HomeStreet(US:HMST)2023-08-04 16:42Financial Performance - The company reported a net loss of $31.4 million in Q2 2023, significantly impacted by a goodwill impairment charge of $34.6 million[138]. - Core net income for Q2 2023 was $3.2 million, down from $5.1 million in Q1 2023, reflecting a decrease in net interest income[142]. - Net interest income for Q2 2023 was $43.5 million, compared to $49.4 million in Q1 2023, indicating a decline in earnings[133]. - Noninterest expense surged to $90.8 million in Q2 2023, primarily due to a $39.9 million goodwill impairment charge, compared to $52.5 million in Q1 2023[153]. - Core net income for the six months ended June 30, 2023, was $8.2 million, down from $37.7 million in the same period of 2022, reflecting lower net interest income and higher provisions for credit losses[155]. - The company reported a net loss of $26.4 million for the six months ended June 30, 2023, compared to a net income of $37.7 million for the same period in 2022[155]. - Total revenues for the quarter were $53,787,000, down from $59,566,000 in the previous quarter, representing a decrease of approximately 13%[190]. Asset and Liability Management - The company's total assets increased to $9.5 billion as of June 30, 2023, up from $9.4 billion at the end of 2022[135]. - Total interest-earning assets increased to $9.1 billion in Q2 2023, with an average yield of 4.45%[144]. - The total interest-bearing liabilities rose to $7.4 billion in Q2 2023, with an average cost of 3.08%[144]. - The company experienced a $782 million decrease in deposits, attributed to a decline in brokered certificates of deposit and non-certificates of deposit balances[167]. - Average borrowings increased by $1.1 billion to fund the growth of the loan portfolio and investment securities[159]. - The company reported a cumulative interest sensitivity gap of $(2,145,799) thousand, which is approximately (23)% of total assets[197][198]. Credit Quality and Provisions - The allowance for credit losses (ACL) remained stable at $41.5 million, representing 0.57% of total loans[135]. - Nonperforming assets increased to $41.5 million, representing 0.44% of total assets as of June 30, 2023[135]. - Provision for credit losses recorded a recovery of $0.4 million in Q2 2023, compared to a provision of $0.6 million in Q1 2023, with the allowance for credit losses remaining unchanged at $41.5 million[148]. - The company recorded a $0.2 million provision for credit losses in the first half of 2023, contrasting with a $9.0 million recovery in the same period of 2022[160]. Taxation - The effective tax rate for Q2 2023 was 14.2%, influenced by the non-deductible portion of the goodwill impairment charge[143]. - The effective tax rate for the six months ended June 30, 2023, was 12.5%, significantly impacted by the non-deductible portion of the goodwill impairment charge[156]. - The effective tax rate for core net income was 14.2% for the quarter, reflecting a slight increase from 12.5% in the previous quarter[190]. Interest Rate Risk Management - The company is focused on managing interest rate risk through a simulation model to estimate sensitivity of net interest income to changes in market interest rates[195]. - The estimated impact on net interest income for a +300 basis point change in interest rates is a decrease of 7.3%[202]. - The company is considered liability-sensitive, taking actions to extend the duration of its liabilities through increased levels of term certificates of deposit[198]. - Changes in the mix of interest-earning assets or interest-bearing liabilities can significantly affect net interest margin without altering interest rate sensitivity[199]. - The interest rate spread between earning assets and funding liabilities can vary significantly, impacting net interest income[199]. Capital and Liquidity - HomeStreet, Inc. reported a Tier 1 leverage capital ratio of 6.93% as of June 30, 2023, exceeding the minimum requirement of 4.0%[182]. - The capital conservation buffer for HomeStreet, Inc. was 4.03% as of June 30, 2023, indicating strong capital adequacy above regulatory requirements[182]. - The Company had available borrowing capacity of $2.3 billion from the FHLB as of June 30, 2023, down from $2.6 billion at December 31, 2022[173]. - The company believes it has sufficient liquidity to meet its current needs despite market uncertainties[205]. - The company has $5.6 billion in available contingent liquidity, representing 84% of total deposits, with uninsured deposits at 7% of total deposits[205]. Dividends and Shareholder Returns - The Company declared a cash dividend of $0.10 per common share for the second quarter of 2023, with intentions to continue quarterly dividends subject to Board approval[183]. Operational Efficiency - The efficiency ratio for the quarter was 93.7%, compared to 87.2% in the previous quarter, indicating a decline in operational efficiency[190]. - Return on average tangible equity (annualized) was 2.9% for the quarter, down from 4.1% in the previous quarter[190]. - Tangible book value per share decreased to $27.50 as of June 30, 2023, from $28.41 at the end of 2022[191].