other intangible assets		5,141		5,588		6,035		6,482		7,100
Other assets		241,019		229,537		204,766		182,166		183,410
Total assets	$	4,464,906	$	4,101,206	$	4,058,921	$	3,949,020	$	3,737,424
Liabilities and Stockholders' Equity
Deposits:
Demand deposit accounts	$	642,971	$	439,793	$	406,403	$	446,433	$	447,448
NOW accounts		199,400		174,971		165,877		143,547		147,058
Regular savings and club accounts		876,753		744,564		626,685		585,327		544,401
Money market deposit accounts		831,653		809,622		856,830		875,804		885,775
Term certificate accounts		757,897		852,274		887,078		873,397		944,923
Total deposits		3,308,674		3,021,224		2,942,873		2,924,508		2,969,605
Short-term borrowed funds		200,000		104,000		183,000		60,000		98,000
Long-term borrowed funds		141,114		181,123		171,132		211,140		211,149
Subordinated debt		33,970		33,938		33,907		33,875		33,843
Other liabilities and accrued expenses		96,693		85,782		62,215		59,943		53,709
Total liabilities		3,780,451		3,426,067		3,393,127		3,289,466		3,366,306
Common stock		584		584		584		584		327
Additional paid-in capital		462,881		461,616		460,232		458,599		154,730
Unearned compensation - ESOP		(32,218)		(32,678)		(33,137)		(33,838)		(9,793)
Retained earnings		251,032		242,080		237,356		233,049		225,936
Treasury stock		(721)		(721)		(721)		(721)		(1,548)
Accumulated other comprehensive income		2,897		4,258		1,480		1,881		1,466
Total stockholders' equity		684,455		675,139		665,794		659,554		371,118
Total liabilities and stockholders' equity	$	4,464,906	$	4,101,206	$	4,058,921	$	3,949,020	$	3,737,424

HarborOne Bancorp, Inc.

Consolidated Statements of Net Income - Trend

(Unaudited)

	Quarters Ended
	June 30,		March 31,		December 31,		September 30,		June 30,
(in thousands, except share data)	2020		2020		2019		2019		2019
Interest and dividend income:
Interest and fees on loans	$	33,970	$	34,025	$	36,195	$	36,230	$	35,438
Interest on loans held for sale		988		577		1,120		747		542
Interest on securities		1,424		1,808		1,580		1,542		1,850
Other interest and dividend income		239		759		828		1,211		448
Total interest and dividend income		36,621		37,169		39,723		39,730		38,278
Interest expense:
Interest on deposits		5,805		8,693		9,480		9,972		9,362
Interest on FHLB borrowings		845		1,253		1,385		1,249		1,679
Interest on subordinated debentures		524		523		524		524		524
Total interest expense		7,174		10,469		11,389		11,745		11,565
Net interest and dividend income		29,447		26,700		28,334		27,985		26,713
Provision for loan losses		10,004		3,749		1,251		889		1,750
Net interest and dividend income, after provision for loan losses		19,443		22,951		27,083		27,096		24,963
Noninterest income:
Mortgage banking income:
Gain on sale of mortgage loans		30,862		12,278		9,471		11,015		8,429
Changes in mortgage servicing rights fair value		(1,111)		(4,387)		625		(2,474)		(2,241)
Other		4,110		2,571		2,894		2,964		2,467
Total mortgage banking income		33,861		10,462		12,990		11,505		8,655
Deposit account fees		2,969		3,931		4,274		4,186		4,056
Income on retirement plan annuities		103		101		102		104		100
Loss on asset held for sale		—		—		(482)		—		—
Gain on sale and call of securities, net		8		2,525		—		77		1,267
Bank-owned life insurance income		554		551		343		256		253
Other income		1,143		1,296		912		1,145		1,387
Total noninterest income		38,638		18,866		18,139		17,273		15,718
Noninterest expenses:
Compensation and benefits		27,469		21,185		23,719		23,238		20,585
Occupancy and equipment		4,152		4,563		4,366		4,171		4,411
Data processing		2,277		2,180		2,251		2,196		2,199
Loan expense		2,763		1,481		1,893		1,704		1,334
Marketing		1,057		876		771		799		1,177
Professional fees		1,518		1,228		2,470		889		1,384
Deposit insurance		279		271		5		(225)		589
Other expenses		4,323		3,604		3,260		3,431		3,402
Total noninterest expenses		43,838		35,388		38,735		36,203		35,081
Income before income taxes		14,243		6,429		6,487		8,166		5,600
Income tax provision		3,668		1,705		2,180		1,053		819
Net income	$	10,575	$	4,724	$	4,307	$	7,113	$	4,781
Earnings per common share (1):
Basic	$	0.19	$	0.09	$	0.08	$	0.13	$	0.08
Diluted	$	0.19	$	0.09	$	0.08	$	0.13	$	0.08
Weighted average shares outstanding (1):
Basic		54,450,146		54,392,465		54,208,629		55,638,734		56,704,297
Diluted		54,450,146		54,392,465		54,209,182		55,638,734		56,704,297
(1) Share amounts related to periods prior to the date of the completion of the second step offering ("stock offering") (August 14, 2019) have been restated to give retroactive recognition to the exchange ratio applied in the stock offering (1.795431-to-one)

