HarborOne Bancorp, Inc. Announces 2021 Third Quarter Earnings

HarborOne Bancorp, Inc. (the “Company” or “HarborOne”) (NASDAQ:HONE), the holding company for HarborOne Bank (the “Bank”), announced net income of $12.3 million, or $0.24 per diluted share, for the third quarter of 2021, compared to $14.3 million, or $0.27 per diluted share, for the preceding quarter and $11.9 million, or $0.22 per diluted share, for the same period last year. For the nine months ended September 30, 2021, net income was $45.9 million, or $0.88 per diluted share, compared to $27.2 million, or $0.50 per diluted share, for the same period last year.

Selected Third Quarter Financial Highlights:

• Commercial loan growth of $52.8 million, or 2.6%, excluding U.S. Small Business Administration Paycheck Protection Program (“PPP”) loans.
• Recorded a reversal of provision of $1.6 million, reflecting continued positive pandemic and economic trends.
• Second share repurchase program completed at an average cost of $14.09 per share, third share repurchase program approved.
• Cost of funds continue to decline, decreasing 4 basis points.

“We continue to make steady progress against our plan despite market challenges including an ultra-competitive rate environment, tight labor market, and the ongoing impact of COVID-19. I’m incredibly proud of our team for continuing to deliver in these tough times,” said Jim Blake, CEO. “We’re very excited with our recently announced expansion into Brighton, Brookline, and Cambridge as we continue to make investments in building out our greater Boston footprint. We look forward to the opportunities this expansion will provide for our customers and the business,” added Joe Casey, President and COO.

Net Interest Income

The Company’s net interest and dividend income was $32.8 million for the quarter ended September 30, 2021, up $273,000, or 0.8%, from $32.5 million for the quarter ended June 30, 2021 and up $1.6 million, or 5.2%, from $31.2 million for the quarter ended September 30, 2020. The tax equivalent interest rate spread and net interest margin were 2.97% and 3.08%, respectively, for the quarter ended September 30, 2021, compared to 2.93% and 3.06%, respectively, for the quarter ended June 30, 2021, and 2.87% and 3.09%, respectively, for the quarter ended September 30, 2020. Net interest margin and the tax equivalent interest rate spread continue to be impacted by low interest rates, elevated loan prepayments, and the recognition of deferred fees on PPP loan forgiveness. The continued favorable repricing of deposits was partially offset by the decrease in the yield on interest-earning assets. Additionally, effective September 30, 2021, $20.0 million in Federal Home Loan Bank of Boston (“FHLB”) borrowings with an average cost of 3.5% were prepaid, with a penalty of $1.1 million included in noninterest expense. Although interest rates may begin to rise moving into 2022, the positive impact of the recognition of deferred loan fees on PPP loan forgiveness will diminish, resulting in continued margin pressure.

The quarter-over-quarter increase in net interest and dividend income included a decrease of $79,000, or 0.2%, in total interest and dividend income and a decrease of $352,000, or 10.5%, in total interest expense. The decrease in total interest and dividend income primarily reflected a $31.0 million decrease in average interest-earning assets and a 2-basis point decrease in the yield on average interest-earning assets. The yield on loans was 3.91% for the quarter ended September 30, 2021, down from 4.00% for the quarter ended June 30, 2021, as new loan originations have lower interest rates. The yield on loans continues to be impacted by the recognition of deferred fees due to PPP loan forgiveness, accretion income and prepayment penalties, although the recent uptick in rates is expected to lessen the impact from these yield adjustments in the future. The three months ended September 30, 2021 and June 30, 2021 include the recognition of deferred fees on PPP loans in the amount of $1.9 million and $1.3 million, respectively. Most of the remaining $2.1 million in deferred PPP loan fees are expected to be recognized in the fourth quarter of 2021 as the loans are forgiven. Interest on loans in the third quarter included $675,000 in accretion income from the fair value discount on loans acquired in connection with the merger with Coastway Bancorp, Inc. and $436,000 in prepayment penalties on commercial loans. Accretion income and prepayment penalties in the preceding quarter were $1.0 million and $244,000, respectively.

