4th Quarter 2024 Nasdaq: HMST January 27, 2025 Important Disclosures Forward-Looking Statements This presentation includes forward-looking statements, as that term is defined for purposes of applicable securities laws, our industry, our future financial performance, business plans and expectations, including expectations relating to decreases in interest rates and the impact of such decreases on the Company, impact of loan sales on the Company, and return to profitability and timing of such achievement. The ...

Financial Data and Key Metrics Changes - In Q4 2024, the company reported a net loss of $123.3 million or $6.54 per share, compared to a net loss of $7.3 million or $0.39 per share in Q3 2024 [4] - On a core basis, the net loss was $5.1 million or $0.27 per share, an improvement from a net loss of $6 million or $0.32 per share in Q3 2024 [4][5] - The net interest income increased by $1 million from Q3 2024, with a net interest margin rising from 1.33% to 1.38% [6][7] Business Line Data and Key Metrics Changes - Non-interest income decreased in Q4 2024 primarily due to an $88.8 million loss on the sale of multifamily loans [9] - Non-interest expenses were reduced by $5.2 million in Q4 2024, attributed to a decrease in compensation benefits and general administrative expenses [9][10] Market Data and Key Metrics Changes - The ratio of non-performing assets to total assets was 71 basis points as of December 31, 2024, with total loans delinquent over 30 days at 106 basis points [9] - The company experienced a $15 million increase in non-accrual loans during Q4, mainly related to a syndicated commercial loan [9][15] Company Strategy and Development Direction - Following the termination of a merger, the company adopted a new strategic plan, including the sale of $990 million in multifamily loans to improve liquidity and reduce commercial real estate concentrations [12][13] - The company anticipates returning to profitability in the first half of the year, driven by loan repricing and effective management of non-interest expenses [13][19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to profitability early in the year, contingent on stable interest rates and effective credit management [19][20] - The company noted that its deposits have shown resilience despite external pressures, maintaining a low level of uninsured deposits at 9% of total deposits [14][15] Other Important Information - The tangible book value per share decreased to $20.67 as of year-end, influenced by the loss on the loan sale and tax impacts [15][16] - The company has significant exposure to commercial real estate, particularly in areas affected by wildfires, but has current insurance coverage for impacted properties [17] Q&A Session Summary Question: What is the expected trajectory for NIM and breakeven levels? - Management does not have a specific targeted number but expects a positive impact on earnings from the loan sale and debt retirement [22][24] Question: Are there any other strategic initiatives needed for profitability? - The strategy is straightforward, focusing on working with commercial real estate borrowers to improve yields [25] Question: What is the current spot rate on deposits? - As of December 31, the spot rate for all deposits was 2.65%, with plans to reduce broker deposits further [30][31] Question: What is the appetite for more originate-to-sale business? - The appetite is large but tempered by current market conditions and borrower activity [45] Question: Can more be done to lower non-interest expenses? - Management believes they are close to the limit of what can be done, with some potential for slight decreases in certain areas [47][50]

Group 1 - The year 2024 was exceptional for banks, following a complicated 2023 marked by a series of bank failures, starting with Silicon Valley Bank [1] - The economy demonstrated greater resilience than anticipated, which contributed to the recovery of the banking sector [1] Group 2 - The article does not provide specific financial data or performance metrics related to individual banks or the banking sector as a whole [1]

Core Viewpoint - HomeStreet (HMST) reported a quarterly loss of $0.27 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.21, and a decline from a loss of $0.12 per share a year ago [1][2] Financial Performance - The company posted revenues of $40.31 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 2.36% and down from $45.95 million year-over-year [2] - Over the last four quarters, HomeStreet has surpassed consensus EPS estimates only once [2] Stock Performance - HomeStreet shares have declined approximately 11% since the beginning of the year, while the S&P 500 has gained 3.7% [3] Future Outlook - The company's earnings outlook is crucial for investors, with current consensus EPS estimates at $0.01 for the coming quarter and $0.38 for the current fiscal year, alongside revenues of $46.79 million and $194.7 million respectively [7] - The estimate revisions trend for HomeStreet is currently favorable, resulting in a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Financial - Savings and Loan industry, to which HomeStreet belongs, is currently in the top 11% of over 250 Zacks industries, suggesting a positive outlook for stocks within this sector [8]

