Financial Performance - Net income for 2022 was $66,540,000, a decrease of 42.4% from $115,422,000 in 2021[177]. - Total revenues decreased to $280,607,000 in 2022, down 19.2% from $347,032,000 in 2021[177]. - The net interest income for 2022 was $233.3 million, an increase from $227.1 million in 2021, while noninterest income dropped significantly to $51.6 million from $120.0 million[123]. - The effective tax rate for 2022 was 21.4%, slightly higher than 21.3% in 2021, due to benefits from tax-advantaged investments[129]. - The company reported a net interest income sensitivity gap of $(2,795,402,000), indicating a liability-sensitive position[184]. - Basic net income per share decreased to $3.51 in 2022 from $5.53 in 2021, a decline of 36.5%[211]. - The Company’s net interest income after provision for credit losses was $238,509 thousand in 2022, a decrease of 1.3% from $242,057 thousand in 2021[211]. Assets and Liabilities - As of December 31, 2022, HomeStreet had total assets of $9.4 billion, loans of $7.4 billion, and deposits of $7.5 billion[15]. - The company's total assets increased to $9,364,760,000 in 2022, up 30.0% from $7,204,091,000 in 2021[177]. - Total liabilities increased to $8,802,613 thousand in 2022 from $6,488,752 thousand in 2021, a rise of approximately 35.7%[208]. - The allowance for credit losses (ACL) for loans held for investment was $41,500 thousand in 2022, down from $47,123 thousand in 2021[208]. - The total amount of loans was $7,426,320 thousand as of December 31, 2022, with a delinquency rate of 0.29%[152]. Interest Rates and Profitability - Changes in interest rates significantly impact the company's profitability, affecting the difference between interest earned on loans and investments and interest paid on deposits and borrowings[40]. - The net interest margin decreased to 2.99% in 2022 from 3.38% in 2021, reflecting the impact of rising short-term interest rates[123]. - A 200 basis point increase in interest rates is projected to decrease net interest income by 1.7% and net portfolio value by 24.1%[188]. - The estimated impact on net interest income over a one-year period shows a potential decrease of 0.7% with a 100 basis point increase in interest rates[188]. - The company’s interest rate simulation model assumes no negative interest rates, which may limit the reliability of results in extreme scenarios[190]. Operational Efficiency - Efficiency ratio increased to 72.4% in 2022 compared to 61.9% in 2021, indicating a decline in operational efficiency[177]. - Total noninterest expense decreased to $205.4 million in 2022 from $215.3 million in 2021, mainly due to lower compensation and benefit costs[140]. Employee and Community Engagement - The employee headcount was 937, with a turnover rate of 28% and a voluntary turnover rate of 21%[17]. - The company emphasizes diversity, equity, and inclusion, aiming to create a workplace that reflects the communities it serves[20]. - The company is committed to community involvement, offering paid time off for employees who volunteer and matching their contributions to community organizations[26]. - In 2022, HomeStreet provided 6,890 paid hours off for employees to isolate, treat, and recover from COVID-19 exposure[24]. Regulatory and Compliance Risks - The company faces extensive regulations that increase compliance costs and potential liabilities, particularly in states like California with stringent laws[72]. - The company is subject to ongoing regulatory examinations, which could lead to operational restrictions and increased compliance risks[73]. - The company is subject to federal and state privacy regulations, including the California Consumer Privacy Act of 2018 and the California Privacy Rights Act of 2020, which impose strict obligations on the use and dissemination of customer information[83]. Market and Economic Conditions - The financial services industry is highly competitive, with pressures on pricing for loans and deposits, which could adversely affect future earnings and growth[45]. - Inflation may negatively impact the company's profitability by increasing fixed costs and reducing consumer purchasing power, potentially leading to higher default rates[44]. - The company operates primarily in the Western United States, with a majority of revenues derived from the Puget Sound region and other metropolitan areas, exposing it to regional economic volatility and natural disasters[66]. Cybersecurity and Operational Risks - The company has experienced various cyber incidents but has not been materially impacted; however, the risk of future incidents remains high[79]. - The company faces risks related to cybersecurity threats, which may increase operational costs and impact customer information security[84]. - The company acknowledges that climate change poses operational, credit, and reputational risks that could adversely affect its business and customers[96]. Capital Management - The company's capital management strategy aims to return excess capital to shareholders, but negative changes in business conditions could lead to suspended dividend payments[61]. - The company maintains capital ratios above regulatory minimums but may face decreases due to economic changes or capital returns to shareholders[63]. - The Company paid a quarterly cash dividend of $0.35 per common share in each quarter of 2022, with intentions to continue this in 2023[169].