The quarter-over-quarter decrease in total interest expense primarily reflected a decrease in interest rates, resulting in a 4-basis point decrease in the cost of interest-bearing deposits. The mix of deposits continues to shift as customers move to more liquid options. The average balance of certificate of deposit accounts decreased quarter over quarter by $19.4 million, while the average balance of non-certificate accounts increased $49.0 million from the preceding quarter. Average FHLB advances decreased $12.4 million, and the cost of those funds decreased 17 basis points, resulting in a decrease of $100,000 in interest expense on FHLB borrowings.

The increase in net interest and dividend income from the prior year quarter reflected a decrease of $2.9 million, or 48.9%, in total interest expense, partially offset by a $1.2 million, or 3.3%, decrease in total interest and dividend income. The decreases reflect rate and volume changes in both interest-bearing assets and liabilities. The cost of interest-bearing liabilities decreased 41 basis points while the average balance increased $110.2 million. The yield on interest-earning assets decreased 31 basis points while the average balance increased $212.6 million.

Noninterest Income

Total noninterest income increased $307,000, or 1.4%, to $22.0 million for the quarter ended September 30, 2021, from $21.7 million for the quarter ended June 30, 2021. Mortgage loan demand remained strong; although refinancing activity continued to slow, purchase originations increased. Mortgage loan closings of $604.9 million resulted in a gain on loan sales of $12.8 million for the quarter ended September 30, 2021, as compared to $638.8 million in mortgage closings and $14.3 million in gain on sales for the preceding quarter. The locked residential mortgage pipeline decreased $125.9 million and negatively impacted the fair value of the derivative mortgage commitments recorded through the gain on loan sales. The change in the fair value of derivatives included in mortgage banking income was a negative $833,000 for the three months ended September 30, 2021 as compared to a negative $5.3 million for the three months ended June 30, 2021.

The net impact to mortgage servicing rights values was a decrease of $992,000 and $2.6 million for the three months ended September 30, 2021 and June 30, 2021, respectively. The change in the fair value of mortgage servicing rights positively impacted mortgage banking income; however, it was offset by the impact of residential mortgage loan payoffs. The fair value of the mortgage servicing rights increased $621,000 for the three months ended September 30, 2021, as compared to a $1.1 million decrease for the three months ended June 30, 2021. The 10-year Treasury Constant Maturity rate increased 7 basis points in the third quarter of 2021 and decreased 29 basis points in the second quarter of 2021. The change in the fair value of the mortgage servicing rights is generally consistent with the change in the 10-year Treasury Constant Maturity rate. As interest rates rise and prepayment speeds slow, mortgage servicing rights values tend to increase; conversely, as interest rates fall and prepayment speeds quicken mortgage servicing rights values tend to decrease. The negative impact on mortgage servicing rights when rates fall in the future may be muted, as mortgage servicing rights originated during the second half of 2020 were at historically low rates. Residential mortgage loan payoffs resulted in a decrease of mortgage servicing rights values in the amount of $1.6 million and $1.5 million for the three months ended September 30, 2021 and June 30, 2021, respectively.

Deposit account fees increased $112,000, or 2.5%, to $4.7 million for the quarter ended September 30, 2021, from $4.5 million for the quarter ended June 30, 2021.

Total noninterest income decreased $22.4 million, or 50.5%, as compared to the quarter ended September 30, 2020, primarily due to a $22.5 million, or 59.0%, decrease in mortgage banking income, driven by the decrease in loan closings and narrowing gain-on-sale margins in 2021. The decrease in mortgage banking income was offset by a $1.2 million increase in deposit account fees as deposit fees were reinstated in 2021.

Noninterest Expense

Total noninterest expenses were $39.3 million for the quarter ended September 30, 2021, an increase of $676,000, or 1.8%, from the quarter ended June 30, 2021, primarily driven by the $1.1 million prepayment penalty on Federal Home Loan Bank borrowings, partially offset by a $386,000 decrease in compensation and benefits and a $73,000 decrease in loan expense. Both decreases reflect the decrease in residential mortgage loan closings at HarborOne Mortgage, LLC (“HarborOne Mortgage”). During the third quarter, HarborOne Mortgage closed its New Jersey office, as management continues to respond to declining mortgage origination volume with strategic expense reduction.

Total noninterest expenses decreased $6.4 million, or 14.1%, from the quarter ended September 30, 2020. Compensation and benefits decreased $5.1 million and loan expenses decreased $1.8 million, consistent with the decrease in residential mortgage loan closings.