Financial Performance - HomeStreet reported a net loss of $123.3 million in Q4 2024, compared to a net loss of $7.3 million in Q3 2024, resulting in a net loss per fully diluted share of $6.54[1]. - For the full year 2024, the net loss was $144.3 million, with a net loss per fully diluted share of $7.65, compared to a net loss of $27.5 million and $1.46 per share in 2023[2]. - The company reported a net loss of $123,327,000 for Q4 2024, compared to a net loss of $3,419,000 in Q4 2023, marking a substantial increase in losses[12]. - The company reported a net loss of $144,344 thousand for the year 2024, compared to a net loss of $27,508 thousand in 2023, representing a significant increase in losses[17]. - Core net loss for the quarter ended December 31, 2024, was $(123,327), compared to $(7,282) in the previous quarter[60]. - The core net loss for Q4 2024 was $5.1 million, a slight improvement from $6.0 million in Q3 2024, primarily due to increased net interest income and reduced noninterest expenses[21]. Asset and Liability Management - Total assets as of December 31, 2024, were $8,123,698,000, down from $9,392,450,000 as of December 31, 2023, reflecting a decrease of 13.5%[13]. - Total liabilities decreased to $7,726,701 thousand in 2024 from $8,854,063 thousand in 2023, a reduction of about 12.7%[16]. - Total deposits decreased by $33 million, with uninsured deposits at $581 million, representing 9% of total deposits[3]. - Deposits fell to $6,413,021 thousand in 2024, down from $6,763,378 thousand in 2023, a decrease of approximately 5.2%[16]. - Total assets decreased by $1.3 billion in 2024, largely due to the $990 million sale of multifamily loans and a $221 million decrease in investment securities[34]. - Total liabilities decreased by $1.1 billion in 2024, driven by a $745 million decrease in borrowings and a $350 million decrease in deposits[34]. Income and Expenses - Net interest income for Q4 2024 was $29,616,000, a decrease from $34,989,000 in Q4 2023, representing a decline of 15.4% year-over-year[12]. - Noninterest income for Q4 2024 was a loss of $78,124,000, compared to a gain of $10,956,000 in Q4 2023, indicating a significant downturn[12]. - The company experienced a total noninterest income loss of $44,385 thousand for the year ended December 31, 2024, compared to a gain of $41,921 thousand in 2023[17]. - Interest expense increased to $282,486 thousand in 2024, up from $232,990 thousand in 2023, reflecting a rise of about 21.2%[17]. - Noninterest expenses were reduced by $45.7 million in 2024, primarily due to a $39.9 million goodwill impairment charge in 2023[33]. Credit Quality and Allowances - The allowance for credit losses to LHFI was 0.63%, with nonperforming assets to total assets at 0.71%[3]. - The allowance for credit losses (ACL) was $38,743,000 as of December 31, 2024, slightly down from $40,500,000 as of December 31, 2023[13]. - The provision for credit losses was zero in 2024, compared to a provision of $441 thousand in 2023, indicating a change in credit loss expectations[17]. - The ratio of nonperforming assets to total assets rose to 0.71% as of December 31, 2024, up from 0.45% as of December 31, 2023, indicating a deterioration in asset quality[13]. Equity and Book Value - The tangible book value per share decreased to $20.67 as of December 31, 2024, from previous levels due to cumulative losses and market conditions[6]. - The company’s total shareholders' equity decreased to $396,997,000 as of December 31, 2024, from $538,387,000 as of December 31, 2023, a decline of 26.2%[13]. - The book value per share was $21.05 as of December 31, 2024, down from $28.62 as of December 31, 2023, representing a decrease of 26.5%[13]. Future Outlook - HomeStreet anticipates continuous growth in earnings for the foreseeable future, supported by effective noninterest expense management and expected reductions in short-term interest rates[1]. - The company anticipates potential challenges due to changes in the interest rate environment and economic conditions, which may affect future performance[63]. - The company has highlighted the importance of managing operating costs and credit quality to mitigate risks associated with economic fluctuations[64]. - The company plans to continue focusing on market expansion and new product development to enhance future performance[58].

Core Viewpoint - HomeStreet (HMST) is expected to report a quarterly loss of $0.21 per share, reflecting a year-over-year decline of 75%, with anticipated revenues of $41.29 million, down 10.2% from the previous year [1] Earnings Projections - The consensus EPS estimate for the quarter has been revised upward by 105.7% in the past 30 days, indicating a reassessment by analysts [2] - Changes in earnings projections are crucial for predicting investor reactions, as empirical studies show a strong correlation between earnings estimate trends and short-term stock price movements [3] Key Metrics Analysis - Analysts predict the 'Efficiency Ratio' will reach 111.5%, up from 105.9% in the same quarter last year [5] - The 'Average Balance - Total interest earning assets' is expected to be $8.61 billion, down from $8.92 billion in the same quarter last year [5] - The consensus estimate for 'Total noninterest income' is $11.48 million, compared to $10.96 million in the same quarter last year [6] - 'Net Interest Income' is projected to be $30.14 million, down from $34.99 million year-over-year [6] - 'Loan servicing income' is expected to be $3.00 million, compared to $3.26 million in the same quarter last year [6] - 'Other' income is projected to reach $3.04 million, down from $3.26 million in the same quarter last year [7] Stock Performance - HomeStreet shares have changed by +1.3% in the past month, compared to a +2.1% move of the Zacks S&P 500 composite [7] - With a Zacks Rank 2 (Buy), HMST is expected to outperform the overall market in the near future [7]

