Financial Data and Key Metrics Changes - In Q1 2021, the company's net income was $30 million or $1.35 per share, compared to core net income of $32 million or $1.47 per share in Q4 2020 [5] - The annualized return on tangible common equity for Q1 was 17.3%, and the annualized return on average assets was 1.65% [6] - The efficiency ratio was reported at 60% for the quarter [6] - The effective tax rate for the quarter was 19.3%, benefiting from tax-advantaged investments [6] Business Line Data and Key Metrics Changes - Loan originations in Q1 totaled $769 million, including $123 million of PPP loans [8] - The net interest margin increased to 3.92%, primarily due to lower deposit rates, although net interest income was lower than in Q4 2020 due to a decrease in interest-earning assets [7] - The net gain on loan origination and sales activity decreased by $3.4 million compared to Q4 2020, primarily due to lower volumes of multifamily loans sold [11] Market Data and Key Metrics Changes - Outstanding loans in forbearance in commercial and CRE portfolios decreased to 11 loans and $22 million as of March 31, 2021 [10] - The ratio of non-performing assets to total assets remained low at 32 basis points [10] Company Strategy and Development Direction - The company plans to increase commercial real estate loan originations, both for sale and for its portfolio, due to strong fundamentals and demand in its markets [27] - The company is focusing on cost reduction and profitability improvement, with meaningful reductions in non-interest expenses [16] - The company is exploring M&A opportunities to enhance its deposit franchise and create greater density in primary markets [56][58] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the economic recovery driven by government stimulus and the normalization of economic activity [19] - The company anticipates lower origination and gain on sales activities in the single-family mortgage banking business as long-term interest rates rise [22] - Management expects to release some of the allowance for credit losses in the near future due to low levels of problem loans [17] Other Important Information - The company repurchased 3% of its outstanding common stock at an average price of $44.56 per share and declared a dividend of $0.25 per share [12] - The company expects to recognize approximately $9 million of deferred fees from PPP loans over the next three quarters [77] Q&A Session Summary Question: Loan demand and growth expectations - Management expects total loan growth this year in the high single-digit percentage range, subject to prepayment activity [37] Question: Funding costs expectations - Management anticipates continued decline in funding costs, with expectations of lower single-digit basis points over the next couple of quarters [39][42] Question: Capital management and buyback plans - Management indicated an expectation to continue the $25 million per quarter repurchase program [44] Question: Liquidity deployment from PPP loan forgiveness - Management plans to pay down borrowings first and then return excess capital to shareholders through dividends and share repurchases [53] Question: Gain on sale margins outlook - Management expects single-family profitability margins to normalize this year, with potential volatility [67] Question: Non-interest expense expectations - Management anticipates total non-interest expenses to decline in the second half of the year as mortgage volume normalizes [26] Question: Allowance for credit losses outlook - Management expects the allowance for credit losses to normalize to levels at or below pre-pandemic levels [125]

1st Quarter 2021 as of April 26, 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 curre ...

Financial Performance - Net income for 2020 was $80.0 million, up from $17.5 million in 2019, representing a growth of approximately 356.6%[193]. - Noninterest income rose to $149.4 million in 2020, compared to $74.4 million in 2019, marking an increase of approximately 100.5%[193]. - Net interest income for 2020 was $208.7 million, an increase from $189.4 million in 2019, reflecting a growth of approximately 10.8%[193]. - The efficiency ratio improved to 61.4% in 2020 from 79.4% in 2019, indicating better cost management[193]. - Total assets increased to $7.24 billion in 2020 from $6.81 billion in 2019, reflecting a growth of approximately 6.1%[196]. - Loans held for sale increased significantly to $361.9 million in 2020 from $208.2 million in 2019, a rise of approximately 73.7%[196]. - The allowance for credit losses (ACL) increased to $64.3 million in 2020, up from $41.8 million in 2019, indicating a higher reserve for potential loan losses[196]. - Noninterest expense increased by $20 million in 2020, totaling $235.7 million, attributed