Income Tax Provision

The effective tax rate was 28.6% for the quarter ended September 30, 2021, compared to 28.3% for the quarter ended June 30, 2021 and 27.7% for the quarter ended September 30, 2020.

Provision for Loan Losses and Asset Quality

The Company recorded a reversal of provision for loan losses of $1.6 million for the quarter ended September 30, 2021, compared to a reversal of provision of $4.3 million for the quarter ended June 30, 2021 and a provision for loan losses of $13.5 million for the quarter ended September 30, 2020. The allowance for loan losses was $48.0 million, or 1.39% of total loans at September 30, 2021, compared to $51.3 million, or 1.50% of total loans at June 30, 2021 and $49.2 million, or 1.40% of total loans at September 30, 2020. 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 September 30, 2021 included adjustments for our quarterly analysis of our historical and peer loss experience rates, commercial and residential loan growth, and a $5.0 million specific reserve on one commercial real estate credit. These items, combined with adjustments for positive economic and pandemic trends of $4.8 million, resulted in a $1.6 million negative provision. The provision for loan losses for the quarter ended June 30, 2021 included adjustments based on our quarterly analysis of our historical and peer loss experience rates, commercial real estate loan growth, an increase of general reserve allocation on jumbo residential mortgage loans and a $1.5 million specific reserve on one commercial credit. Positive economic and pandemic trends also resulted in a $6.4 million negative provision for COVID-19. The provision for loan losses for the quarter ended September 30, 2020 included adjustments for our quarterly analysis of our historical and peer loss experience rates, commercial real estate loan growth, and a $10.7 million provision directly related to the estimate of inherent losses resulting from the impact of the COVID-19 pandemic.

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, and the loan risk profile of each loan type. Positive economic trends, vaccination rates, and COVID-19 cases, low delinquency levels, and status of deferred loans resulted in management reducing the provision related to the COVID-19 pandemic in the third quarter of 2021 with a reversal of provision of $4.8 million. Similar trends resulted in management reducing provisions related to the COVID-19 pandemic in the second quarter of 2021 with a reversal of provision of $6.4 million.

Management continues to evaluate our loan portfolio, particularly the commercial loan portfolio, in light of current economic conditions, the mitigating effects of government stimulus, and loan modification efforts designed to limit the long-term impacts 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 73.5% of the total commercial loan portfolio. Management initially identified six sectors as the most susceptible to increased credit risk as a result of the COVID-19 pandemic: retail, office space, hotels, health and social services, restaurants, and recreation. In the second quarter of 2021, as part of ongoing monitoring of the at-risk sectors, management determined that the health and social services sector no longer presents an additional risk from the impact of the COVID-19 pandemic as borrowers in this sector have returned to pre-pandemic revenue and profitability levels. Health and social services operations supported by first-round PPP loans have a 100% forgiveness rate. Further, over the last eight quarters, the sector has experienced a positive migration in obligor risk ratings and no watch or substandard credits, and delinquency in the sector is currently zero. The total loan portfolio of the remaining five commercial sectors identified as at risk totaled $751.0 million at September 30, 2021, which represents 35.1% of the commercial loan portfolio. The five currently identified at-risk sectors include $630.4 million in commercial real estate loans, $75.8 million in commercial and industrial loans, and $44.8 million in commercial construction loans. Non-performing loans included in the at-risk sectors amounted to $18.3 million at September 30, 2021, of which $9.1 million was included in the hotels sector and $8.8 million was included in the office sector.

As of September 30, 2021, the retail sector was $266.8 million, or 12.5% of total commercial loans, and included $219.3 million in commercial real estate loans, $28.9 million in commercial and industrial loans, and $18.6 million in commercial construction loans. There are no active deferrals for loans in this sector or PPP loans. We originated $6.0 million loans during the third quarter that are within the retail sector.

As of September 30, 2021, the office space sector was $214.2 million, or 10.0% of total commercial loans, and included $199.3 million in commercial real estate loans, $14.0 million in commercial and industrial loans, and $854,000 in commercial construction loans. There are no active deferrals for loans and one expired deferral, in the amount of $515,000 is delinquent and on nonaccrual. No PPP loans were originated in this sector. We originated $1.4 million loans during the third quarter that are within the office space sector and there were $4.5 million in advances on existing loans. The Bank is the lead bank in a commercial real estate credit secured by office space that was downgraded and placed on nonaccrual during the third quarter of 2021. The Bank’s portion of this credit has a recorded net book value of $8.8 million, and a specific reserve of $5.0 million was recorded.

