HomeStreet(US:HMST)2023-05-10 15:17Financial Performance - Net interest income for Q1 2023 was $49.4 million, down from $55.7 million in Q4 2022, reflecting a decrease of approximately 11.5%[128] - Noninterest income increased to $10.2 million in Q1 2023 from $9.7 million in Q4 2022, representing an increase of about 5.4%[128] - Return on average equity (annualized) was 3.5% in Q1 2023, down from 6.0% in Q4 2022, indicating a significant decrease in profitability[128] - Net income for Q1 2023 was $5.1 million, a decrease from $20.0 million in Q1 2022, with income before taxes dropping from $24.6 million to $6.5 million[147] - Total revenues for the quarter were $59,566,000, down from $65,364,000 in the previous quarter, representing a decline of 8.7%[184] Asset and Liability Management - Total assets grew to $9.86 billion as of March 31, 2023, compared to $9.36 billion at the end of 2022, marking an increase of approximately 5.3%[130] - The loans to deposit ratio increased to 106.4% as of March 31, 2023, compared to 99.9% at the end of 2022, indicating a tighter liquidity position[130] - Total interest-earning assets increased to $9.05 billion in Q1 2023, up from $8.89 billion in Q4 2022[138] - The total interest-bearing liabilities amounted to $7.27 billion in Q1 2023, compared to $7.17 billion in Q4 2022, with a net interest rate spread of 1.71%[138] - The Company had available borrowing capacity of $2.1 billion from the FHLB as of March 31, 2023, down from $2.6 billion at December 31, 2022[167] Credit Quality - Provision for credit losses was $593,000 in Q1 2023, significantly lower than $3.8 million in Q4 2022, indicating improved credit quality[128] - Nonperforming assets increased to $14.9 million as of March 31, 2023, compared to $11.9 million at the end of 2022, reflecting a rise of approximately 25.5%[130] - A provision for credit losses of $0.6 million was recorded in Q1 2023, compared to a $9.0 million recovery in Q1 2022[153] - As of March 31, 2023, the total Allowance for Credit Losses (ACL) was $41,500,000, with a rate of 0.56%, unchanged from December 31, 2022[163] Interest Rate and Liquidity Risk - The net interest margin decreased to 2.23% in Q1 2023 from 2.53% in Q4 2022, a decline of approximately 11.8%[128] - The estimated impact on net interest income over a one-year horizon shows a decrease of (5.0)% with a +300 basis points change in interest rates[196] - The Company is considered liability-sensitive, with a cumulative interest sensitivity gap of $(2.30) million, representing (23)% of total assets[192] - The Company believes it has sufficient liquidity to meet its current needs despite the competitive landscape for deposits in the banking industry[199] Operational Efficiency - Noninterest expense increased to $52.49 million in Q1 2023 from $50.42 million in Q4 2022, primarily due to higher compensation and benefits costs[146] - The efficiency ratio for the quarter was 87.2%, up from 76.2% in the previous quarter, indicating a decline in operational efficiency[184] - The tangible common equity to tangible assets ratio decreased to 5.3% as of March 31, 2023, down from 5.7% at the end of the previous quarter[184] Tax and Dividends - The company’s effective tax rate was 22.0% in Q1 2023, lower than 23.7% in Q4 2022, primarily due to benefits from tax-advantaged investments[137] - The effective tax rate for Q1 2023 was 22.0%, compared to 19.0% in Q1 2022, influenced by tax-advantaged investments[148] - The Company declared a cash dividend of $0.10 per common share payable on May 24, 2023, following a quarterly cash dividend of $0.35 per common share in the first quarter of 2023[177] Growth and Acquisitions - The company acquired three branches in Southern California, gaining $373 million in deposits and $21 million in loans, with total deposit balances reaching $322 million by the end of March 2023[135] - The Company had no material commitments for capital expenditures as of March 31, 2023, but intends to pursue growth opportunities, which may include acquisitions[178]