HarborOne Bancorp, Inc. (HONE): 5 FORCES Analysis [Nov-2025 Updated]

You're looking for the definitive competitive snapshot of HarborOne Bancorp, Inc. right before its November 1, 2025, merger with Eastern Bankshares, and honestly, that impending deal is the ultimate context for every single force. We need to see how the pressure cooker environment-where depositors pulled $125.1 million in Q2 2025, forcing competitive pricing, and the Net Interest Margin was squeezed to 2.52%-shaped their final strategic path. I've mapped out the leverage held by suppliers and customers, the intensity of rivalry in New England, and the threats from substitutes and new entrants, giving you the precise, late-2025 view you need to understand the landscape they were operating in. Dive in below to see the hard numbers behind the forces that drove this major regional banking move.

HarborOne Bancorp, Inc. (HONE) - Porter's Five Forces: Bargaining power of suppliers

When we look at HarborOne Bancorp, Inc. (HONE)'s supplier side, we see power concentrated in a few key areas: depositors, wholesale funding providers, technology vendors, and skilled labor. For a bank, the primary suppliers are those providing the raw material-deposits-and the essential infrastructure and personnel to operate.

Depositors definitely hold sway, especially when market conditions shift. You saw this pressure in the second quarter of 2025, where total deposits for HarborOne Bancorp, Inc. fell by $125.1 million in Q2 2025, forcing the bank to engage in more competitive deposit pricing to stem the outflow. That kind of movement means the bank has to pay more to keep its funding base stable.

Wholesale funding markets, such as brokered deposits, represent another high-power supplier group. These sources are highly sensitive to cost and liquidity conditions. While HarborOne Bancorp, Inc. managed its core deposits, its reliance on more volatile funding increased; borrowed funds rose by $40.1 million in the quarter, moving from $399.5 million at the prior quarter end to $439.7 million as of June 30, 2025. This reliance on borrowed funds signals a higher-cost, more sensitive funding structure, which gives those lenders leverage.

Here's a quick look at the funding structure dynamics from the Q2 2025 report:

Core technology vendors, like those providing the core processing system, are suppliers with significant leverage due to high switching costs. Moving a core banking system is a massive, multi-year, multi-million dollar undertaking, so HarborOne Bancorp, Inc. is effectively locked in for the contract term, giving the vendor pricing power.

Also, don't forget the labor market, which is a critical supplier of human capital. The labor market for skilled bankers in New England remains tight, which definitely pushes up the cost of key personnel. For instance, as of May 2025, New England's nonfarm payroll employment growth was only 0.3 percent year-over-year, lagging the US rate of 1.1 percent for the same period, suggesting a competitive environment for the talent that is available. In Massachusetts alone, the financial services industry supports about 369,000 jobs, contributing $60.3 billion in wages, which underscores the high value and competition for experienced professionals in the region.

You should keep an eye on these supplier dynamics, especially as the merger with Eastern Bankshares, Inc. progresses. The ability to manage deposit costs and retain top talent will be key to realizing the expected benefits of that transaction.

HarborOne Bancorp, Inc. (HONE) - Porter's Five Forces: Bargaining power of customers

You're looking at HarborOne Bancorp, Inc. (HONE) right as it navigates a major transition with the pending merger closing on November 1, 2025. The bargaining power of your customers-both retail and commercial-is a key lever in this environment, especially for a regional player focused on Massachusetts and Rhode Island.

For basic deposit products, the power is inherently high. Customers can shop around easily for the best yield or lowest fees. HarborOne Bank offers the standard fare that makes switching simple for the consumer.

Here are the core products where customer switching costs are low:

• Checking accounts
• Savings accounts
• Certificates of Deposit (CDs)
• Online and mobile banking services

The ease of comparison directly pressures profitability. When customers can shop rates instantly, it compresses the spread the bank earns. Look at the Net Interest Margin (NIM) for the second quarter of 2025; it was reported at 2.52%. That number reflects the market's ability to price-shop your core assets and liabilities.

To give you a clearer picture of the Q2 2025 financial context that customer pricing power influences, here are some related figures:

Commercial borrowers definitely hold more leverage. They aren't just looking at HarborOne Bank; they can access capital from national players and other large regional banks operating in the same footprint. This access means they can demand tighter pricing on commercial and industrial loans or commercial real estate financing. The competitive landscape in Massachusetts and Rhode Island includes giants like Truist, among others.