to higher compensation and benefits, occupancy costs, and general administrative expenses[211]. - The company recorded a $100.8 million gain on single-family loan origination and sale activities in 2020, compared to $86.7 million in 2019[206]. Loan Products and Services - HomeStreet's loan products include commercial business loans, single-family residential mortgages, and construction loans[22]. - The company offers a variety of loan products, including commercial real estate loans, construction loans, and residential construction loans, all requiring substantial equity from borrowers[37][38][39]. - Multifamily residential mortgage loans are offered for terms up to 30 years, with adjustable rates tied to independent indices[36]. - Consumer installment loans are provided for terms ranging from one to five years, underwritten based on borrower creditworthiness and ability to repay[41]. - In 2020, the company originated 1,822 PPP loans totaling $298 million, with $277 million still outstanding as of December 31, 2020[186]. Risk Management and Regulatory Compliance - The company has a hedging program in place to manage the volatility of mortgage servicing rights (MSRs) due to changes in prepayment speeds[42]. - The company actively manages its capital levels with a goal of returning excess capital to shareholders, but negative changes in business conditions could lead to a suspension of dividend and stock repurchase programs[125]. - The company is subject to extensive and complex regulations, which can be costly to comply with and may result in significant penalties for noncompliance[135]. - The company is subject to evolving regulatory requirements, which increase compliance costs and complexity[137]. - The Company is required to maintain a common equity Tier 1 capital ratio of at least 4.5% and a total risk-based ratio of 8.0% or more[69]. - The Company and the Bank must maintain a "conservation buffer" of at least 2.5% above the required minimum capital levels[70]. - The Company is prohibited from acquiring control of another depository institution without prior approval from the Federal Reserve[78]. Impact of COVID-19 - The COVID-19 pandemic has resulted in financial hardship for certain industries, impacting the Bank's financial position and results of operations[114]. - The company has significantly increased its allowance for credit losses due to the negative economic impacts of the COVID-19 pandemic, but the adequacy of this allowance remains uncertain, potentially leading to future net charge-offs exceeding current expected losses[116]. - The company has implemented safety measures and protocols in response to COVID-19, including facilitating work-from-home capabilities for approximately 50% of its workforce[57][58]. - The company is working with COVID-19 affected borrowers to defer payments, which may impact future interest income and credit losses[181]. - The company has executed multiple assistance programs for borrowers affected by COVID-19, including loan forbearance programs[185]. - The company’s ability to pay dividends in future periods is uncertain due to the ongoing impacts of the COVID-19 pandemic[187]. Employee and Community Engagement - The employee headcount was 1,030, with a turnover rate of 23% and a voluntary turnover rate of 16% for the year ended December 31, 2020[49]. - The company is committed to diversity, equity, and inclusion, focusing on recruiting and retaining employees from various backgrounds[52]. - The company supports employee community involvement by allowing time off for volunteering and providing financial contributions to organizations where employees are actively involved[59]. Market and Economic Conditions - The company is geographically concentrated in the Western United States, making it vulnerable to local economic volatility and natural disasters that could disproportionately affect its operations[129]. - The financial services industry is highly competitive, with pressure to adapt to evolving customer preferences and technology[149]. - Changes in monetary policy by the Federal Reserve could adversely impact the company's results of operations[142]. - Fluctuations in interest rates may negatively affect the company's profitability and financial results[144]. - The company's earnings depend on the interest rate spread between loans and deposits, which can be impacted by market interest rate changes[145]. - The transition from LIBOR to SOFR may create uncertainty and affect the company's financial instruments[150]. Strategic Growth and Acquisitions - The company aims to grow by marketing services directly to new customers and making opportunistic acquisitions[17]. - HomeStreet has a history of strategic acquisitions to enhance its market presence and service offerings[20].

