HomeStreet(HMST) - 2025 Q3 - Quarterly Report

Financial Performance - Total assets increased to $22.71 billion as of September 30, 2025, up from $16.49 billion at December 31, 2024, representing a 37.5% growth[16] - Net loan and lease receivables rose to $14.40 billion, compared to $9.55 billion in the previous year, marking a 50.5% increase[15] - Total deposits reached $19.45 billion, an increase of 39.5% from $13.94 billion at the end of 2024[16] - Net income for the quarter was $55.16 million, compared to $39.94 million in the same quarter last year, representing a 38.1% increase[20] - Basic earnings per share for Class A common stock increased to $0.25, up from $0.19 year-over-year, a growth of 31.6%[20] - Total comprehensive income for the nine months ended September 30, 2025, was $192,394,000, compared to $158,422,000 for the same period in 2024, reflecting a 21% increase[21] Income and Expenses - Net interest income after provision for credit losses was $98.65 million for the quarter, down from $124.23 million year-over-year, a decrease of 20.6%[18] - Noninterest income surged to $109.78 million for the quarter, compared to $16.90 million in the same quarter last year, reflecting a significant increase[18] - Total noninterest expense increased to $163.33 million for the quarter, compared to $85.65 million in the previous year, reflecting higher operational costs[20] Credit Losses and Provisions - The provision for credit losses on loans and leases was $46.06 million, up from $6.73 million in the prior year, indicating increased risk management measures[18] - The provision for credit losses on loans and leases for the nine months ended September 30, 2025, was $42,663,000, significantly higher than $2,684,000 in 2024[26] - The allowance for credit losses on loans and leases was $168.96 million as of September 30, 2025, compared to $88.56 million at the end of 2024, indicating a significant increase in provisions for potential credit losses[129] Merger and Acquisition - Mechanics Bancorp completed the merger with HomeStreet Bank on September 2, 2025, with legacy Mechanics Bank shareholders owning approximately 91.7% of the combined company on an economic basis[42] - The merger is classified as a reverse acquisition, with Mechanics Bank as the accounting acquirer, and the identifiable assets and liabilities were remeasured at fair value as of the acquisition date[43] - The preliminary purchase price for the acquisition of HomeStreet was $265.8 million, resulting in a preliminary bargain purchase gain of $90.4 million due to HomeStreet's financial distress and significant discount to its tangible book value[88] - HomeStreet reported after-tax losses of $27.5 million in 2023, $144.3 million in 2024, and $8.9 million in the first two quarters of 2025, contributing to its financial distress[88] Loan Portfolio and Quality - The total loan portfolio amounted to $709,239 million as of September 30, 2025, with a year-to-date gross charge-off of $1,221 million[160] - The total past due loans as of September 30, 2025, amounted to $94.199 million, with total loans not past due at $14.474 billion, indicating a past due ratio of approximately 0.65%[139] - The percentage of modified loans in financial distress for commercial and industrial loans was 2.92% as of September 30, 2025, reflecting the company's efforts to assist borrowers[140] - The total amortized cost of loans modified during the quarter ended September 30, 2025, was $11.966 million, with a significant portion attributed to payment delays and term extensions[141] Securities and Investments - The total fair value of available-for-sale securities was $3.49 billion as of September 30, 2025, with a significant portion in mortgage-backed securities[126] - The company executed an investment portfolio restructuring in the first quarter of 2024, selling $1.8 billion of lower yielding AFS securities and realizing a loss of $207.2 million[1] - The company held $1,186,260 thousand in total securities held-to-maturity, down by $177,879 thousand compared to December 31, 2024[1] Regulatory and Compliance - The company’s financial statements are prepared in accordance with U.S. GAAP, ensuring compliance with industry practices[32] - The company will adopt ASU 2023-09, effective after December 15, 2024, which expands income tax disclosures but will not impact financial position[79] - The company is assessing the impact of ASU 2024-03, effective after December 15, 2026, which requires disaggregation of income statement expenses[80] Tax and Community Investments - Tax credits and other tax benefits recognized for Q3 2025 were $1,012,000, compared to $869,000 in Q3 2024, representing a 16.4% increase[171] - The balance of CRA investments increased to $77.9 million as of September 30, 2025, up from $55.9 million at December 31, 2024, reflecting a 39.5% growth[171] - The Company recognized dividend income on CRA investments of $2.3 million for Q3 2025, compared to $1.6 million in Q3 2024, marking a 43.8% increase[171]