HarborOne Bancorp, Inc.

Consolidated Statements of Net Income

(Unaudited)

	For the Six Months Ended June 30,
(dollars in thousands, except share data)	2020		2019		$ Change		% Change
Interest and dividend income:
Interest and fees on loans	$	67,995	$	69,803	$	(1,808)	(2.6)	%
Interest on loans held for sale		1,565		900		665	73.9
Interest on securities		3,232		3,697		(465)	(12.6)
Other interest and dividend income		998		931		67	7.2
Total interest and dividend income		73,790		75,331		(1,541)	(2.0)
Interest expense:
Interest on deposits		14,498		17,605		(3,107)	(17.6)
Interest on FHLB borrowings		2,098		3,954		(1,856)	(46.9)
Interest on subordinated debentures		1,047		1,029		18	1.7
Total interest expense		17,643		22,588		(4,945)	(21.9)
Net interest and dividend income		56,147		52,743		3,404	6.5
Provision for loan losses		13,753		2,607		11,146	427.5
Net interest and dividend income, after provision for loan losses		42,394		50,136		(7,742)	(15.4)
Noninterest income:
Mortgage banking income:
Gain on sale of mortgage loans		43,140		13,072		30,068	230.0
Changes in mortgage servicing rights fair value		(5,498)		(4,392)		(1,106)	(25.2)
Other		6,681		4,477		2,204	49.2
Total mortgage banking income		44,323		13,157		31,166	236.9
Deposit account fees		6,900		7,834		(934)	(11.9)
Income on retirement plan annuities		204		196		8	4.1
Gain on sale and call of securities, net		2,533		1,267		1,266	100.0
Bank-owned life insurance income		1,105		506		599	118.4
Other income		2,439		2,600		(161)	(6.2)
Total noninterest income		57,504		25,560		31,944	125.0
Noninterest expenses:
Compensation and benefits		48,654		39,830		8,824	22.2
Occupancy and equipment		8,715		8,859		(144)	(1.6)
Data processing		4,457		4,245		212	5.0
Loan expense		4,244		2,605		1,639	62.9
Marketing		1,933		2,135		(202)	(9.5)
Professional fees		2,746		2,330		416	17.9
Deposit insurance		550		1,255		(705)	(56.2)
Other expenses		7,927		6,414		1,513	23.6
Total noninterest expenses		79,226		67,673		11,553	17.1
Income before income taxes		20,672		8,023		12,649	157.7
Income tax provision		5,373		1,175		4,198	357.3
Net income	$	15,299	$	6,848	$	8,451	123.4	%
Earnings per common share (1):
Basic	$	0.28	$	0.12
Diluted	$	0.28	$	0.12
Weighted average shares outstanding (1):
Basic		54,421,306		56,685,741
Diluted		54,421,306		56,685,741
(1) Share amounts related to periods prior to the date of the completion of the stock offering (August 14, 2019) have been restated to give retroactive recognition to the exchange ratio applied in the stock offering (1.795431-to-one)

HarborOne Bancorp, Inc.