HomeStreet Forward-Looking Statements This presentation includes forward-looking statements, as that term is defined for purposes of applicable securities laws, about our industry, our future financial performance, business plans and expectations. These statements are, in essence, attempts to anticipate or forecast future events, and thus subject to many risks and uncertainties. These forward-looking statements are based on our management's current expectations, beliefs, projections, and related to future p ...

Financial Data and Key Metrics Changes - In Q4 2022, net income was $8.5 million or $0.45 per share, down from $20.4 million or $1.08 per share in Q3 2022. For the full year 2022, net income was $67 million or $3.49 per share [3] - Net interest income in Q4 2022 decreased by $7.3 million compared to Q3 2022, with net interest margin dropping from 3% to 2.53% [48] - The annualized return on average tangible equity for Q4 2022 was 6.4%, while for the full year it was 11.5% [64] Business Line Data and Key Metrics Changes - The cost of interest-bearing liabilities increased by 150 basis points in Q4 2022, while the cost of deposits rose by 58 basis points [4] - Non-interest income decreased in Q4 2022 primarily due to a $4.3 million gain on the sale of branches in Q3 2022 [5] - The loan portfolio grew by $209 million in Q4 2022, with a total growth of $1.9 billion for the year [54] Market Data and Key Metrics Changes - Interest-sensitive deposits declined as customers moved funds to higher-yielding products, creating competition from treasury securities and non-bank money market funds [51] - The weighted average rate for interest-bearing deposits was approximately 16 basis points in Southern California [28] Company Strategy and Development Direction - The company aims to reduce sensitivity to interest rate cycles by downsizing its mortgage banking business and growing non-interest-bearing deposits [7] - Plans to replace wholesale funding with lower-cost promotional deposit products, having raised $1.4 billion in such products by the end of 2022 [10] - The company is acquiring three retail deposit branches from Union Bank to expand its footprint in Southern California [28] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by rising short-term interest rates and expects revenue pressure to peak in Q1 2023 before easing [68] - The company anticipates that the current low point in net interest margin will improve as short-term rates stabilize [69] - Management expressed confidence in credit quality, with non-performing assets remaining low at 13 basis points [49] Other Important Information - The company recorded a $3.8 million provision for credit losses in Q4 2022, primarily due to portfolio growth and increased collateral risk [65] - The effective tax rate for Q4 2022 was 23.7%, with an expected rate of approximately 23% for 2023 [65] Q&A Session Summary Question: What is the margin outlook for the upcoming quarter? - Management indicated that the average margin in December was likely lower than the average due to the Fed's rate hike [33] Question: Can you provide an update on brokered deposits? - Total broker deposits at year-end 2022 were approximately $1.4 billion [104] Question: Will the branch purchase provide a day one benefit to NIM? - Management confirmed that the forecast remains uncertain but previously indicated a potential benefit of 25 basis points [82]

PART I – FINANCIAL INFORMATION [ITEM 1 FINANCIAL STATEMENTS](index=4&type=section&id=ITEM%201%20FINANCIAL%20STATEMENTS) This section presents HomeStreet, Inc.'s unaudited consolidated financial statements for Q3 and the first nine months of 2022, reflecting significant asset growth and net income of $20.4 million for the quarter [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to **$9.07 billion** by September 30, 2022, driven by growth in loans held for investment, while shareholders' equity decreased to **$552.8 million** Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2022 (Unaudited) | December 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $57,256 | $65,214 | | Loans held for investment, net | $7,175,881 | $5,495,726 | | Investment securities | $1,311,941 | $1,006,691 | | **Total assets** | **$9,072,887** | **$7,204,091** | | **Liabilities & Equity** | | | | Deposits | $6,610,231 | $6,146,509 | | Borrowings | $1,569,000 | $41,000 | | Total liabilities | $8,520,098 | $6,488,752 | | Total shareholders' equity | $552,789 | $715,339 | | **Total liabilities and shareholders' equity** | **$9,072,887** | **$7,204,091** | [Consolidated Income Statements](index=5&type=section&id=Consolidated%20Income%20Statements) Net income for Q3 2022 was **$20.4 million**, a decrease from Q3 2021, primarily due to a significant decline in noninterest income from loan origination and sale activities Consolidated Income Statement Highlights (in thousands, except per share data) | Metric | Q3 2022 | Q3 2021 | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Net interest income | $63,018 | $57,484 | $177,620 | $169,973 | | Provision for credit losses | — | $(5,000) | $(9,000) | $(9,000) | | Total noninterest income | $13,322 | $24,298 | $41,893 | $91,355 | | Total noninterest expense | $49,889 | $51,949 | $154,999 | $161,372 | | **Net income** | **$20,367** | **$27,170** | **$58,039** | **$85,990** | | Diluted EPS | $1.08 | $1.31 | $3.03 | $4.03 | [Consolidated Statements of Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) The company reported a total comprehensive loss of **$22.3 million** for Q3 2022, primarily due to unrealized losses on available-for-sale investment securities Comprehensive Income (Loss) (in thousands) | Metric | Q3 2022 | Q3 2021 | Nine Months 2022 | Nine Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $20,367 | $27,170 | $58,039 | $85,990 | | Other comprehensive income (loss) | $(42,668) | $(5,753) | $(127,071) | $(13,264) | | **Total comprehensive income (loss)** | **$(22,301)** | **$21,417** | **$(69,032)** | **$72,726** | [Consolidated Statements of Shareholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity) Shareholders' equity decreased to **$552.8 million** by September 30, 2022, primarily due to other comprehensive loss and common stock repurchases - Total shareholders' equity decreased by **$162.5 million** during the first nine months of 2022[17](index=17&type=chunk) Changes in Shareholders' Equity (Nine Months Ended Sep 30, 2022, in thousands) | Description | Amount | | :--- | :--- | | Beginning Balance (Dec 31, 2021) | $715,339 | | Net Income | $58,039 | | Other comprehensive loss | $(127,071) | | Dividends declared | $(20,435) | | Common stock repurchased | $(76,322) | | **Ending Balance (Sep 30, 2022)** | **$552,789** | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash and cash equivalents decreased by **$8.0 million** for the first nine months of 2022, with significant investing outflows funded by financing activities Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Cash Flow Category | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $209,455 | $182,474 | | Net cash used in investing activities | $(2,378,854) | $(155,370) | | Net cash provided by financing activities | $2,161,441 | $133,509 | | **Net (decrease) increase in cash** | **$(7,958)** | **$160,613** | [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed disclosures on accounting policies, investment and loan portfolios, deposits, debt, mortgage banking, and fair value measurements - In July 2022, the company closed the sale of five retail deposit branches in eastern Washington, transferring **$191 million** of deposits, selling **$43 million** of loans, and recognizing a gain of **$4.3 million**[26](index=26&type=chunk) - The company adopted ASU No. 2022-02 regarding Troubled Debt Restructurings (TDRs) prospectively as of January 1, 2022, which did not have a material impact[29](index=29&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=41&type=section&id=ITEM%202%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses financial performance, highlighting strategic loan portfolio growth, declining noninterest income from mortgage banking, strong credit quality, and robust capital and liquidity [Critical Accounting Estimates](index=41&type=section&id=Critical%20Accounting%20Estimates) Critical accounting estimates include the Allowance for Credit Losses (ACL) and Mortgage Servicing Rights (MSRs) valuation, involving subjective judgments - The two most critical accounting estimates are the Allowance for Credit Losses (ACL) and the valuation of Mortgage Servicing Rights (MSRs)[128](index=128&type=chunk) - A hypothetical downgrade of one grade in the projected unemployment rate would increase the ACL by