As of September 30, 2021, the hotel sector was $193.7 million, or 9.1% of total commercial loans, and included $182.6 million in commercial real estate loans, $2.0 million in commercial and industrial loans, and $9.0 million in commercial construction loans. PPP loans included in the sector totaled $31,000. Active deferrals for loans in this sector had outstanding principal balances of $7.7 million, and one loan with an outstanding principal balance of $242,000 had an expired deferral period and is greater than 30 days delinquent. At September 30, 2021, nonperforming loans included in the hotel sector amount to $9.1 million. The non-accrual loan amounted to $9.1 million with a deferral period that expired in the third quarter of 2021, however it was determined in the fourth quarter of 2020 that weaknesses in the borrower’s credit warranted a downgrade to substandard and nonaccrual status. A specific reserve of $1.8 million has been allocated to this loan. The Bank is receiving payments of interest only on its pro rata share of the loan in accordance with a forbearance agreement, in part through a non-revolving line of credit provided solely by the lead bank. The Bank sold a nonperforming loan that was included in the hotel sector in the third quarter of 2021. The loan had a $3.3 million net book value at the time of sale and total a charge-offs on the credit amounted to $1.3 million, $157,000 of which was taken in the third quarter of 2021.

As of September 30, 2021, the restaurant sector amounted to $57.9 million, or 2.7% of total commercial loans, including $313,000 in PPP loans. There were no active deferrals in this sector and expired deferrals are paying as expected. The recreation sector amounted to $18.5 million, or 0.9% of total commercial loans, including $3,000 in PPP loans. There are no active deferrals for loans in this sector and expired deferrals are paying as expected.

We provided access to the PPP to both our existing customers and new customers, to ensure small businesses in the communities we serve have access to this important lifeline for their businesses. No PPP loans were originated in the third quarter and forgiveness was processed on $50.9 million loans. We have processed forgiveness on approximately 98% of PPP loans executed in 2020, with a success rate above 99%, and we have processed forgiveness on approximately 50% of the PPP loans executed in 2021. As of September 30, 2021, outstanding PPP loans amounted to $54.3 million and there was $2.1 million in deferred processing fee income. We expect to complete the forgiveness process on most of the remaining PPP loans by year end.

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 September 30, 2021, we have two active payment deferrals on commercial loans with a total principal balance of $7.7 million, or 0.4% of total commercial loans, both of which are loans included in an at-risk sector. As of September 30, 2021, 96.8% of the commercial deferrals have expired and the borrower is making payments as agreed, 0.3% of the commercial deferrals have expired and the borrower is delinquent, and 2.9% are in active deferral period. The active commercial deferrals are scheduled to expire during 2021. We are no longer providing deferrals under the Coronavirus Aid Relief and Economic Security Act but continue to consider accommodations in the normal course of business.

The residential loan and consumer loan portfolios have not experienced significant credit quality deterioration as of September 30, 2021; however, the continuing impact and uncertain nature of the COVID-19 pandemic may result in increases in delinquencies, charge-offs and loan modifications in these portfolios through the remainder of 2021. As of September 30, 2021, we had one active payment deferrals on residential mortgage loans with a total principal balance of $177, 000. As of September 30, 2021, 97.8% of the deferrals have expired and are paying as agreed, 1.8% have expired and are delinquent and 0.5% are in active deferral periods. We have no active payment deferrals on consumer loans and 98.4% of the consumer loan deferrals have expired and are paying as agreed. Requests for additional extensions on residential mortgage loans and consumer loans were not significant as of September 30, 2021.

Net charges-offs totaled $1.7 million for the quarter ended September 30, 2021, or 0.19% of average loans outstanding on an annualized basis. During the third quarter, there was a $1.5 million charge-off on a single credit previously reserved for in the second quarter of 2021. Net recoveries totaled $175,000, or 0.02% of average loans outstanding on an annualized basis, for the quarter ended June 30, 2021 and net charge-offs totaled $338,000, or 0.04% of average loans outstanding on an annualized basis, for the quarter ended September 30, 2020.