Average Balances / Yields

(Unaudited)

	Quarters Ended
	June 30, 2020							March 31, 2020							June 30, 2019
	Average							Average							Average
	Outstanding					Yield/		Outstanding					Yield/		Outstanding					Yield/
	Balance			Interest		Cost (6)		Balance			Interest		Cost (6)		Balance			Interest		Cost (6)
	(dollars in thousands)
Interest-earning assets:
Investment securities (1)	$	240,025		$	1,430	2.40	%	$	275,632		$	1,822	2.66	%	$	259,151		$	1,880	2.91	%
Other interest-earning assets		222,840			239	0.43			186,619			759	1.64			26,758			448	6.71
Loans held for sale		119,047			988	3.34			61,548			577	3.77			48,158			542	4.52
Loans
Commercial loans (2)		1,872,349			18,196	3.91			1,647,667			18,123	4.42			1,445,652			18,580	5.16
Residential real estate loans (2)		1,123,896			11,811	4.23			1,100,177			11,544	4.22			1,118,761			12,265	4.40
Consumer loans (2)		372,929			3,963	4.27			415,317			4,358	4.22			459,774			4,593	4.01
Total loans		3,369,174			33,970	4.06			3,163,161			34,025	4.33			3,024,187			35,438	4.70
Total interest-earning assets		3,951,086			36,627	3.73			3,686,960			37,183	4.06			3,358,254			38,308	4.58
Noninterest-earning assets		334,452							314,193							260,864
Total assets	$	4,285,538						$	4,001,153						$	3,619,118
Interest-bearing liabilities:
Savings accounts	$	842,560			834	0.40		$	686,031			1,298	0.76		$	528,360			564	0.43
NOW accounts		187,560			33	0.07			158,702			31	0.08			140,115			25	0.07
Money market accounts		826,939			1,207	0.59			835,154			2,583	1.24			872,653			3,384	1.56
Certificates of deposit		730,756			3,472	1.91			794,883			4,357	2.20			788,701			4,627	2.35
Brokered deposits		66,701			259	1.56			92,189			424	1.85			124,122			762	2.46
Total interest-bearing deposits		2,654,516			5,805	0.88			2,566,959			8,693	1.36			2,453,951			9,362	1.53
FHLB advances		258,679			845	1.31			241,302			1,253	2.09			291,835			1,679	2.31
Subordinated debentures		33,951			524	6.21			33,919			523	6.20			33,826			524	6.21
Total borrowings		292,630			1,369	1.88			275,221			1,776	2.60			325,661			2,203	2.71
Total interest-bearing liabilities		2,947,146			7,174	0.98			2,842,180			10,469	1.48			2,779,612			11,565	1.67
Noninterest-bearing liabilities:
Noninterest-bearing deposits		585,715							419,620							423,462
Other noninterest-bearing liabilities		72,808							67,714							49,163
Total liabilities		3,605,669							3,329,514							3,252,237
Total equity		679,869							671,639							366,881
Total liabilities and equity	$	4,285,538						$	4,001,153						$	3,619,118
Tax equivalent net interest income					29,453							26,714							26,743
Tax equivalent interest rate spread (3)						2.75	%						2.58	%						2.91	%
Less: tax equivalent adjustment					6							14							30
Net interest income as reported				$	29,447						$	26,700						$	26,713
Net interest-earning assets (4)	$	1,003,940						$	844,780						$	578,642
Net interest margin (5)						3.00	%						2.91	%						3.19	%
Tax equivalent effect						—							—							—
Net interest margin on a fully tax equivalent basis						3.00	%						2.91	%						3.19	%
Average interest-earning assets to average interest-bearing liabilities		134.06	%						129.72	%						120.82	%
Supplemental information:
Total deposits, including demand deposits	$	3,240,231		$	5,805			$	2,986,579		$	8,693			$	2,877,413		$	9,362
Cost of total deposits						0.72	%						1.17	%						1.31	%
Total funding liabilities, including demand deposits	$	3,532,861		$	7,174			$	3,261,800		$	10,469			$	3,203,074		$	11,565
Cost of total funding liabilities						0.82	%						1.29	%						1.45	%
(1) Includes securities available for sale and securities held to maturity. Interest income from tax exempt securities is computed on a taxable equivalent basis using a tax rate of 21% for the quarters presented. The yield on investments before tax equivalent adjustments for the quarters presented were 2.40%, 2.64%, and 2.86%, respectively.
(2) Includes nonaccruing loan balances and interest received on such loans.
(3) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(4) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
(5) Net interest margin represents net interest income divided by average total interest-earning assets.
(6) Annualized.