approximately **$14 million** as of September 30, 2022[130](index=130&type=chunk) [Current Developments](index=45&type=section&id=Current%20Developments) The company focuses on loan portfolio growth for stable net interest income and is optimizing its branch network by selling and acquiring locations - The company is focusing on growing its loan portfolio to generate more stable net interest income, reducing reliance on gain on loan sale activities[137](index=137&type=chunk) - The company is optimizing its branch network by selling 5 branches in eastern Washington and acquiring 3 in southern California, focusing on major metropolitan areas in the western U.S.[138](index=138&type=chunk) [Management's Overview of Financial Performance](index=45&type=section&id=Management's%20Overview%20of%20Financial%20Performance) Q3 2022 net income increased to **$20.4 million** sequentially, but year-to-date net income decreased to **$58.0 million** due to lower mortgage banking gains - Q3 2022 net income rose to **$20.4 million** from **$17.7 million** in Q2 2022, helped by higher net interest income and a **$4.3 million** gain on the sale of branches[139](index=139&type=chunk)[148](index=148&type=chunk) - Net income for the first nine months of 2022 decreased to **$58.0 million** from **$86.0 million** in the prior year period, mainly due to a **$56.0 million** decline in gain on loan origination and sale activities[150](index=150&type=chunk)[160](index=160&type=chunk) - Net interest margin compressed to **3.00%** in Q3 2022 from **3.27%** in Q2 2022, as the cost of interest-bearing liabilities rose faster than the yield on interest-earning assets[143](index=143&type=chunk) [Financial Condition](index=52&type=section&id=Financial%20Condition) Total assets grew by **$1.9 billion** to **$9.1 billion** in the first nine months of 2022, driven by loan portfolio expansion funded by borrowings and deposits Balance Sheet Changes (First Nine Months of 2022, in billions) | Account | Change | | :--- | :--- | | Total Assets | +$1.9 | | Loans Held for Investment | +$1.7 | | Investment Securities | +$0.3 | | Borrowings | +$1.5 | | Deposits | +$0.5 | [Credit Risk Management](index=52&type=section&id=Credit%20Risk%20Management) Credit risk is well-managed with nonperforming assets at **0.15%** of total assets, and a **$9 million** ACL recovery reduced the ACL to LHFI ratio to **0.53%** - Nonperforming assets to total assets remained low at **0.15%** as of September 30, 2022[164](index=164&type=chunk) - A **$9 million** recovery of the allowance for credit losses was recorded in the first nine months of 2022 due to favorable loan performance and improved economic outlook[164](index=164&type=chunk) ACL to LHFI Ratio | Date | ACL to LHFI Ratio | | :--- | :--- | | September 30, 2022 | 0.53% | | December 31, 2021 | 0.88% | [Liquidity and Sources of Funds](index=53&type=section&id=Liquidity%20and%20Sources%20of%20Funds) The company maintains strong liquidity, with **$1.0 billion** available from FHLB, and financing activities largely funded **$2.4 billion** in investing outflows - Primary sources of liquidity include deposits, loan payments, investment security payments, and borrowings[167](index=167&type=chunk) Available Borrowing Capacity (as of Sep 30, 2022) | Source | Capacity | | :--- | :--- | | FHLB | $1.0 billion | | FRBSF | $337 million | | Other financial institutions | $1.2 billion | [Capital Resources and Dividend Policy](index=54&type=section&id=Capital%20Resources%20and%20Dividend%20Policy) HomeStreet, Inc. and HomeStreet Bank exceeded all minimum regulatory capital requirements, with the Bank categorized as 'well-capitalized', and continued quarterly dividends - The company and the Bank exceeded all minimum required capital ratios and were compliant with the capital conservation buffer requirements as of September 30, 2022[179](index=179&type=chunk) Company Capital Ratios (as of Sep 30, 2022) | Ratio | Actual | Minimum Requirement | | :--- | :--- | :--- | | Tier 1 leverage ratio | 7.61% | 4.0% | | Common equity Tier 1 capital ratio | 8.66% | 4.5% | | Total risk-based capital ratio | 11.43% | 8.0% | - A quarterly cash dividend of **$0.35 per common share** was paid in Q3 2022, and another was declared for payment in November 2022[180](index=180&type=chunk) [Non-GAAP Financial Measures](index=57&type=section&id=Non-GAAP%20Financial%20Measures) The