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]

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 ...

Financial Data and Key Metrics Changes - In Q4 2021, the company's net income was $29 million or $1.43 per share, compared to $27 million or $1.31 per share in Q3 2021. For the full year 2021, net income reached a record $115 million or $5.46 per share [5][6] - The annualized return on average tangible equity for Q4 2021 was 17%, while for the full year it was 16.8%. The annualized return on average assets was 1.59% for Q4 and 1.58% for the full year [6] - The efficiency ratio for Q4 2021 was 62.2%, consistent with the previous quarter [17][19] Business Line Data and Key Metrics Changes - Net interest income in Q4 2021 was slightly lower than in Q3 due to a $2.1 million decrease in interest income from PPP loans, offset by higher non-PPP loans. The net interest margin was consistent with Q3 when excluding PPP loans [7] - Non-interest income increased by $4.3 million in Q4 2021 compared to Q3, primarily due to a $2.6 million increase in net gain on loan origination and sales activities [10] - Non-interest expenses increased by $2 million in Q4 2021 compared to Q3, mainly due to higher general administrative costs [11] Market Data and Key Metrics Changes - As of December 31, 2021, outstanding PPP loans were only $38 million, with deferred fees of $1 million [8] - The ratio of non-performing assets to total assets improved to 18 basis points, and the allowance for credit losses (ACL) to total loans ratio was 88 basis points [9] Company Strategy and Development Direction - The company aims to grow its loan portfolio by 10% to 15% in the coming years, focusing on commercial real estate loan originations, particularly multifamily loans [17][19] - The company plans to improve its efficiency ratio to below 60% in the future, leveraging existing infrastructure for growth [19] - The board anticipates discussing an increase in dividends in Q1 2022, contingent on financial conditions and regulatory requirements [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to provide consistent and less volatile earnings moving forward, with expectations of continued recoveries in the allowance for credit losses [16][22] - The company expects Q1 2022 earnings to be lower than Q4 2021 due to the absence of a permanent multifamily loan sale and higher compensation expenses [23][24] - Management noted that while earnings may show volatility in 2022, the decision to increase loan retention early in the year is expected to set a strong foundation for earnings growth [25][26] Other Important Information - The company repurchased 2% of its outstanding common stock in Q4 2021 and declared a dividend of $0.25 per share [12][20] - Total shareholder return over one year, three years, and five years was 58%, 156%, and 72%, respectively, outperforming the KRX index [27][28] Q&A Session Summary Question: Guidance on margin assumptions - Management indicated that margin stability does not include assumptions about Fed rate movements, which could have a generally positive impact [31] Question: Non-interest income expectations - Management expects a decline in non-interest income in Q1 2022 compared to Q4 2021, with lower volume impacting gains on sale [32][33] Question: Expense guidance - Management clarified that guidance for slightly increasing expenses is based on a run rate of around $54 million per quarter, with some non-recurring items from Q4 not expected to carry forward [39][41] Question: Loan prepayment levels - Prepayment rates in Q4 were consistent with Q3, and management expects prepayment levels to drop in 2022 [44][46] Question: Loan sales expectations - Management does not expect to conduct a loan sale in Q1 2022 but may consider one in Q2 based on performance [50][52] Question: Reserve coverage ratio - Management anticipates continued recoveries in the first half of 2022, with normal provisioning expected in 2023 and 2024 [64]