HarborOne Bancorp, Inc.

Average Balances / Yields

(Unaudited)

	Years Ended
	June 30, 2020							June 30, 2019
	Average							Average
	Outstanding					Yield/		Outstanding					Yield/
	Balance			Interest		Cost		Balance			Interest		Cost
	(dollars in thousands)
Interest-earning assets:
Investment securities (1)	$	257,828		$	3,252	2.54	%	$	259,678		$	3,766	2.92	%
Other interest-earning assets		204,730			998	0.98			32,334			931	5.81
Loans held for sale		90,297			1,565	3.48			38,797			900	4.68
Loans
Commercial loans (2)		1,760,008			36,319	4.15			1,414,415			36,058	5.14
Residential real estate loans (2)		1,112,036			23,355	4.22			1,118,901			24,472	4.41
Consumer loans (2)		394,123			8,321	4.25			472,683			9,273	3.96
Total loans		3,266,167			67,995	4.19			3,005,999			69,803	4.68
Total interest-earning assets		3,819,022			73,810	3.89			3,336,808			75,400	4.56
Noninterest-earning assets		324,323							256,895
Total assets	$	4,143,345						$	3,593,703
Interest-bearing liabilities:
Savings accounts	$	764,295			2,132	0.56		$	506,782			928	0.37
NOW accounts		173,130			64	0.07			138,543			50	0.07
Money market accounts		831,048			3,790	0.92			833,781			6,144	1.49
Certificates of deposit		762,819			7,829	2.06			800,780			9,139	2.30
Brokered deposits		79,445			683	1.73			111,800			1,344	2.42
Total interest-bearing deposits		2,610,737			14,498	1.12			2,391,686			17,605	1.48
FHLB advances		249,990			2,098	1.69			341,880			3,954	2.33
Subordinated debentures		33,935			1,047	6.20			33,824			1,029	6.13
Total borrowings		283,925			3,145	2.23			375,704			4,983	2.67
Total interest-bearing liabilities		2,894,662			17,643	1.23			2,767,390			22,588	1.65
Noninterest-bearing liabilities:
Noninterest-bearing deposits		502,668							412,081
Other noninterest-bearing liabilities		70,261							50,682
Total liabilities		3,467,591							3,230,153
Total equity		675,754							363,550
Total liabilities and equity	$	4,143,345						$	3,593,703
Tax equivalent net interest income					56,167							52,812
Tax equivalent interest rate spread (3)						2.66	%						2.91	%
Less: tax equivalent adjustment					20							69
Net interest income as reported				$	56,147						$	52,743
Net interest-earning assets (4)	$	924,360						$	569,418
Net interest margin (5)						2.96	%						3.19	%
Tax equivalent effect						—							—
Net interest margin on a fully tax equivalent basis						2.96	%						3.19	%
Average interest-earning assets to average interest-bearing liabilities		131.93	%						120.58	%
Supplemental information:
Total deposits, including demand deposits	$	3,113,405		$	14,498			$	2,803,767		$	17,605
Cost of total deposits						0.94	%						1.27	%
Total funding liabilities, including demand deposits	$	3,397,330		$	17,643			$	3,179,471		$	22,588
Cost of total funding liabilities						1.04	%						1.43	%
(1) Includes securities available for sale and securities held to maturity. Interest income from tax exempt securities is computed on a tax equivalent basis using a tax rate of 21%. The yield on investments before tax equivalent adjustments was 2.52% and 2.87% for the six months ended June 30, 2020 and 2019, respectively.
(2) Includes nonaccruing loan balances and interest received on such loans.
(3) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(4) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
(5) Net interest margin represents net interest income divided by average total interest-earning assets.

HarborOne Bancorp, Inc.