The geographic concentration of HarborOne Bancorp, Inc.'s physical presence-serving Eastern Massachusetts and Rhode Island through 30 full-service banking centers-actually works against the bank in terms of customer power. If a customer in Brockton, MA, or Providence, RI, is unhappy, a local competitor is likely nearby, or a digital-first competitor is just a few clicks away. The market is a battlefield for Southern New England share.

Consider the competitive factors impacting customer retention:

• Proximity to 30 full-service branches in MA/RI
• Availability of digital services from rivals
• Merger activity creating customer uncertainty
• Presence of larger competitors like Truist

Finance: draft a sensitivity analysis on NIM if deposit costs rise by 25 basis points by next quarter.

HarborOne Bancorp, Inc. (HONE) - Porter's Five Forces: Competitive rivalry

You're looking at the competitive landscape for HarborOne Bancorp, Inc. right at the moment it ceased to exist as an independent entity, which is a unique analytical point. The competitive rivalry in the New England market, especially Greater Boston, has always been fierce. Before the merger, HarborOne Bancorp, with its $5.7 billion in assets as of Q1 2025, was fighting for share against giants. Now, the resulting entity, Eastern Bankshares, Inc., is the largest Massachusetts-based bank with combined assets of $31 billion. This scale immediately changes the dynamic against major national and regional players, including Truist and the former peer, Eastern Bankshares, Inc. (now the surviving entity).

The core of the rivalry stems from the fact that the regional industry is mature and, frankly, slow-growth. When the market isn't expanding much, any market share gain for one bank is a direct loss for another-it's a zero-sum game, plain and simple. This environment forces aggressive pricing and relationship management, which is why the merger was such a defintely strategic move.

To give you a clearer picture of the competitive scale before the November 1, 2025, closing, here's how the two merging parties stacked up against each other and the resulting combined footprint:

Products in this space are largely seen as undifferentiated commodities, especially standard deposit accounts and basic commercial loans. This lack of product distinction pushes competition directly onto price, meaning the fight is over the interest rates offered on loans and paid on deposits. For HarborOne leading up to the deal, you saw this pressure in their cost of deposits decreasing by 14 basis points to 2.48% for the quarter ended March 31, 2025, as they managed funding costs in a competitive rate environment.

The ultimate strategic response to this intense, rate-driven rivalry was the merger itself. The transaction, which saw HarborOne Bancorp merge with and into Eastern Bankshares, Inc., became effective on November 1, 2025. This combination was designed to achieve economies of scale, which is crucial when competing on price. The expectation was that the combined entity would achieve a projected operating return on average tangible common equity of around 15.5%, positioning it in the top quartile of its peer group and better equipped to withstand the rivalry.

• The merger created the largest locally-based organization in the region.
• The transaction was valued at approximately $490 million based on April 23, 2025, closing prices.
• The deal promised 16% EPS accretion for Eastern Bankshares shareholders.
• HarborOne common stock was delisted from the NASDAQ Global Select Market following trading on October 31, 2025.

HarborOne Bancorp, Inc. (HONE) - Porter's Five Forces: Threat of substitutes

The threat of substitutes for HarborOne Bancorp, Inc. (HONE) is substantial, coming from specialized, digitally-native competitors across its core business lines. You see this pressure most clearly when looking at the mortgage business and the competition for customer deposits.

Mortgage Origination Competition

HarborOne Mortgage, LLC faces a market where non-bank entities dominate origination volume. For instance, in the first half of 2025, nonbanks captured 65.1% of all originations, leaving depository institutions like HarborOne Bank with a 27.9% share. This suggests that for mortgage customers, the non-bank channel is the default choice for a majority of new business. While HarborOne Mortgage saw mortgage loan closings rise to $176.2 million in the second quarter of 2025 from $114.1 million in the first quarter, this was against a backdrop where the overall industry capacity for nonbanks had already shrunk by 35% since April 2021. The mortgage banking income for HarborOne Bancorp, Inc. itself saw a $2.9 million decrease quarter-over-quarter in Q1 2025.