company utilizes non-GAAP measures like tangible common equity and an adjusted efficiency ratio to provide supplemental performance insights and facilitate comparisons Key Non-GAAP Reconciliations (as of Sep 30, 2022) | Metric | Value | | :--- | :--- | | Tangible book value per share | $27.92 | | Tangible common equity to tangible assets | 5.8% | | Return on average tangible equity (annualized, Q3) | 14.2% | | Efficiency ratio (Q3) | 68.4% | [Quantitative and Qualitative Disclosures About Market Risk](index=59&type=section&id=ITEM%203%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company's primary market risks are price and interest rate risk, with a liability-sensitive position as of September 30, 2022, projecting a **5.1%** decrease in net interest income from a 100 bps rate increase - The company's primary market risks are price risk and interest rate risk, with no material exposure to foreign currency or commodity price risk[187](index=187&type=chunk)[188](index=188&type=chunk) - As of September 30, 2022, the company is liability-sensitive, meaning net interest income is expected to be negatively impacted by rising interest rates[193](index=193&type=chunk) Net Interest Income Sensitivity to Interest Rate Changes | Change in Interest Rates (bps) | Estimated % Change in NII (as of Sep 30, 2022) | Estimated % Change in NII (as of Dec 31, 2021) | | :--- | :--- | :--- | | +200 | (9.9)% | 7.8% | | +100 | (5.1)% | 3.5% | | -100 | 3.3% | (1.3)% | [Controls and Procedures](index=62&type=section&id=ITEM%204%20CONTROLS%20AND%20PROCEDURES) The CEO and CFO concluded that disclosure controls and procedures were effective as of September 30, 2022, with no material changes to internal control over financial reporting - The CEO and CFO concluded that disclosure controls and procedures were effective as of September 30, 2022[199](index=199&type=chunk) - No material changes to internal control over financial reporting occurred during the third quarter of 2022[201](index=201&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=62&type=section&id=ITEM%201%20LEGAL%20PROCEEDINGS) The company is subject to various legal proceedings in the ordinary course of business, none of which are expected to have a material adverse effect - The company is subject to various legal proceedings in the ordinary course of business, but none are expected to have a material adverse effect[203](index=203&type=chunk) [Risk Factors](index=63&type=section&id=ITEM%201A%20RISK%20FACTORS) This section refers to risk factors detailed in the company's 2021 Form 10-K and Q2 2022 Form 10-Q - For a discussion of risk factors, the report refers to the 2021 Form 10-K and the Q2 2022 Form 10-Q[205](index=205&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=64&type=section&id=ITEM%202%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) No sales of unregistered equity securities occurred during the third quarter of 2022 - There were no sales of unregistered securities during the third quarter of 2022[206](index=206&type=chunk) [Defaults Upon Senior Securities](index=64&type=section&id=ITEM%203%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) This section is not applicable [Mine Safety Disclosures](index=64&type=section&id=ITEM%204%20MINE%20SAFETY%20DISCLOSURES) This section is not applicable [Other Information](index=64&type=section&id=ITEM%205%20OTHER%20INFORMATION) This section is not applicable [Exhibits](index=65&type=section&id=ITEM%206%20EXHIBITS) This section provides an index of exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data files - The report includes required certifications from the CEO and CFO (Exhibits 31 and 32) and XBRL data files[211](index=211&type=chunk) [Signatures](index=66&type=section&id=SIGNATURES) The report is duly signed and authorized by the President and CEO, and Executive Vice President and CFO, on November 4, 2022 - The Form 10-Q was signed on November 4, 2022, by Mark K. Mason (CEO) and John M. Michel (CFO)[214](index=214&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk)

