HomeStreet(HMST) - 2024 Q1 - Quarterly Report

Financial Performance - For the quarter ended March 31, 2024, net interest income was $32,151,000, a decrease of 8% from $34,989,000 in the previous quarter and a decrease of 35% from $49,376,000 in the same quarter last year [131]. - The company reported a net loss of $7,497,000 for the quarter, compared to a net loss of $3,419,000 in the previous quarter and a net income of $5,058,000 in the same quarter last year [131]. - The efficiency ratio increased to 118.0% for the quarter, compared to 105.9% in the previous quarter and 87.2% in the same quarter last year [131]. - The company reported a net loss of $(7.5) million in Q1 2024, compared to a net income of $5.1 million in Q1 2023, reflecting a $14.4 million decrease in core income before taxes [152]. - Total revenues for the quarter were $41,605,000, a decrease of 9.9% from $45,945,000 in the previous quarter and a decrease of 30.2% from $59,566,000 in the same quarter last year [189]. - Core net income per fully diluted share was $(0.29) for the quarter ended March 31, 2024, down from $(0.12) in the previous quarter and up from $0.27 in the same quarter last year [189]. Assets and Liabilities - Total assets as of March 31, 2024, were $9,455,182,000, an increase from $9,392,450,000 at the end of the previous quarter [133]. - Loans held for investment, net, increased to $7,405,052,000 from $7,382,404,000 in the previous quarter [133]. - Total assets increased by $63 million in Q1 2024, driven by a $105 million increase in cash, despite a decrease in investment securities [164]. - Total liabilities increased by $74 million in Q1 2024, primarily due to an increase in borrowings, while deposits decreased by $272 million [164]. - The ratio of nonperforming assets to total assets was 0.56% as of March 31, 2024, indicating a slight increase but remaining at low levels [165]. Noninterest Income and Expenses - Noninterest income fell to $9.454 million in Q1 2024 from $10.956 million in Q4 2023, largely due to higher income levels in the previous quarter from investments in small business investment companies [149]. - Total noninterest expenses increased to $52.164 million in Q1 2024, up from $49.511 million in Q4 2023, driven by higher compensation costs and merger-related expenses [150]. - Noninterest expenses decreased by $0.3 million to $52.164 million in Q1 2024, mainly due to lower compensation and benefits costs [162]. Credit Losses and Allowance - The allowance for credit losses (ACL) was $39,677,000, a slight decrease from $40,500,000 in the previous quarter [133]. - There was no provision for credit losses in Q1 2024, compared to a $0.4 million provision in Q4 2023, indicating stability in the loan portfolio [145]. - The allowance for credit losses (ACL) totaled $39.677 million as of March 31, 2024, with a rate of 0.54% [166]. Tax and Effective Rates - The effective tax rate for Q1 2024 was 29.0%, significantly higher than the statutory rate of 24.6%, influenced by tax-advantaged investments [140]. - The effective tax rate used in computations was 22.0% for all periods presented [189]. Employment and Operational Metrics - The company had 858 full-time equivalent employees as of March 31, 2024, down from 875 in the previous quarter [131]. - The company expects loan balances to remain stable in 2024, with a lower net interest margin anticipated compared to 2023 due to rising interest rates [138]. Mergers and Acquisitions - The proposed merger with FirstSun Capital Bancorp is expected to close in late 2024, with HomeStreet shareholders receiving 0.3867 shares of FirstSun common stock for each share of HomeStreet common stock [136]. Capital Ratios and Dividends - HomeStreet Inc. maintained a Tier 1 leverage capital ratio of 6.90% as of March 31, 2024, exceeding the minimum requirement of 4.0% [180]. - Common equity Tier 1 capital ratio for HomeStreet Inc. was 9.55% as of March 31, 2024, above the minimum requirement of 4.5% [180]. - The Company did not declare a cash dividend in the quarter and does not plan to pay any quarterly dividends in 2024 [182]. Interest Rate Sensitivity and Liquidity - The company is primarily exposed to price and interest rate risks, with no significant exposure to foreign currency exchange or commodity price risk [191][192]. - The company manages interest rate sensitivity through an interest rate simulation model, focusing on minimizing the impact of interest rate changes on net interest income and capital [194]. - The company has available contingent liquidity of $5.1 billion, which is 78% of its total deposits, indicating a strong liquidity position [204]. - The level of uninsured deposits was reported at 8% of total deposits, reflecting a moderate risk exposure [204]. - The company believes it has sufficient liquidity to meet its current needs despite the competitive landscape for deposits in the banking industry [204].