Average Balances and Yield Trend

(Unaudited)

	Average Balances - Trend - Quarters Ended
	June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019
	(in thousands)
Interest-earning assets:
Investment securities (1)	$	240,025		$	275,632		$	236,828		$	224,379		$	259,151
Other interest-earning assets		222,840			186,619			159,211			185,063			26,758
Loans held for sale		119,047			61,548			115,699			74,327			48,158
Loans
Commercial loans (2)		1,872,349			1,647,667			1,591,188			1,511,487			1,445,652
Residential real estate loans (2)		1,123,896			1,100,177			1,105,025			1,119,742			1,118,761
Consumer loans (2)		372,929			415,317			442,689			454,837			459,774
Total loans		3,369,174			3,163,161			3,138,902			3,086,066			3,024,187
Total interest-earning assets		3,951,086			3,686,960			3,650,640			3,569,835			3,358,254
Noninterest-earning assets		334,452			314,193			288,558			278,976			260,864
Total assets	$	4,285,538		$	4,001,153		$	3,939,198		$	3,848,811		$	3,619,118
Interest-bearing liabilities:
Savings accounts	$	842,560		$	686,031		$	616,008		$	564,040		$	528,360
NOW accounts		187,560			158,702			142,505			139,773			140,115
Money market accounts		826,939			835,154			867,066			879,694			872,653
Certificates of deposit		730,756			794,883			811,199			831,262			788,701
Brokered deposits		66,701			92,189			69,035			98,278			124,122
Total interest-bearing deposits		2,654,516			2,566,959			2,505,813			2,513,047			2,453,951
FHLB advances		258,679			241,302			249,102			213,578			291,835
Subordinated debentures		33,951			33,919			33,887			33,858			33,826
Total borrowings		292,630			275,221			282,989			247,436			325,661
Total interest-bearing liabilities		2,947,146			2,842,180			2,788,802			2,760,483			2,779,612
Noninterest-bearing liabilities:
Noninterest-bearing deposits		585,715			419,620			433,478			515,612			423,462
Other noninterest-bearing liabilities		72,808			67,714			54,022			52,357			49,163
Total liabilities		3,605,669			3,329,514			3,276,302			3,328,452			3,252,237
Total equity		679,869			671,639			662,896			520,359			366,881
Total liabilities and equity	$	4,285,538		$	4,001,153		$	3,939,198		$	3,848,811		$	3,619,118
	Annualized Yield Trend - Quarters Ended
	June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019
Interest-earning assets:
Investment securities (1)		2.40	%		2.66	%		2.67	%		2.76	%		2.91	%
Other interest-earning assets		0.43	%		1.64	%		2.06	%		2.59	%		6.71	%
Loans held for sale		3.34	%		3.77	%		3.84	%		3.99	%		4.52	%
Commercial loans (2)		3.91	%		4.42	%		4.79	%		4.93	%		5.16	%
Residential real estate loans (2)		4.23	%		4.22	%		4.41	%		4.50	%		4.40	%
Consumer loans (2)		4.27	%		4.22	%		4.20	%		4.13	%		4.01	%
Total loans		4.06	%		4.33	%		4.58	%		4.66	%		4.70	%
Total interest-earning assets		3.73	%		4.06	%		4.32	%		4.42	%		4.58	%
Interest-bearing liabilities:
Savings accounts		0.40	%		0.76	%		0.77	%		0.63	%		0.43	%
NOW accounts		0.07	%		0.08	%		0.08	%		0.07	%		0.07	%
Money market accounts		0.59	%		1.24	%		1.42	%		1.54	%		1.56	%
Certificates of deposit		1.91	%		2.20	%		2.31	%		2.39	%		2.35	%
Brokered deposits		1.56	%		1.85	%		2.39	%		2.47	%		2.46	%
Total interest-bearing deposits		0.88	%		1.36	%		1.50	%		1.57	%		1.53	%
FHLB advances		1.31	%		2.09	%		2.21	%		2.32	%		2.31	%
Subordinated debentures		6.21	%		6.20	%		6.13	%		6.14	%		6.21	%
Total borrowings		1.88	%		2.60	%		2.68	%		2.84	%		2.71	%
Total interest-bearing liabilities		0.98	%		1.48	%		1.62	%		1.69	%		1.67	%
(1) Includes securities available for sale and securities held to maturity.
(2) Includes nonaccruing loan balances and interest received on such loans.

HarborOne Bancorp, Inc.

