HomeStreet(US:HMST)2023-01-30 19:10Financial Data and Key Metrics Changes - In Q4 2022, net income was $8.5 million or $0.45 per share, down from $20.4 million or $1.08 per share in Q3 2022. For the full year 2022, net income was $67 million or $3.49 per share [3] - Net interest income in Q4 2022 decreased by $7.3 million compared to Q3 2022, with net interest margin dropping from 3% to 2.53% [48] - The annualized return on average tangible equity for Q4 2022 was 6.4%, while for the full year it was 11.5% [64] Business Line Data and Key Metrics Changes - The cost of interest-bearing liabilities increased by 150 basis points in Q4 2022, while the cost of deposits rose by 58 basis points [4] - Non-interest income decreased in Q4 2022 primarily due to a $4.3 million gain on the sale of branches in Q3 2022 [5] - The loan portfolio grew by $209 million in Q4 2022, with a total growth of $1.9 billion for the year [54] Market Data and Key Metrics Changes - Interest-sensitive deposits declined as customers moved funds to higher-yielding products, creating competition from treasury securities and non-bank money market funds [51] - The weighted average rate for interest-bearing deposits was approximately 16 basis points in Southern California [28] Company Strategy and Development Direction - The company aims to reduce sensitivity to interest rate cycles by downsizing its mortgage banking business and growing non-interest-bearing deposits [7] - Plans to replace wholesale funding with lower-cost promotional deposit products, having raised $1.4 billion in such products by the end of 2022 [10] - The company is acquiring three retail deposit branches from Union Bank to expand its footprint in Southern California [28] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by rising short-term interest rates and expects revenue pressure to peak in Q1 2023 before easing [68] - The company anticipates that the current low point in net interest margin will improve as short-term rates stabilize [69] - Management expressed confidence in credit quality, with non-performing assets remaining low at 13 basis points [49] Other Important Information - The company recorded a $3.8 million provision for credit losses in Q4 2022, primarily due to portfolio growth and increased collateral risk [65] - The effective tax rate for Q4 2022 was 23.7%, with an expected rate of approximately 23% for 2023 [65] Q&A Session Summary Question: What is the margin outlook for the upcoming quarter? - Management indicated that the average margin in December was likely lower than the average due to the Fed's rate hike [33] Question: Can you provide an update on brokered deposits? - Total broker deposits at year-end 2022 were approximately $1.4 billion [104] Question: Will the branch purchase provide a day one benefit to NIM? - Management confirmed that the forecast remains uncertain but previously indicated a potential benefit of 25 basis points [82]