Financial Performance - Net income for Q3 2021 was $27.2 million, down from $29.2 million in Q2 2021, while income before taxes decreased from $37.4 million to $34.8 million[133]. - Noninterest income for Q3 2021 was $24.298 million, down from $28.224 million in Q2 2021, contributing to the overall decrease in income[122]. - The company reported net income of $86.0 million for the nine months ended September 30, 2021, compared to $52.4 million for the same period in 2020[146]. - Net income for the quarter ended September 30, 2021, was $27,170,000, compared to $52,392,000 for the same quarter in 2020, reflecting a decrease of 48%[186]. - Total revenues for the nine months ended September 30, 2021, were $261,328,000, up from $257,435,000 in the same period of 2020, representing a growth of 1.1%[186]. Interest Income and Margin - Net interest income for Q3 2021 was $57.484 million, compared to $57.972 million in Q2 2021, reflecting a decrease in net interest margin from 3.45% to 3.42%[122]. - Net interest income for Q3 2021 was $58.356 million, a decrease from $58.826 million in Q2 2021[137]. - The net interest margin for Q3 2021 was 3.42%, compared to 3.45% in Q2 2021[137]. - Net interest income increased by $114 million due to a rise in interest-earning assets and an increase in net interest margin from 3.09% to 3.39% for the nine months ended September 30, 2021[150]. - The average yield on loans for the nine months ended September 30, 2021, was 3.95%, down from 4.16% in the same period of 2020[148]. Credit Losses and Allowances - Provision for credit losses was $5 million in Q3 2021, an increase from $4 million in Q2 2021, while the allowance for credit losses (ACL) decreased to $54.516 million from $64.294 million[122][124]. - Provision for credit losses recorded a recovery of $5 million in Q3 2021, up from a $4 million recovery in Q2 2021[138]. - Provision for credit losses recorded a recovery of $9 million for the nine months ended September 30, 2021, compared to a provision of $20.5 million in the same period of 2020[152]. - The allowance for credit losses (ACL) totaled $54.5 million, with a reserve rate of 1.06% as of September 30, 2021, down from $64.3 million and 1.33% at December 31, 2020[165]. Assets and Loans - Total assets increased to $7.372 billion as of September 30, 2021, compared to $7.237 billion at the end of 2020[124]. - Loans held for investment, net, rose to $5.299 billion from $5.179 billion at the end of 2020, indicating growth in the loan portfolio[124]. - Total assets as of September 30, 2021, were $7,372,451,000, an increase from $7,204,211,000 as of December 31, 2020[186]. - The ratio of nonperforming assets to total assets remained low at 0.26% as of September 30, 2021, with total loans delinquent over 30 days at 0.54%[161]. Capital and Dividends - HomeStreet Inc. maintained a Tier 1 leverage capital ratio of 10.00% as of September 30, 2021, exceeding the minimum requirement of 4.0%[177]. - The capital conservation buffer for HomeStreet Inc. as of September 30, 2021, was 5.01%, indicating strong capital adequacy[178]. - The company declared a quarterly cash dividend of $0.25 per common share for each of the first three quarters of 2021, with intentions to continue this practice[179]. Cash Flow and Commitments - Net cash provided by operating activities for the nine months ended September 30, 2021, was $182 million, a significant increase from a net cash usage of $40 million in the same period of 2020[171]. - Net cash used in investing activities for the nine months ended September 30, 2021, was $155 million, a decrease from $394 million used in the same period of 2020[172]. - Total off-balance sheet commitments as of September 30, 2021, amounted to $1,260,782 thousand, an increase from $1,113,532 thousand at December 31, 2020[175]. Operational Efficiency - Noninterest expense for Q3 2021 was $51.949 million, down from $52.815 million in Q2 2021[143]. - Total noninterest expense decreased by $9.5 million to $161.4 million for the nine months ended September 30, 2021, driven by lower information services, occupancy, and general administrative expenses[158]. - The efficiency ratio for the quarter ended September 30, 2021, was 62.8%, consistent with the previous quarter, indicating stable operational efficiency[186]. Interest Rate Sensitivity - The company is primarily exposed to price and interest rate risks, with no significant exposure to foreign currency exchange or commodity price risks[187]. - Interest rate sensitivity is managed through an interest rate simulation model, focusing on the repricing characteristics of assets and liabilities[190]. - The company is considered liability-sensitive, with a cumulative interest sensitivity gap of $(2,183,565), representing (30)% of total assets[194]. - A 200 basis point increase in interest rates is projected to increase net interest income by 7.0% and decrease net portfolio value by (7.1)%[198]. - The estimated impact on net interest income for a 100 basis point increase in interest rates is 3.0%, while a decrease of 100 basis points would result in a (4.2)% decline[198].

3rd Quarter 2021 October 25, 2021 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 ...

