HomeStreet, Inc. (NASDAQ:HMST) Q4 2022 Earnings Conference Call January 30, 2023 1:00 PM ET Company Participants Mark Mason - Chief Executive Officer, President, and Chairman John Michel - Chief Financial Officer Conference Call Participants Matthew Clark - Piper Sandler Woody Lay - KBW Operator Good afternoon. Thank you for attending today’s Fourth Quarter 2022 Earnings Release Call for HomeStreet Bank. Joining us on this call is Mark Mason, CEO, President, and Chairman of the Board. I would now like to pa ...

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]

[HomeStreet] meStreet reet ESTY 2nd Quarter 2022 July 25, 2022 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 manage ...

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 ...

Call Start: 13:00 January 1, 0000 1:39 PM ET HomeStreet, Inc. (NASDAQ:HMST) Q1 2022 Earnings Conference Call April 26, 2022, 1:00 PM ET Company Participants Mark Mason – Chairman and Chief Executive Officer John Michel – Chief Financial Officer Conference Call Participants Jeff Rulis – D.A. Davidson & Co. Matthew Clark – Piper Sandler Woody Lay – Keefe, Bruyette & Woods Steve Moss – B. Riley Securities Operator Hello, and thank you for attending today's HomeStreet Q1 2022 earnings call. My name is Selena an ...

Financial Performance - Net income for 2021 was $115.4 million, an increase of 44.8% compared to $80.0 million in 2020[123]. - Net interest income rose to $227.1 million in 2021 from $208.7 million in 2020, reflecting a net interest margin increase from 3.13% to 3.38%[125][128]. - Provision for credit losses recorded a recovery of $15.0 million in 2021, compared to a provision of $20.5 million in 2020 due to improved loan portfolio performance[129]. - Noninterest income decreased to $120.0 million in 2021 from $149.4 million in 2020, primarily due to a decline in gain on loan origination and sale activities[130]. - The efficiency ratio improved slightly to 61.9% in 2021 from 61.4% in 2020, reflecting better cost management[120]. - The company reported a return on average equity of 15.9% in 2021, up from 11.3% in 2020, indicating enhanced profitability[120]. - Nonperforming assets decreased to $12.9 million in 2021 from $22.1 million in 2020, showing improved credit quality[120]. - Total noninterest income decreased to $119,975 thousand in 2021 from $149,364 thousand in 2020, reflecting a decline of about 19.6%[211]. Asset and Loan Management - As of December 31, 2021, HomeStreet had total assets of $7.2 billion, loans of $5.7 billion, and deposits of $6.1 billion[14]. - Loans held for investment increased to $5.5 billion in 2021 from $5.2 billion in 2020, while loans held for sale decreased significantly from $361.9 million to $176.1 million[120]. - The total LHFI less allowance for credit losses (ACL) was $5.496 billion at the end of 2021, compared to $5.180 billion at the end of 2020[138]. - Total loan originations increased to $3,279,593 thousand in 2021, up 15.2% from $2,846,270 thousand in 2020[141]. - The ratio of nonperforming assets to total assets remained low at 0.18% as of December 31, 2021, indicating strong asset quality[148]. - The company approved forbearances for 140 loans totaling $176.985 million due to the COVID-19 pandemic, with 99% of commercial and CRE loans having completed their forbearance period[155]. Capital Management - The company’s financial condition and capital position may be adversely affected by uncertainties related to the transition from LIBOR[70]. - The company has maintained capital ratios above regulatory minimums, but future economic changes could decrease these ratios, potentially requiring additional capital raising[46]. - HomeStreet Inc. reported Tier 1 leverage capital of $723,232 thousand with a ratio of 9.94% as of December 31, 2021, exceeding the minimum requirement of 4.0%[167]. - Common equity tier 1 capital for HomeStreet Inc. was $663,232 thousand, representing a ratio of 10.84%, above the minimum requirement of 4.5%[167]. - Total risk-based capital for HomeStreet Inc. stood at $774,695 thousand with a ratio of 12.66%, surpassing the minimum requirement of 8.0%[167]. - The Company maintained a capital conservation buffer of 4.66% as of December 31, 2021, above the required minimum of 2.5%[169]. Regulatory and Compliance Issues - The company faces extensive regulations that increase compliance costs and could lead to significant penalties for noncompliance[54]. - Federal and state banking regulations limit dividends from the bank subsidiary, and the board of directors may not declare cash dividends exceeding retained earnings without regulatory approval[87]. - The transition from LIBOR to alternative indices, such as SOFR, may lead to increased borrowing costs and litigation exposure for the company[67]. - The company is subject to federal and state privacy regulations, which impose obligations to protect confidential information and could result in penalties for non-compliance[82]. Employee and Community Engagement - The employee headcount was 984, with a turnover rate of 24% and a voluntary turnover rate of 21% for the year ended December 31, 2021[16]. - The company achieved a vaccination status of over 80% among employees, supported by wellness credits as an incentive[25]. - The company has established a Diversity Committee to promote opportunities for all employees and combat discrimination[20]. - The company has a commitment to community involvement, allowing employees time off to volunteer and providing financial contributions to organizations where employees are actively involved[26]. Market and Economic Conditions - The company derives a portion of its revenue from residential mortgage lending, which is subject to significant volatility due to interest rate changes and housing inventory shortages[42]. - Changes in monetary policy by the Federal Reserve could adversely impact the company's liquidity and financial condition[60]. - Fluctuations in interest rates can significantly affect the company's profitability, impacting loan demand and interest rate spreads[61]. - Inflationary pressures and increases in market interest rates are expected to affect operations, with higher compensation costs anticipated in 2022[110]. - The company is geographically confined to certain metropolitan areas in the Western United States, making it vulnerable to local economic volatility and natural disasters[48]. Technology and Cybersecurity - Cybersecurity risks continue to pose a threat, with potential for financial losses and reputational damage due to breaches or fraudulent activities[76]. - The company may face challenges in implementing new technology-driven products and services due to limited resources compared to larger competitors[85].

4th Quarter 2021 January 24, 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 e ...