Financial Data and Key Metrics Changes - In Q4 2020, the company reported net income of $28 million, or $1.25 per share, compared to $26 million in Q3 2020. Core income was $32 million, or $1.47 per share, up from $28 million in Q3 2020. Pre-provision core income before income taxes was $41 million, compared to $36 million in Q3 2020 [5][6][18] - The net interest margin increased to 3.26% due to continued decreases in funding costs [9][17] - The return on average assets for the full year 2020 was 1.23%, and for Q4 2020, it was 1.73%. The return on average tangible common equity was 13.4% for the full year and 19% for Q4 2020 [18][19] Business Line Data and Key Metrics Changes - The single-family and consumer loan origination and sales volumes remained strong, driven by a mortgage refinancing boom. The increase in non-interest income was attributed to higher sales of multi-family loans and servicing income [12][17] - The company recognized a $6.1 million charge related to the impairment of lease and fixed assets due to restructuring, which is expected to save approximately $1.3 million annually over the next seven years [6][20] Market Data and Key Metrics Changes - Loans in forbearance for commercial and CRE portfolios were $41 million, representing 1.2% of such loans outstanding. New forbearances granted in Q4 2020 were less than $7 million [10][11] - Single-family loans in forbearance, excluding those guaranteed by Ginnie Mae, were $76 million, with expectations for additional forbearance requests in 2021 due to recent legislation [11] Company Strategy and Development Direction - The company plans to maintain and build on cost efficiency gains achieved over the last two years, focusing on profitable growth and strong infrastructure [33][37] - The transfer of the Fannie Mae multifamily lending business to HomeStreet Bank has already resulted in higher loan origination volumes and is expected to continue [25] - The company is evaluating real estate space needs in a post-COVID environment and implementing scalable technology solutions for greater efficiency [26][33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the credit quality of the loan portfolio, which is primarily secured by high-quality real estate [29][30] - The company anticipates that single-family mortgage volumes will remain robust due to the low interest rate environment, although margins may normalize as capacity in the industry adjusts [23][24] - The company expects to continue returning excess capital to shareholders through dividends and share repurchases [20][35] Other Important Information - The company returned $73 million of excess capital to shareholders in 2020 through dividends and share repurchases, with tangible book value per share increasing by 16% [20][21] - The company has a centennial anniversary in 2021, marking its long-standing presence in the community [38][39] Q&A Session Summary Question: What is the impact of new money loan origination yields and PPP on the margin? - The impact of PPP on the margin was less than one basis point, about $0.5 million in income, with most to be recognized in 2021. New originations saw a yield decrease of about 16 basis points in Q4 2020 [46][48] Question: How is the commercial business performing relative to CRE? - Loan growth in the general C&I area is slow, with a reasonable origination quarter in the commercial business. The focus for growth is expected to be in multifamily loans [49][50] Question: What are the expectations for capital levels and potential buybacks? - The board will review the loan portfolio and credit status before making decisions on buybacks. Consistent authorization sizes are expected going forward [53][54] Question: What is the outlook for non-interest expenses? - The company expects operating leverage, with revenues growing without a commensurate increase in non-interest expenses. Some costs may increase due to inflation and technology spending [62][63] Question: What are the expectations for mortgage volumes in 2021 and beyond? - The company anticipates elevated mortgage volumes, with a potential stabilization in the single-family portfolio as prepayment levels decrease [122][135]

4th Quarter 2020 Nasdaq: HMST as of January 25, 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 cur ...

Financial Performance - Net interest income for Q3 2020 was $55.7 million, up from $47.1 million in Q3 2019, representing a 18.5% increase[247] - Noninterest income increased to $36.2 million in Q3 2020 from $24.6 million in Q3 2019, a growth of 47.1%[247] - Income from continuing operations for Q3 2020 was $26.3 million, compared to $13.7 million in Q3 2019, marking a 92.0% increase[260] - Book value per share increased to $31.66 as of September 30, 2020, up from $28.45 at the end of 2019, a rise of 7.7%[249] - HomeStreet Inc. reported a net income of $26,349,000 for the quarter ended September 30, 2020, resulting in a return on average tangible equity of 15.3%[341] - Income from continuing operations for the nine months ended September 30, 2020, was $52.4 million, compared to $27.6 million for the same period in 2019[274] Asset and Liability Management - Total assets increased to $7.41 billion as of September 30, 2020, up from $6.81 billion at the end of 2019, reflecting an 8.7% growth[249] - The total assets increased to $7,499,809 thousand as of