HarborOne Bancorp (HONE) Q1 2025 earnings summary

Executive summary

• Net income for Q1 2025 was $5.5 million ($0.14 per diluted share), down from $7.3 million in Q1 2024 and 38.1% from Q4 2024, mainly due to higher credit loss provisions and lower mortgage banking income.

• Announced merger with Eastern Bankshares, Inc., expected to close in Q4 2025, creating a leading mid-sized bank in Boston and Rhode Island.

• Client deposits increased by $79.6 million (1.9%) quarter-over-quarter, while total assets decreased 0.9% to $5.70 billion at March 31, 2025.

• Commercial and industrial loans grew by $33 million, while commercial real estate balances and loan delinquencies declined.

• Residential mortgage closings increased 11.8% year-over-year despite elevated rates and seasonal weakness.

Financial highlights

• Net interest margin improved to 2.39%, up 3 basis points quarter-over-quarter and 14 basis points year-over-year.

• Net interest and dividend income was $31.9 million on a tax-equivalent basis, up 3.6% year-over-year.

• Noninterest income declined, with mortgage banking income down 19.6% year-over-year and gain-on-sale revenue down $1.2 million sequentially.

• Noninterest expense increased 2.8% to $28.2 million, driven by higher compensation and deposit expenses.

• Loans-to-deposits ratio improved to 104.38% from 106.63% sequentially.

Outlook and guidance

• The merger with Eastern Bankshares is expected to deliver ~16% EPS accretion, 2.8-year tangible book value earnback, and top quartile profitability.

• Cost savings from the merger are projected at $55 million (40% of operating non-interest expenses), with 75% realized in 1H26.

• No capital raise is planned; deleveraging to be achieved by selling securities and paying down FHLB borrowings.

• Management expects continued commercial loan growth, lower deposit costs, and improved asset quality in 2025.

• The company continues to monitor CRE portfolio risk and expects market softness due to higher vacancies and rates.