Safe and Sound

HarborOne Bank

Brockton, MA
3
Star Rating
HarborOne Bank is a Brockton, MA-based, FDIC-insured bank dating back to 2013. Regulatory filings show the bank having equity of $262.5 million on $2.65 billion in assets, as of December 31, 2017.

Thanks to the work of 581 full-time employees in 17 offices in MA, the bank currently holds loans and leases worth $2.24 billion, $1.62 billion of which are for real estate. U.S. bank customers currently have $2.05 billion in deposits with the bank.

Overall, Bankrate believes that, as of December 31, 2017, HarborOne Bank exhibited a generally satisfactory condition, earning 3 out of 5 stars for safety and soundness. Keep reading for a look at how the bank did on the three major criteria Bankrate used to evaluate American banks.

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THE INSTITUTION'S SCORE

Capital Score

When it comes to measuring an a bank's financial fortitude, capital is crucial. It works as a bulwark against losses and provides protection for accountholders when a bank is experiencing economic instability. When it comes to safety and soundness, more capital is better.

HarborOne Bank fell below the national average of 13.13 on our test to measure capital adequacy, receiving a score of 8 out of a possible 30 points.

One widely followed measure of this buffer is a bank's Tier 1 capital ratio. HarborOne Bank's Tier 1 capital ratio was 11.43 percent, higher than the 6 percent level regulators consider adequate, but under the national average of 25.65 percent. A higher capital ratio means the bank will be better able to stand up to economic downturns.

Overall, HarborOne Bank held equity amounting to 9.91 percent of its assets, which was lower than the national average of 12.03 percent.

Asset Quality Score

This test is intended to estimate how the bank's loan loss reserves and overall capitalization could be affected by problem assets, such as past-due loans.

Having large numbers of these kinds of assets could eventually require a bank to use capital to cover losses, shrinking its equity buffer. Many of those assets are also likely to be in non-accrual status and no longer earning interest for the bank, resulting in depressed earnings and potentially more risk of a failure in the future.

On Bankrate's test of asset quality, HarborOne Bank scored 36 out of a possible 40 points, failing to reach the national average of 37.49 points.

The percentage of problem assets a bank holds compared to its total assets is a widely used indicator of asset quality.As of December 31, 2017, 0.79 percent of HarborOne Bank's loans were noncurrent -- in other words, they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.01 percent.

Banks maintain a reserve to handle problem assets known as an "allowance for loan and lease losses." Comparing the reserve's size to the total amount of problem loans can be a useful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on HarborOne Bank's loan loss allowance in its most recent filings.

Earnings score

How profitable a bank is has an effect on its long-term survivability. Earnings can be retained by the bank, increasing its capital cushion, or be used to deal with problematic loans, likely making the bank better prepared to withstand economic trouble. Conversely, losses diminish a bank's ability to do those things.

On Bankrate's earnings test, HarborOne Bank scored 10 out of a possible 30, coming in below the national average of 15.12.

Return on equity, calculated by dividing net income (essentially, profit) by the total amount of equity, is one important way to measure a bank's earnings. The most recent annualized quarterly return on equity for HarborOne Bank was 4.45 percent, below the national average of 8.10 percent.

For the twelve months ended December 31, 2017, the bank reported net income of $11.3 million on total equity of $262.5 million. The bank experienced an annualized return on average assets, or ROA, of 0.44 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.00 percent.

WHAT IS SAFE & SOUND?

Bankrate.com's Safe & Sound Ratings provide a star rating system to evaluate the current financial status of financial institutions. The information gathered about banks, credit unions and thrifts is updated as set forth in the Terms of Use of Safe & Sound Ratings and Reports. The Safe & Sound Ratings information is grouped by categories of banks, thrifts and credit unions.

Scoring methodology

Bankrate.com evaluates the financial condition of institutions and assigns a one- to five-star rating for each with five stars representing the highest rating. Institutions with satisfactory performance will generally receive a rating of three or more stars. The majority of institutions fall into the three- to four-star range. An institution with an "NR" rating may be too new to rate or may have limited the publicly available information in their regulatory filings. The "NR" is not an indication of financial strength or weakness. The Safe & Sound rating is believed to be reliable, but the information is not guaranteed. In addition, events since the information was collected may have altered the institution's financial condition.