Financial Data and Key Metrics Changes - In Q3 2022, net income was $20.4 million or $1.08 per share, compared to $17.7 million or $0.94 per share in Q2 2022, reflecting a positive trend in profitability [4] - Annualized return on average tangible equity was 14.2%, and annualized return on average assets was 91 basis points, with an efficiency ratio of 68.4% [4] - Net interest income increased by $3 million from Q2 2022, driven by a 13% rise in interest-earning assets, although net interest margin decreased from 3.27% to 3% [4][5] Business Line Data and Key Metrics Changes - The loan portfolio grew by $454 million or 7% in Q3 2022, and year-to-date growth reached $1.7 billion or 31%, primarily due to strong loan origination levels [15] - Noninterest income remained consistent with Q2 2022, with a $4.3 million gain on the sale of Eastern Washington branches offset by a decrease in single-family loan origination and sales activities [9] - Noninterest expenses decreased by $0.7 million compared to Q2 2022, mainly due to reduced headcount from branch sales and lower commission expenses [10] Market Data and Key Metrics Changes - The effective tax rate for Q3 was 23%, expected to remain stable going forward [7] - The ratio of nonperforming assets to total assets remained low at 15 basis points, indicating strong credit quality [9] - The weighted average rate for all interest-bearing deposits was less than 10 basis points, with 39% of deposits being noninterest-bearing [21][93] Company Strategy and Development Direction - The company plans to replace wholesale funding with lower-cost promotional deposit products, aiming to grow certificate and money market deposit balances [18][20] - An acquisition of three retail deposit branches in Southern California is expected to close in Q1 2023, anticipated to improve net interest margin by approximately 25 basis points [20][22] - The company is focused on maintaining a loan-to-deposit ratio below 100%, with efforts to replace borrowings with deposits [83] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges from rising short-term interest rates, which have disrupted financial goals, but expressed confidence in achieving profitability targets in the second half of 2023 [12][39] - The company expects a temporary decline in net interest margin over the next two quarters due to rising wholesale funding costs [23][24] - Management remains optimistic about the credit quality of the loan portfolio, expecting to perform well relative to the industry during potential economic downturns [26][48] Other Important Information - The accumulated other comprehensive income (AOCI) balance declined from a positive $21 million at year-end 2021 to negative $106 million at the end of Q3 2022, impacting tangible book value per share [34][35] - The company has restructured its portfolio to reduce duration and is buying shorter-duration securities to mitigate the impact of rising interest rates [35][37] Q&A Session Summary Question: Margin in September relative to quarterly average - Management indicated that they do not provide month-by-month changes but expect margin compression in Q4 to be similar to Q3 [51][52] Question: Expectations for margin Q4 to Q1 - Management anticipates some recovery in margins, particularly with the expected closing of the deposit deal, which could improve margins by about 25 basis points [53] Question: Increase in net nonaccruals - Management noted that the increase in nonaccruals represents volatility rather than a trend, with delinquency levels remaining stable [57][60] Question: Decline in loan servicing revenue - The decline was attributed to difficulties in hedging and a decay in the servicing portfolio, with no single major factor driving the decrease [64][65] Question: Targeted loan-to-deposit ratio for Q4 - Management prefers to keep the loan-to-deposit ratio below 100% and aims to reduce it over the next several quarters [83] Question: Changes to promotional CD rates - Management did not change promotional CD rates during Q3 but recently increased them to accelerate deposit growth before anticipated rate hikes [85][88]

Financial Performance Highlights - Net income was $17.7 million, or $0.94 per share[4] - Return on Average Equity (ROAE) was 11.8%, Return on Average Tangible Equity (ROATE) was 12.6%, and Return on Average Assets (ROAA) was 0.89%[4] - Net interest margin stood at 3.27%[4] - The efficiency ratio was 68.5%[4] Balance Sheet and Loan Portfolio - Loans held for investment increased by $896 million, a 15% increase during the quarter, driven by record loan production of $1.3 billion[4] - Noninterest-bearing deposits accounted for 27% of total deposits as of June 30, 2022[4, 13] - Total assets reached $8.6 billion[6] - Portfolio loan production reached $2.1 billion in the first six months of 2022[14] Capital Management - The company repurchased 1,471,485 shares at an average price of $50.97 per share during the year, representing 7% of shares repurchased since the beginning of the year[4] - A quarterly cash dividend of $0.35 per share was declared and paid[4] Shareholder Returns - HomeStreet's total shareholder return (TSR) since IPO is 242%[16]