September 30, 2020, compared to $7,004,265 thousand as of September 30, 2019[263] - The company reported total assets of $7,409,641,000 as of September 30, 2020, an increase from $6,812,435,000 at December 31, 2019[341] - The company's total assets as of September 30, 2020, amount to $7,409,641,000, with interest-earning assets totaling $6,933,224,000[350] Credit Losses and Provisions - The provision for credit losses was $20.5 million for the nine months ended September 30, 2020, compared to $1.5 million for the same period in 2019[247] - The allowance for credit losses rose to $64.9 million as of September 30, 2020, compared to $41.8 million at the end of 2019, an increase of 55.3%[249] - Provision for credit losses increased significantly to $20.5 million for the nine months ended September 30, 2020, from $1.5 million in the same period of 2019, due to adverse economic conditions related to the COVID-19 pandemic[280] - The company recorded a provision for credit losses of $20.5 million for the nine months ended September 30, 2020, with the allowance for credit losses (ACL) for loans increasing by $23 million[298] Deposits and Loans - The total deposits decreased to $4,326,808 thousand in Q3 2020 from $4,846,585 thousand in Q3 2019[263] - Total deposits increased by $476 million to $4,293 million, attributed to a $547 million rise in business and consumer accounts[289] - Loans held for investment increased to $5,294 million as of September 30, 2020, from $5,115 million at the end of 2019, with significant originations including $298 million under the PPP[293] - As of September 30, 2020, total loans amounted to $5,254,339,000, with 0.76% classified as past due and still accruing[314] Efficiency and Cost Management - The efficiency ratio improved to 59.9% in Q3 2020 from 75.9% in Q3 2019, indicating better cost management[247] - Total noninterest expense increased to $58,057 thousand in Q3 2020 from $55,721 thousand in Q3 2019, mainly due to $2.4 million in impairments related to restructuring[273] - Noninterest expense rose to $170,893 thousand for the nine months ended September 30, 2020, compared to $162,399 thousand in 2019, mainly due to increased compensation and benefits costs[287] Tax and Regulatory Compliance - The effective tax rate for the third quarter of 2020 was 22.0%, compared to 14.6% in the third quarter of 2019, with a statutory rate of 23.7%[261] - The effective tax rate for the nine months ended September 30, 2020, was 21.4%, up from 15.0% in the same period of 2019[275] - HomeStreet Inc. maintained a Tier 1 leverage capital ratio of 9.34% as of September 30, 2020, exceeding the minimum requirement of 4.0%[333] - Total risk-based capital ratio for HomeStreet Bank was 13.95% as of September 30, 2020, well above the minimum requirement of 8.0%[333] Interest Rate Sensitivity - The interest sensitivity gap is reported at $(2,241,727,000) for the 3-month period, indicating a significant exposure to interest rate changes[350] - A 200 basis point increase in interest rates is projected to increase net interest income by 3.3% and decrease net portfolio value by 6.1% as of September 30, 2020[354] - The estimated impact on net interest income for a 100 basis point increase in interest rates is 1.1%, while a decrease of 100 basis points would result in a decline of 3.6%[354] - The company is considered liability sensitive, as indicated by the gap table and projected changes in net portfolio value[356] COVID-19 Impact and Response - The company had 375 loans approved for forbearance totaling $206 million as of September 30, 2020, due to the COVID-19 pandemic[256] - The company closed or approved 1,822 Paycheck Protection Program loans, amounting to $298 million in outstanding balances as of September 30, 2020[257] - The company approved second forbearances for $66 million of loans during the third quarter, indicating ongoing support for borrowers affected by the COVID-19 pandemic[301] - The company is actively managing risks associated with the COVID-19 pandemic, with a focus on credit, market, and operational risks[319]

Financial Data and Key Metrics Changes - In Q3 2020, the company's net income was $26 million or $1.15 per share, compared to $18.9 million in Q2 2020, representing a significant increase [6] - Core income for Q3 was $28 million or $1.23 per share, up from $20.2 million in Q2 [6] - Pre-provision core income before income taxes was $36 million in Q3, compared to $32 million in Q2 [6] - The net interest margin increased to 3.20% in Q3 due to decreased funding costs, while the cost of deposits was 36 basis points [7][8] Business Line Data and Key Metrics Changes - The company recorded a decrease in non-interest income due to a $4 million drop in loan servicing income, partially offset by a $3 million increase in gains on sales of loans [12] - The increase in loan sales was attributed to higher volumes of commercial real estate loans sold in Q3 [13] - Non-performing assets to total assets remained low at 30 basis points, with total loans delinquent over 30 days decreasing to 76 basis points [8] Market Data and Key Metrics Changes - The company experienced a favorable performance in its loan portfolio, with a decrease in loans in forbearance and stable low levels of non-performing assets [8][10] - 97% of commercial and industrial loans granted forbearance prior