HomeStreet, Inc. (NASDAQ:HMST) Q3 2021 Earnings Conference Call October 26, 2021 1:00 AM ET Company Participants Mark Mason - Executive Chairman, President & CEO John Michel - EVP & CFO Conference Call Participants Jeff Rulis - D.A. Davidson & Co. Steve Moss - B. Riley Securities Disclaimer*: This transcript is designed to be used alongside the freely available audio recording on this page. Timestamps within the transcript are designed to help you navigate the audio should the corresponding text be unclear. ...

Financial Performance - Net interest income for Q2 2021 was $57.972 million, up from $54.517 million in Q1 2021, contributing to a total of $112.489 million for the first half of 2021, compared to $96.930 million for the same period in 2020[125] - Noninterest income for Q2 2021 was $28.224 million, down from $38.833 million in Q1 2021, leading to a total of $67.057 million for the first half of 2021, compared to $69.232 million in the first half of 2020[125] - For the six months ended June 30, 2021, net income was $58.8 million, significantly up from $26.0 million for the same period in 2020[147] - The net income for the quarter ended June 30, 2021, was $29,157,000, reflecting a decrease from $29,663,000 in the previous quarter[188] - The total revenues for the six months ended June 30, 2021, were $179,546,000, an increase from $165,596,000 in the same period of 2020[188] Credit Quality - Provision for credit losses decreased to $(4.000) million in Q2 2021 from $20.469 million in the same quarter of the previous year, indicating improved credit quality[125] - A recovery of $4 million in the allowance for credit losses was recorded in Q2 2021, compared to no provision in Q1 2021, reflecting favorable loan portfolio performance[140][141] - The provision for credit losses recorded a recovery of $4 million for the six months ended June 30, 2021, compared to a $20.5 million provision in the same period of 2020[153] - Nonperforming assets remained stable at 0.31% of total assets as of June 30, 2021, indicating consistent asset quality[127] - The ratio of nonperforming assets to total assets remained low at 0.31% as of June 30, 2021[163] Assets and Liabilities - Total assets as of June 30, 2021, were $7.168 billion, a slight decrease from $7.237 billion at the end of 2020[127] - Loans held for investment increased to $5.333 billion as of June 30, 2021, from $5.180 billion at the end of 2020, showing growth in lending activities[127] - The total Allowance for Credit Losses (ACL) was $59,897 thousand with a reserve rate of 1.18% as of June 30, 2021, down from $64,294 thousand and 1.33% at December 31, 2020[167] - Interest-bearing liabilities totaled $4,700,703,000, with demand deposit accounts at $557,677,000 and money market accounts at $2,650,564,000[193] Deposits - Deposits increased to $6.087 billion as of June 30, 2021, compared to $5.822 billion at the end of 2020, reflecting strong customer confidence[127] - Total deposits decreased slightly to $4.58 billion in Q2 2021 from $4.59 billion in Q1 2021, with a total cost of deposits at 0.24%[138] - Total deposits increased by $265 million, reflecting growth from new customers and increases in existing customer balances[161] - The cost of deposits, including noninterest-bearing deposits, decreased from 0.86% in the six months ended June 30, 2020, to 0.21% in 2021[150] Tax and Efficiency - The effective tax rate for Q2 2021 was 22.0%, higher than 19.3% in Q1 2021, primarily due to tax benefits from investments[135] - The effective tax rate for the six months ended June 30, 2021, was 20.6%, slightly lower than 20.7% for the same period in 2020[148] - The efficiency ratio for the quarter was 62.8%, compared to 60.0% in the previous quarter[188] Shareholder Returns - The company repurchased 1,126,352 shares of common stock at an average price of $44.39 per share during the first half of 2021, with a new repurchase program approved for up to $15 million[133] - The Company declared a quarterly cash dividend of $0.25 per common share for the first and second quarters of 2021, with intentions to continue this practice[181] Market and Interest Rate Sensitivity - The company is exposed to market risks primarily related to price and interest rate fluctuations[189] - The company is considered liability-sensitive, with a cumulative interest sensitivity gap of $(2,126,507,000), representing (30)% of total assets[195] - A 200 basis point increase in interest rates is projected to increase net interest income by 5.4% and decrease net portfolio value by (11.1)%[199] - The estimated impact on net interest income for a 100 basis point increase in interest rates is a 2.2% increase, while a decrease of 100 basis points would result in a (3.6)% decline[199] - The company’s interest rate sensitivity analysis indicates a potential for positive results in increasing interest rate scenarios due to historical deposit repricing betas[195] Operational Cash Flow - Net cash provided by operating activities was $55 million for the six months ended June 30, 2021, a significant improvement from a net cash usage of $145 million in the same period of 2020[173] - Net cash provided by investing activities was $44 million for the six months ended June 30, 2021, compared to a net cash usage of $371 million in the same period of 2020[174] - The Company used $69 million in financing activities for the six months ended June 30, 2021, primarily due to net repayment of short-term borrowings and dividends paid[175] Growth Strategy - The company plans to pursue opportunities for growth, including opening additional offices or acquiring complementary businesses[182]