Credit quality performance has remained strong with total nonperforming assets of $36.5 million at September 30, 2021, compared to $32.7 million at June 30, 2021 and $41.0 million at September 30, 2020. Nonperforming assets as a percentage of total assets were 0.80% at September 30, 2021, 0.71% at June 30, 2021, and 0.93% at September 30, 2020. During the third quarter of 2021, a nonperforming commercial real estate loan with a $3.3 million net book value was sold and a charge-off of $157,000 was recorded. As noted above, a commercial real estate credit secured by office space was downgraded and placed on nonaccrual. The Bank’s 56% portion has a recorded net book value of $8.8 million and a specific reserve of $5.0 million was recorded in the third quarter.

Balance Sheet

Total assets decreased $49.3 million, or 1.1%, to $4.57 billion at September 30, 2021 from $4.62 billion at June 30, 2021. The decrease primarily reflects a decrease of $97.3 million in short-term investments and a $26.8 million decrease in loans held for sale, partially offset by increases of $41.3 million in net loans and $36.7 million in securities available for sale. Short-term investments were used to pay down FHLB borrowings and purchase securities available for sale.

Net loans increased $41.3 million, or 1.2%, to $3.41 billion at September 30, 2021 from $3.37 billion at June 30, 2021. The net increase in loans for the three months ended September 30, 2021 was primarily due to increases in residential mortgage loans of $64.3 million commercial construction loans of $45.1 million and commercial real estate loans of $11.4 million, partially offset by decreases in commercial and industrial loans of $52.7 million and consumer loans of $30.2 million. The decrease in commercial and industrial loans is primarily due to forgiveness of PPP loans during the quarter. Excluding the change in PPP loans, total commercial loans increased $52.8 million, primarily due to an increase in commercial construction loans. The allowance for loan losses was $48.0 million at September 30, 2021 and $51.3 million at June 30, 2021, the change primarily reflecting a negative $1.6 million provision for loan losses and $1.7 million in net loan charge-offs recorded in the third quarter.

Total deposits was $3.69 billion at September 30, 2021 and June 30, 2021. Compared to the prior quarter, non-certificate accounts increased $28.8 million and term certificate accounts decreased $22.7 million. FHLB borrowings decreased $31.8 million, or 36.3%, to $55.7 million at September 30, 2021 from $87.5 million at June 30, 2021. During the third quarter FHLB borrowings of $20.0 million were prepaid resulting in a $1.1 million prepayment penalty.

As previously announced, the Bank has agreed to acquire the leases to four East Boston Savings Bank branches being divested as part of the acquisition of East Boston Savings Bank by Rockland Trust Company. The transaction is subject to a number of contingencies and is expected to close by the end of the year. The Bank also agreed to acquire the branches’ furniture, fixtures, and equipment, and expects to add approximately 19 new employees to staff the branches. The new branches are located in Brighton, Cambridge, and Brookline, Massachusetts. The average leased space is approximately 1300 square feet and the leases generally have initial terms of 10 years with one or more year option terms. The initial terms expire in 6-10 years. The Bank also transferred a former branch property into assets held for sale at a carrying value of $881,000.

Total stockholders’ equity was $680.0 million at September 30, 2021, compared to $705.5 million at June 30, 2021 and $694.1 million at September 30, 2020. During the third quarter, the Company announced and completed a share repurchase program adopted April 16, 2021, repurchasing 2,790,903 shares of the Company’s common stock at an average cost of $14.09 per share. The Company adopted a third share repurchase program on September 17, 2021 to repurchase up to 2,668,159 shares of the Company’s common stock, or approximately 5% of the Company’s outstanding shares. The Company has not repurchased any shares under the third share repurchase program as of September 30, 2021. The tangible common equity to tangible assets ratio was 13.50% at September 30, 2021, 13.91% at June 30, 2021, and 14.23% at September 30, 2020. At September 30, 2021, 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 27 full-service branches located in Massachusetts and Rhode Island, 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, and Maine, and is licensed to lend in six 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. We may also make forward-looking statements in other documents we file with the Securities and Exchange Commission (“SEC”), in our annual reports to shareholders, in press releases and other written materials, and in oral statements made by our officers, directors or employees. 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; changes in 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 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’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.