to Q3 have resumed payments [10] Company Strategy and Development Direction - The company plans to focus on growth and maintaining capital to support growth while returning excess capital to shareholders through repurchases and dividends [35] - The transition to a more consistent and durable level of core profitability and efficiency is emphasized, with a focus on cost control and technology investments [36][39] - The company reorganized its Fannie Mae business to enhance profitability by offering larger loans with higher profitability [30][32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the credit quality of the loan portfolio, citing strong performance despite pandemic challenges [25][27] - The company anticipates that mortgage volumes will remain robust due to low interest rates, although profit margins may decline as capacity normalizes in the industry [17][18] - There is significant uncertainty regarding the pandemic's long-term impact, but management does not foresee a need for additional provisions for loan losses at this time [27][93] Other Important Information - The Board of Directors declared a $0.15 per share common stock dividend, with discussions of a potential increase in the first quarter of the following year [33][34] - The company completed a $25 million stock repurchase authorization, buying back 20% of its outstanding shares over six quarters [29] Q&A Session Summary Question: What is the core expense baseline excluding facility impairments? - Management indicated a stable expense environment, with expectations of $53 million to $54 million per quarter in the future, accounting for inflation and normal expenses [50][51] Question: What are the expectations for loan runoff and growth? - Management expects loan balances to stabilize and grow somewhat by the end of next year, despite high prepayment speeds and PPP loan runoff [108] Question: What are the current loan yields and funding costs? - New loan yields are lower than desired, with construction lending in the high 4% range and single-family mortgage rates around 3% to 3.25% [66] - The cost of deposits was 36 basis points at quarter-end, down from the 40s earlier [68] Question: How is the company managing excess liquidity? - The company plans to grow its loan portfolio again, but acknowledges the challenges posed by high prepayment speeds [72] Question: What are the expectations for mortgage banking income? - Management anticipates a decline in mortgage banking income over the next few quarters, but expects volume to remain strong due to low mortgage rates [110]

Financial Performance - Net interest income for Q2 2020 was $51.5 million, an increase from $49.2 million in Q2 2019, while noninterest income rose to $36.6 million from $19.8 million[271] - Income from continuing operations for Q2 2020 was $18.9 million, compared to $8.9 million in Q2 2019, marking a significant increase[284] - Total revenues increased to $87,532 in Q2 2020 from $69,016 in Q2 2019, with net interest income rising to $51,496 from $49,187[369] - Noninterest income surged to $36,602 in Q2 2020, compared to $19,829 in Q2 2019, reflecting a strong performance in fee-based services[369] - Net income for the quarter ended June 30, 2020, was $18,904, a significant recovery from a loss of $5,588 in the same quarter of 2019, resulting in a return on average tangible equity of 11.4%[369] Asset and Liability Management - Total assets as of June 30, 2020, reached $7.35 billion, up from $6.81 billion at the end of 2019[274] - The total interest-earning assets amounted to $6.670 billion in Q2 2020, with an average yield of 3.74%[287] - As of June 30, 2020, total assets amounted to $7,351,118,000, with interest-earning assets at $6,989,229,000[378] - Interest-bearing liabilities totaled $5,178,891,000, with the largest component being money market accounts at $2,471,388,000[378] Credit Losses and Forbearance - Provision for credit losses increased to $6.5 million in Q2 2020 from $0 in Q2 2019, reflecting the impact of the COVID-19 pandemic[271] - The allowance for credit losses increased to $65 million as of June 30, 2020, compared to $41.8 million at the end of 2019[274] - The company granted forbearance on 572 loans with an outstanding balance of $350 million due to COVID-19 impacts[280] - The company recorded a provision for credit losses of $20.5 million for the six months ended June 30, 2020, due to adverse economic conditions related to the COVID-19 pandemic[325] - As of June 30, 2020, 88% of commercial and industrial loans granted forbearance have resumed payments, with only 3% requesting a second forbearance[328] Capital and Dividends - HomeStreet Inc. had a Tier 1 leverage capital ratio of 9.73%, exceeding the minimum requirement of 4.0%[360] - HomeStreet Bank's total risk-based capital ratio was 14.08%, surpassing the minimum requirement of 8.0%[360] - The company declared a quarterly cash dividend of $0.15 per common share for the first and second quarters of 2020, with intentions to continue this practice[362] - The company maintains a capital conservation buffer of more than 2.5% above required minimum levels to avoid limitations on dividends and share repurchases[360] Efficiency and Cost Management - The efficiency ratio improved to 62.6% in Q2 2020 from 82.4% in Q2 2019, indicating better cost management[271] - Total noninterest