HomeStreet(US:HMST)2020-08-10 20:24Financial 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]