Selected Financial Highlights

(Unaudited)

	Quarters Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
Performance Ratios (annualized):	2020			2020			2019			2019			2019
(dollars in thousands)
Return on average assets (ROAA)		0.99	%		0.47	%		0.44	%		0.74	%		0.53	%
Return on average equity (ROAE)		6.22	%		2.81	%		2.60	%		5.47	%		5.21	%
Total noninterest expense	$	43,838		$	35,388		$	38,735		$	36,203		$	35,081
Less: Amortization of other intangible assets		447			447			448			617			639
Total adjusted noninterest expense	$	43,391		$	34,941		$	38,287		$	35,586		$	34,442
Net interest and dividend income	$	29,447		$	26,700		$	28,334		$	27,985		$	26,713
Total noninterest income		38,638			18,866			18,139			17,273			15,718
Total revenue	$	68,085		$	45,566		$	46,473		$	45,258		$	42,431
Efficiency ratio (1)		63.73	%		76.68	%		82.39	%		78.63	%		81.17	%
(1) This non-GAAP measure represents adjusted noninterest expense divided by total revenue

	At or for the Quarters Ended
	June 30,			March 31,			December 31,			September 30,			June 30,
Asset Quality	2020			2020			2019			2019			2019
(dollars in thousands)
Total nonperforming assets	$	38,599		$	32,134		$	31,040		$	27,947		$	17,165
Nonperforming assets to total assets		0.86	%		0.78	%		0.76	%		0.71	%		0.46	%
Allowance for loan losses to total loans		1.04	%		0.83	%		0.76	%		0.74	%		0.73	%
Net charge offs	$	286		$	1,420		$	235		$	106		$	771
Annualized net charge offs/average loans		0.03	%		0.18	%		0.03	%		0.01	%		0.10	%
Allowance for loan losses to nonperforming loans		94.86	%		83.52	%		79.35	%		83.58	%		133.61	%

HarborOne Bancorp, Inc.

Selected Financial Highlights

(Unaudited)

	June 30,			March 31,			December 31,			September 30,			June 30,
Capital and Share Related	2020			2020			2019			2019			2019
(dollars in thousands, except share data)
Common stock outstanding (1)		58,418,021			58,418,021			58,418,021			58,429,584			58,483,027
Book value per share (1)	$	11.72		$	11.56		$	11.40		$	11.29		$	6.35
Tangible common equity:
Total stockholders' equity	$	684,455		$	675,139		$	665,794		$	659,554		$	371,118
Less: Goodwill		69,802			69,802			69,802			69,635			69,635
Less: Other intangible assets (2)		5,141			5,588			6,035			6,482			7,100
Tangible common equity	$	609,512		$	599,749		$	589,957		$	583,437		$	294,383
Tangible book value per share (1)(3)	$	10.43		$	10.27		$	10.10		$	9.99		$	5.03
Tangible assets:
Total assets	$	4,464,906		$	4,101,206		$	4,058,921		$	3,949,020		$	3,737,424
Less: Goodwill		69,802			69,802			69,802			69,635			69,635
Less: Other intangible assets (2)		5,141			5,588			6,035			6,482			7,100
Tangible assets	$	4,389,963		$	4,025,816		$	3,983,084		$	3,872,903		$	3,660,689
Tangible common equity / tangible assets (4)		13.88	%		14.90	%		14.81	%		15.06	%		8.04	%
(1) Share amounts related to periods prior to the date of the completion of the stock offering (August 14, 2019) have been restated to give retroactive recognition to the exchange ratio applied in the stock offering (1.795431-to-one)
(2) Other intangible assets includes core deposit intangible and noncompete intangible.
(3) This non-GAAP ratio is total stockholders' equity less goodwill and intangible assets divided by common stock outstanding.
(4) This non-GAAP ratio is total stockholders' equity less goodwill and intangible assets to total assets less goodwill and intangible assets.

HarborOne Bancorp, Inc.