Financial Data and Key Metrics Changes - In Q2 2021, the company's net income was $29 million or $1.37 per share, compared to $30 million or $1.35 per share in Q1 2021 [4] - The annualized return on tangible common equity for Q2 was 17.2%, and the annualized return on average assets was 1.59% [4] - The efficiency ratio was reported at 63% [4] - Net interest income increased by 6% in Q2 due to a higher net interest margin of 3.45% and higher levels of interest-earning assets [4][5] - The total deposit costs decreased to 18 basis points in Q2 [4] Business Line Data and Key Metrics Changes - The net gain on loan origination and sales activities decreased by $12.2 million in Q2 compared to Q1, primarily due to lower volume and profit margins on single-family mortgage origination and sales [5] - Loan servicing income increased by $1.2 million due to unfavorable risk management results in Q1 [6] - Noninterest expense decreased by $3.8 million in Q2 compared to Q1, mainly due to lower payroll taxes and a reimbursement of legal costs [7] Market Data and Key Metrics Changes - The company reported a $4 million recovery of its allowance for credit losses in Q2, reflecting the favorable performance of its loan portfolio [5] - The ratio of nonperforming assets to total assets improved to 31 basis points, and the ratio of allowance for credit losses to total loans was 1.18% [5] Company Strategy and Development Direction - The company plans to manage capital efficiently, retaining capital for growth while returning excess capital to shareholders through dividends and share repurchases [11][12] - The company is contemplating utilizing securitizations to support increased multifamily loan originations and improve capital efficiency [17][18] - The company aims to grow its loan portfolio and net interest income while offsetting potential decreases in noninterest income from lower mortgage banking income [19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the economic recovery in their markets due to government stimulus and normalization of economic activity [11] - The company anticipates a slight decrease in origination and sales activities going forward, with expectations of a flat net interest margin excluding the impact of PPP loans [13][14] - Management noted that the pace of normalization in the mortgage banking environment remains difficult to forecast [15] Other Important Information - The company repurchased 3% of its outstanding common stock at an average price of $44.22 per share and declared a dividend of $0.25 per share [7] - The company expects to continue repurchasing shares and paying dividends, with a yield of over 2.5% on common stock [11] Q&A Session Summary Question: Loan production and growth expectations - Management indicated that high single-digit loan growth is expected, potentially reaching low double digits depending on the success of securitization efforts [22] Question: Sustainability of current origination levels - Management believes the current origination level of approximately $900 million is sustainable and hopes to improve on that number [25][26] Question: Share repurchase strategy - Management stated that the $15 million buyback reflects a balance between returning capital to shareholders and retaining capital for growth [30] Question: Loan pricing trends - Current note rates for new production are in the mid- to high 4% range for construction loans and low 3% for single-family and multifamily loans [31] Question: Impact of larger relationships on growth - Management noted that while larger borrowers did not significantly impact this quarter's growth, securitization could benefit larger borrowers in the future [33] Question: PPP loan forgiveness expectations - Management expects a majority of the remaining $204 million in PPP loans to be forgiven by the end of the year, depending on SBA processing and customer actions [85]

Nasdaq: HMST 2nd Quarter 2021 July 26, 2021 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 expe ...