Financial Data and Key Metrics Changes - In Q2 2022, the company's net income was $17.7 million or $0.94 per share, down from $20 million or $1.01 per share in Q1 2022 [4] - The annualized return on average tangible equity was 12.6%, and the annualized return on average assets was 89 basis points [4] - The efficiency ratio improved to 68.5% [4] - The net interest margin remained constant at 3.27%, with a 14 basis point increase in the yield on interest-earning assets offset by a 17 basis point increase in the cost of interest-bearing liabilities [5] Business Line Data and Key Metrics Changes - The loan portfolio grew by $895 million or 15% unannualized, driven by record loan originations across all loan types [12] - Noninterest income decreased by $2.5 million due to a $2.2 million drop in single-family gain on loan origination and sales activities [8] - Noninterest expense decreased by $3.8 million, primarily due to lower compensation costs and deferred cost benefits from higher loan originations [9] Market Data and Key Metrics Changes - The company originated approximately $400 million of loans to new customers who typically would have opted for agency loans [12] - The ratio of nonperforming assets to total assets improved to 13 basis points [7] - Single-family mortgage banking revenues declined to only 6% of total revenues due to a significant drop in mortgage loan volume [23] Company Strategy and Development Direction - The company plans to improve its efficiency ratio to the low 60% levels for the second half of the year and mid-50% range in 2023 [15] - The focus will be on commercial real estate loan originations, particularly multifamily loans, as the principal driver of near-term growth [16] - The company is targeting a return on average assets in excess of 1.1% for the second half of the year and over 1.25% in 2023 [27][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's credit profile, stating it is significantly different from the pre-Great Recession period [22] - The company anticipates continued growth in net interest income and expects meaningful earnings per share growth for the remainder of the year [25] - Management acknowledged the challenges posed by rising interest rates and the potential impact on single-family mortgage volumes [28] Other Important Information - The company is selling its Eastern Washington branches, expecting to realize a gain in excess of $4 million [30] - The company has made significant efficiency improvements and plans to return excess capital to shareholders through dividends and share repurchases [32] Q&A Session Summary Question: What is the outlook for net interest margin (NIM)? - Management indicated that they do not separately disclose individual monthly margins but mentioned that they have not changed base deposit rates [34] Question: What is the rate on the promotional offering? - The current rate is 100 basis points for 7 months and 150 basis points for 13 months, with expectations for increases [35] Question: What is the outlook for loan origination yields? - The weighted average rate for the quarter was approximately 3.80%, with recent rates exceeding 4% [63] Question: What is the expected loan growth for the second half of the year? - The company expects an annualized growth rate of around 10% for the remainder of the year [68] Question: What are the details on the branch sales? - The sale involves both loans and deposits, with an expected loss of about $200 million in deposit funding [72]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ________________________________ FORM 10-Q ________________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: March 31, 2022 OR ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _____ to _____ Commission file number: 001-35424 ________________________________ HOMESTREET, INC. (a ...