Digital Banking and Deposit Substitutes

FinTech platforms and other non-traditional providers chip away at the traditional deposit base. For HarborOne Bancorp, Inc., which had total deposits increase by $79.6 million (or 1.9%) in Q1 2025, managing the cost and stickiness of these funds is key. Money market funds and government securities are direct substitutes for the high-balance deposit accounts that banks rely on for funding. Even in the context of the acquiring entity, Eastern Bankshares, the cost of total interest-bearing liabilities increased due to higher deposit costs, specifically mentioning money market accounts. HarborOne's own Q1 2025 data showed growth across money market accounts, though uninsured deposits stood at $942 million, representing 20.4% of total deposits.

The threat here is that customers can move large balances to instruments offering slightly better yield with minimal friction. Here's the quick math: if a customer can get a better rate from a money market fund, they bypass the branch network entirely.

• FinTech platforms offer digital banking, bypassing traditional branch reliance.
• Money market funds compete directly for high-balance customer funds.
• Government securities offer a risk-free alternative for cash management.

Substitution in Lending

For consumer and small business lending, direct online lenders and peer-to-peer (P2P) platforms offer streamlined application and funding processes. HarborOne Bancorp, Inc.'s loan portfolio as of Q1 2025 was distributed with Commercial Real Estate at 47%, Residential 1-4 Family at 31%, and Commercial & Industrial (C&I) at 13%. While C&I loans showed growth of $33.0 million in Q1 2025, the consumer lending piece, which includes auto loans and personal lines of credit, is where digital lenders often gain traction with speed and convenience.

The bank's total assets stood at $5.70 billion at the end of Q1 2025. The ability of online lenders to offer instant decisions on smaller, unsecured loans directly substitutes for a portion of the consumer lending that HarborOne Bank would typically originate.

• Direct online lenders substitute for consumer loan origination.
• P2P platforms compete for small business funding needs.
• The residential mortgage segment is heavily contested by nonbanks.

HarborOne Bancorp, Inc. (HONE) - Porter's Five Forces: Threat of new entrants

You're looking at the barriers to entry for HarborOne Bancorp, Inc. (HONE) in its core Eastern Massachusetts and Rhode Island markets as of late 2025. Honestly, the threat from de novo (brand new) traditional banks is quite low, primarily due to the sheer cost and regulatory weight involved.

High regulatory hurdles and capital requirements create a significant moat. Consider HarborOne Bancorp, Inc.'s scale at the start of the year: total assets stood at $5.70 billion as of Q1 2025. Starting a bank of this size, or even a smaller community bank, requires massive initial capital injections and navigating complex compliance frameworks from the OCC, FDIC, and state regulators. While some late 2025 regulatory shifts signaled potential easing for existing large banks-with proposed changes that could free up capital-the entry requirements for a new institution remain steep, demanding high capital buffers and adherence to stress testing protocols.

Next, you have the physical footprint barrier. HarborOne Bank serves its market through an established network. This isn't just about having a location; it's about customer convenience and local trust. A new entrant needs to replicate this physical presence, which is a major cost driver.

The nature of new competition is definitely shifting, though. New entrants are increasingly FinTechs that are strategically avoiding the high regulatory costs of a full-service bank charter. They often prefer Banking-as-a-Service (BaaS) partnerships or are pursuing specialized, limited-purpose charters that offer operational benefits without the full compliance overhead of a traditional bank. Still, the momentum for direct entry is growing among the largest players.

• FinTech charter applications submitted through October 3rd, 2025: 20.
• FinTechs pursuing full national charters aim for the same powers as incumbents, accepting the high capital and compliance standards.
• Other FinTechs are seeking Merchant Acquirer Limited Purpose Bank (MALPB) charters to gain direct network access without full deposit-taking regulation.
• The complexity of stitching together state money-transmitter licenses under a BaaS model is a known, costly alternative to a charter.

Finally, brand loyalty for community banks, while not absolute, acts as a sticky barrier against generic national entrants. In Eastern Massachusetts and Rhode Island, HarborOne Bancorp, Inc. has built decades of local recognition. You can't buy that overnight. While digital-first competitors can steal transactional business, winning primary customer relationships-especially commercial and municipal deposits-requires deep, local roots that take years to cultivate. This localized trust definitely slows down any generic national bank trying to enter the market.