expense decreased to $57.652 million in Q2 2020 from $58.832 million in Q2 2019, mainly due to cost-saving initiatives[299] - Total noninterest expense rose to $112,836 for the six months ended June 30, 2020, compared to $106,678 in the same period of 2019, primarily due to increased compensation and benefits costs[316] Loans and Deposits - Total loans held for investment (LHFI) increased by $294 million, or 5.8%, to $5,432,278 as of June 30, 2020, due to $1.5 billion in originations[321] - Total deposits decreased to $4.220 billion in Q2 2020 from $4.362 billion in Q2 2019, with a cost of deposits of 0.78%[287] - Total deposits increased by $316 million, or 5.9%, from December 31, 2019, reaching $5,656,321 thousand as of June 30, 2020[322] Risk Management - The company actively managed various risks, including credit risk and market risk, particularly in response to challenges posed by the COVID-19 pandemic[344] - A Crisis Management Team was established to oversee the implementation of federal programs such as the CARES Act in response to the pandemic[345] - The company remains cautious in evaluating credit risk in loans with forbearance due to the uncertain pandemic environment[330] Interest Rate Sensitivity - The interest sensitivity gap was reported at $(2,491,841,000), indicating a liability-sensitive position[378] - A 200 basis point increase in interest rates is projected to increase net interest income by 3.1% over one year[382] - The company experienced a 4.9% decrease in net interest income with a 200 basis point decrease in interest rates[382]

Financial Data and Key Metrics Changes - In Q2 2020, net income was $18.9 million, or $0.81 per share, compared to $7.1 million, or $0.30 per share, in Q1 2020, representing a significant increase [9] - Core income for Q2 2020 was $20.2 million, or $0.86 per share, up from $8.1 million, or $0.34 per share, in Q1 2020 [9] - Pre-provision core income before income taxes was $32 million in Q2 2020, compared to $24.1 million in Q1 2020 [9] - Net interest margin increased to 3.12% in Q2 2020, attributed to decreased funding costs [10] Business Line Data and Key Metrics Changes - Non-interest income increased by $7.5 million in Q2 2020 due to higher gains on loan sales, partially offset by a $3.7 million decrease in loan servicing income [15] - Non-interest expense rose by $2.5 million in Q2 2020, primarily due to non-core charges and additional compensation costs related to loan origination [16] Market Data and Key Metrics Changes - The commercial business loan portfolio showed resilience, with 88% of loans granted forbearance resuming regular payments [22] - Forbearance on commercial business loans declined by 91% to $4.5 million, and for owner-occupied CRE loans by 77% to $21.3 million as of June 30 [23] Company Strategy and Development Direction - The company aims to support communities and customers while maintaining employee safety during the pandemic [29] - A focus on cost efficiency and strong mortgage banking profitability contributed to solid financial performance [18] - The company plans to resume its share repurchase program, having repurchased 396,795 shares at an average price of $24.17 [32] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the loan portfolio's performance amid the pandemic, noting that many borrowers have reopened businesses [20] - The company anticipates average loans held for investment to increase moderately, offset by high levels of prepayments and forgiveness of PPP loans [35] - Management expects net interest margin to continue increasing, with further declines in deposit costs anticipated [37] Other Important Information - The company has a strong capital base, with consolidated Tier 1 risk-based capital ratios of 9.3% and 13.48% [30] - An additional $25 million stock repurchase program was approved by the Board, reflecting strong second-quarter results [33] - The company recorded a slight increase in non-accrual loans due to downgrading of a few commercial business loans acquired prior to the pandemic [25] Q&A Session Summary Question: Margin expectations and PPP impact - Management confirmed that margin expectations include the impact of PPP income, which is expected to decline as forgiveness occurs [56][57] Question: Non-accrual loans and segments - Non-accrual loans were primarily related to dental practice loans, which have shown strong recovery with most practices operating at 70%-80% of normal revenue [61][63] Question: Reserve build methodology - Management explained that reserves are conservatively built based on current credit health and increased probabilities of default for loans in forbearance [64][66] Question: Loan pipeline and yields - The company noted that loan yields are low due to competitive rates, with commercial real estate loans averaging between 3.40% to 3.70% [82][87] Question: IT expenses and efficiency ratio - Significant reductions in IT expenses are expected in 2021 due to renegotiated contracts, contributing to improved efficiency ratios [88][90] Question: Real estate plans and office space - The company is reconsidering its real estate needs, with excess space in Seattle and potential changes in office requirements due to remote work trends [131][134]

Bank 2nd Quarter 2020 Nasdaq: HMST as of July 28, 2020 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 c ...