1st Quarter 2022 April 25, 2022 Nasdaq: HMST Important Disclosures Forward-Looking Statements This presentation includes forward-looking statements, as that term is defined for purposes of applicable securities laws, about our industry, our future financial performance, business plans and expectations. These statements are, in essence, attempts to anticipate or forecast future events, and thus subject to many risks and uncertainties. These forward-looking statements are based on our management's current exp ...

Financial Data and Key Metrics Changes - In Q1 2022, the company's net income was $20 million or $1.1 per share, down from $29 million or $1.43 per share in Q4 2021 [5] - The annualized return on average tangible equity was 12.2%, and the annualized return on average assets was 1.10% [5] - The efficiency ratio increased to 77% in Q1 2022, compared to previous quarters [15] Business Line Data and Key Metrics Changes - Net interest income decreased by $2.5 million in Q1 2022 compared to Q4 2021, primarily due to lower average loan balances [5] - Non-interest income decreased by $13.1 million in Q1 2022, mainly due to a $4.4 million decrease in single-family gain on loan origination and sales activities [8] - The company recorded a $9 million recovery of its allowance for credit losses in Q1 2022, reflecting improved loan portfolio performance [6] Market Data and Key Metrics Changes - The ratio of non-performing assets to total assets improved to 17 basis points [6] - The ratio of allowance for credit losses (ACL) to total loans was 66 basis points as of March 31, 2022 [7] - The company noted a significant decline in Fannie Mae DUS national loan production, which decreased by 23% quarter-over-quarter [14] Company Strategy and Development Direction - The company aims to grow its loan portfolio organically, with a focus on permanent multifamily loans, which are considered low-risk assets [11][40] - The strategy includes retaining all permanent multifamily loans this year to establish a foundation for future earnings growth [12] - The company plans to improve its efficiency ratio to 60% or below for the second half of the year and to the mid-50% range in 2023 [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a return on average assets in excess of 1.25% in the second half of the year and targeting a return on average tangible equity in the high teens for 2023 and beyond [18] - The company anticipates that earnings growth will be more of a step function upwards rather than incremental [18] - Management acknowledged the challenges posed by rising interest rates but believes they will benefit from a stable or rising interest rate environment [56] Other Important Information - The company completed a $100 million subordinated notes offering and used part of the proceeds for stock repurchases [10] - The first quarter dividend of $0.35 per share represented a 40% increase over the prior quarter [10] - The company has consistently outperformed the KRX benchmark in total shareholder returns over one, three, and five years [20] Q&A Session Summary Question: Loan growth sustainability and geographic strength - Management confirmed that all loan origination is organic and highlighted strong performance in Southern California and Western Washington [26][27] Question: Buyback appetite and stock repurchase plans - Management indicated continued interest in stock buybacks and plans to discuss reentering the repurchase market [34] Question: Commercial real estate concentration limits - Management stated they are comfortable allowing commercial real estate concentration to go to 600% of capital, emphasizing the low-risk nature of permanent multifamily loans [40] Question: Outlook for single-family mortgage revenue - Management expressed caution regarding future single-family mortgage revenue due to low inventory levels and rising interest rates [54] Question: Credit costs and reserve ratios - Management indicated that they expect to start provisioning on a regular basis beginning next year, with current reserves reflecting a recovery in expected losses [70]