HomeStreet(US:HMST)2023-11-07 22:13Financial Performance - Net interest income for Q3 2023 was $38.9 million, down from $43.5 million in Q2 2023, and total net income was $2.3 million compared to a loss of $31.4 million in Q2 2023[134][142]. - Core net income for the quarter ended September 30, 2023, was $2,295,000, compared to a net loss of $31,442,000 for the previous quarter[187]. - Core net income for the nine months ended September 30, 2023, was $10.5 million, down from $58.0 million in the same period of 2022, reflecting lower net interest income and noninterest income[154]. - Total revenues for the quarter were $49,376,000, down from $53,787,000 in the previous quarter, with net interest income at $38,912,000[187]. Credit Quality - Provision for credit losses in Q3 2023 was $(1.1) million, an improvement from $(0.4) million in Q2 2023, indicating a recovery in credit quality[134][142]. - The allowance for credit losses (ACL) was $40 million, down from $41.5 million at the end of 2022, reflecting improved credit conditions[136]. - Nonperforming assets increased to $39.7 million, representing 0.42% of total assets, up from 0.13% at the end of 2022, indicating potential credit quality concerns[136]. - The recovery of the allowance for credit losses was $0.9 million in 2023, down from $9.0 million in 2022, reflecting improved economic conditions[159]. Income and Expenses - Noninterest income for Q3 2023 was $10.5 million, slightly up from $10.3 million in Q2 2023, while noninterest expense decreased to $49.1 million from $90.8 million[134]. - Noninterest expense decreased significantly to $49.089 million in Q3 2023 from $90.781 million in Q2 2023, mainly due to a $39.9 million goodwill impairment charge in Q2 2023[152]. - Total noninterest income for the nine months ended September 30, 2023, was $30.965 million, down from $41.893 million in 2022, reflecting a decrease in gains on loan origination and sale activities[160][163]. Assets and Liabilities - Total assets increased to $9.46 billion as of September 30, 2023, compared to $9.36 billion at the end of 2022[136]. - Total assets as of September 30, 2023, were $9.433 billion, a decrease from $9.563 billion as of June 30, 2023[146]. - Total liabilities increased by $154 million, with a $706 million decrease in deposits offset by $857 million in additional borrowings[165]. - The loans to deposit ratio increased to 110.8% as of September 30, 2023, compared to 99.9% at the end of 2022, suggesting a tighter liquidity position[136]. Interest Rates and Sensitivity - The company's net interest margin decreased to 1.74% in Q3 2023 from 1.93% in Q2 2023, primarily due to higher funding costs[134][140]. - The net interest rate spread decreased to 1.13% in Q3 2023 from 1.37% in Q2 2023[146]. - The estimated impact on net interest income for a +300 basis point change in interest rates is a decrease of (14.8)%, while a -300 basis point change would increase net interest income by 10.2%[199]. - The company is considered liability-sensitive, with a cumulative interest sensitivity gap of $(2,503,064) thousand, representing (26)% of total assets[195]. Capital and Dividends - The Company’s Tier 1 leverage capital ratio was 7.01% as of September 30, 2023, exceeding the minimum requirement of 4.0%[179]. - The Company declared a quarterly cash dividend of $0.10 per common share for Q3 2023, with intentions to continue quarterly dividends subject to profitability and Board approval[181]. - Tangible book value per share decreased to $26.18 as of September 30, 2023, from $28.41 at the end of 2022[188]. Liquidity - The Company had available borrowing capacity of $2.2 billion from the FHLB as of September 30, 2023, compared to $2.6 billion at December 31, 2022[171]. - The company believes it has sufficient liquidity to meet its current needs despite rising competition for liquidity in the banking sector[202]. - The company had available contingent liquidity of $5.1 billion, which is 76% of total deposits, with uninsured deposits constituting 8% of total deposits[202].