Segments Statements of Net Income

(Unaudited)

	HarborOne Mortgage						HarborOne Bank
	For the Quarter Ended						For the Quarter Ended
	June 30,		March 31,		June 30,		June 30,		March 31,		June 30,
	2020		2020		2019		2020		2020		2019
	(in thousands)
Net interest and dividend income	$	739	$	281	$	210	$	29,139	$	26,510	$	27,022
Provision for loan losses		—		—		—		10,004		3,749		1,750
Net interest and dividend income, after provision for loan losses		739		281		210		19,135		22,761		25,272
Mortgage banking income:
Gain on sale of mortgage loans		30,862		12,278		8,428		—		—		1
Intersegment gain (loss)		1,399		400		314		(1,399)		(400)		(314)
Changes in mortgage servicing rights fair value		(621)		(3,217)		(1,803)		(490)		(1,170)		(438)
Other		3,764		2,220		2,090		346		351		377
Total mortgage banking income (loss)		35,404		11,681		9,029		(1,543)		(1,219)		(374)
Other noninterest income (loss)		(11)		(122)		(4)		4,788		8,526		7,067
Total noninterest income		35,393		11,559		9,025		3,245		7,307		6,693
Noninterest expense		18,273		10,806		8,917		25,218		24,288		25,257
Income (loss) before income taxes		17,859		1,034		318		(2,838)		5,780		6,708
Provision for income taxes		3,878		239		418		27		1,601		802
Net income (loss)	$	13,981	$	795	$	(100)	$	(2,865)	$	4,179	$	5,906

	HarborOne Mortgage				HarborOne Bank
	For the Six Months Ended				For the Six Months Ended
	June 30,		June 30,		June 30,		June 30,
	2020		2019		2020		2019
	(in thousands)
Net interest and dividend income	$	1,020	$	319	$	55,649	$	53,441
Provision for loan losses		—		—		13,753		2,607
Net interest and dividend income, after provision for loan losses		1,020		319		41,896		50,834
Mortgage banking income:
Gain on sale of mortgage loans		43,140		13,070		—		1
Intersegment gain (loss)		1,799		473		(1,799)		(473)
Changes in mortgage servicing rights fair value		(3,838)		(3,384)		(1,660)		(1,008)
Other		5,984		3,720		697		758
Total mortgage banking income (loss)		47,085		13,879		(2,762)		(722)
Other noninterest income (loss)		(133)		(16)		13,314		12,419
Total noninterest income		46,952		13,863		10,552		11,697
Noninterest expense		29,079		16,269		49,506		50,122
Income (loss) before income taxes		18,893		(2,087)		2,942		12,409
Provision (benefit) for income taxes		4,117		(427)		1,628		2,248
Net income (loss)	$	14,776	$	(1,660)	$	1,314	$	10,161

HarborOne Bancorp, Inc.

COVID Loans at Risk

(Unaudited)

	At Risk Sectors
																							Percent
										Health									Total				at risk
										and Social									at risk		Total		sector
	Retail			Office			Hotel			Services			Restaurants			Recreation			sectors		loans		to total
	(dollars in thousands)
Commercial real estate	$	207,183		$	198,021		$	167,178		$	84,465		$	10,253		$	15,206		$	682,306	$	1,318,051	51.8	%
Commercial and industrial		33,442			15,878			2,735			93,518			37,357			7,910			190,840		456,192	41.9
Commercial construction		10,010			6,749			21,444			—			9,503			9,044			56,750		194,549	29.2
Total	$	250,635		$	220,648		$	191,357		$	177,983		$	57,113		$	32,160		$	929,896	$	1,968,792	47.2	%
Percent to total commercial loans		12.7	%		11.2	%		9.7	%		9.0	%		2.9	%		1.6	%
Outstanding principal balance of:
Commercial deferrals	$	33,421		$	14,194		$	118,389		$	12,769		$	8,695		$	13,792		$	201,260	$	262,419	76.7	%
PPP loans	$	7,118		$	—		$	569		$	42,509		$	9,353		$	2,772		$	62,321	$	152,634	40.8	%
Nonaccrual loans	$	545		$	155		$	3,325		$	448		$	17		$	9,200		$	13,690	$	38,064	36.0	%
New commercial originations for the three months ended June 30, 2020, excluding PPP loans	$	22,179		$	14,914		$	—		$	50,624		$	—		$	—		$	87,717

			Total
(dollars in thousands)	Loan Deferrals		Outstanding		% to Total
	#	$
Commercial real estate	69	206,777	$	1,318,051		15.7	%
Commercial and industrial	86	40,630		456,213		8.9
Commercial construction	2	15,011		194,527		7.7
1-4 Family	147	50,878		977,336		5.2
Home Equity	25	1,846		152,709		1.2
Residential construction	—	—		20,656		—
Consumer	664	15,875		354,530		4.5
	993	331,017		3,474,022		9.5	%