Core Viewpoint - HomeStreet (HMST) is expected to report a year-over-year decline in earnings due to lower revenues, with a consensus outlook indicating a quarterly loss of $0.21 per share, representing a 75% decrease from the previous year [1][3]. Earnings Expectations - The upcoming earnings report is anticipated to be released on January 27, and the stock may rise if actual results exceed expectations, while a miss could lead to a decline [2]. - Revenues are projected to be $41.29 million, reflecting a 10.1% decrease from the same quarter last year [3]. Estimate Revisions - The consensus EPS estimate has been revised 105.71% higher in the last 30 days, indicating a reassessment by analysts [4]. - The Most Accurate Estimate for HomeStreet is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -35.94%, suggesting a bearish outlook from analysts [10][11]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive reading is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank of 1, 2, or 3 [8]. - HomeStreet currently holds a Zacks Rank of 2, but the negative Earnings ESP complicates the prediction of an earnings beat [11]. Historical Performance - In the last reported quarter, HomeStreet was expected to post a loss of $0.20 per share but actually reported a loss of $0.32, resulting in a surprise of -60% [12]. - Over the past four quarters, the company has only beaten consensus EPS estimates once [13]. Conclusion - HomeStreet does not appear to be a compelling candidate for an earnings beat, and investors should consider other factors when making decisions regarding the stock ahead of the earnings release [16].

Core Viewpoint - HomeStreet (HMST) has experienced significant selling pressure, declining 13.4% over the past four weeks, but is now positioned for a potential trend reversal as it enters oversold territory, with analysts predicting better earnings than previously estimated [1] Group 1: Technical Indicators - The Relative Strength Index (RSI) is a key technical indicator used to identify oversold stocks, with a reading below 30 typically indicating oversold conditions [2] - HMST's current RSI reading is 25.11, suggesting that heavy selling may be exhausting, indicating a potential bounce back towards equilibrium [5] Group 2: Fundamental Analysis - There is strong consensus among sell-side analysts that earnings estimates for HMST have significantly increased, with a 1337.5% rise in the consensus EPS estimate over the last 30 days, which often correlates with price appreciation [6] - HMST holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, further supporting the potential for a near-term turnaround [7]

Core Insights - HomeStreet, Inc.'s subsidiary, HomeStreet Bank, is selling approximately $990 million worth of multifamily commercial real estate loans to Bank of America, which is expected to enhance profitability and mitigate funding costs [1][3] - The loans will be sold at an approximate 8% discount, resulting in nearly $906 million received from Bank of America, primarily due to the existing interest rate environment and the nature of the loans being lower-yielding with longer durations [2][5] - This transaction is a significant milestone for HomeStreet, marking a potential return to profitability after four consecutive quarters of adjusted losses and addressing investor concerns following the halt of a proposed merger with FirstSun Capital Bancorp [3][9] Financial Strategy - The proceeds from the loan sale will be utilized to repay Federal Home Loan Bank (FHLB) advances and brokered deposits, which have higher interest rates compared to the company's core deposits [5] - HomeStreet will retain the servicing of the loans, indicating a continued relationship with the loan portfolio despite the sale [2] Market Context - Both HomeStreet and Bank of America currently hold a Zacks Rank of 3 (Hold), reflecting a neutral outlook in the market [6] - The loan sale aligns with broader industry trends, as other financial firms like Valley National Bancorp are also restructuring their loan portfolios to manage risks and reduce exposure to commercial real estate [4][8]

Core Insights - HomeStreet Bank's parent company has agreed to sell $990 million in multifamily commercial real estate loans to Bank of America, with the sale price being 92% of the principal balance of the loans, expected to close by December 31 [1][2] Financial Performance - The loan sale is a response to the current interest rate environment, as the loans being sold are primarily lower yielding and have longer durations than the overall portfolio [2] - HomeStreet has faced pressure from higher deposit costs while earning less on investments, reporting a net loss of $7.28 million in the third quarter, marking its fourth consecutive quarter of losses [2] Strategic Plans - The loan sale is part of a new strategic plan aimed at returning the bank to profitability early next year [3] - HomeStreet's planned merger with FirstSun Capital Bancorp failed to secure necessary regulatory approvals, leading to discussions about alternative regulatory structures for the merger [3][4] Merger Details - The proposed merger was initially announced in January, with expectations of creating a bank with combined assets of approximately $17 billion, focusing on operations in key markets in the Southwest and West Coast [4]