HomeStreet(HMST)2023-07-31 19:53Financial Data and Key Metrics Changes - The company reported a net loss of 1.67 per share in Q2 2023, primarily due to a 3.2 million or 5.1 million or 5.9 million from Q1 2023, with a net interest margin decline from 2.23% to 1.93% [26][53] - The effective tax rate for Q2 2023 was 14.2%, significantly impacted by the goodwill impairment charge [27] Business Line Data and Key Metrics Changes - Non-interest income in Q2 2023 remained consistent with Q1, with a 10% increase in single-family lending rate locks offset by a slight decrease in rate lock margin [28] - The ratio of non-performing assets to total assets increased from 15 basis points at March 31, 2023, to 44 basis points at June 30, 2023, primarily due to one customer relationship being designated as non-accrual [28][59] Market Data and Key Metrics Changes - The company experienced a stabilization in deposit levels at the three retail deposit branches acquired in Southern California, with a weighted average cost of deposits at these branches remaining low at 38 basis points as of June 30, 2023 [36] - Home prices have been stable or rising, particularly in West Coast markets, with increased demand for new homes leading to higher land acquisition and project development by builders [37] Company Strategy and Development Direction - The company is focusing on reducing non-essential expenses while maintaining high-quality lending lines of business to prepare for growth once the interest rate environment stabilizes [30] - The strategy includes attracting new deposits and retaining existing ones through promotional certificates of deposit and money market accounts, while managing liquidity and net interest margin [32][54] Management's Comments on Operating Environment and Future Outlook - Management noted that the operating results reflect the adverse impact of historically high increases in short-term interest rates, with expectations for continued margin pressure until rates stabilize [53][56] - The company anticipates a decline in loans held for investment, stable deposits, and slightly increasing non-interest expenses in the near term [40] Other Important Information - The company recorded a goodwill impairment charge of 101 million, affecting tangible book value per share but not regulatory capital levels [62] - A dividend of 0.10 per share was approved, unchanged from the prior quarter [63] Q&A Session Summary Question: What is the company's outlook on margins and profitability? - Management expects to remain profitable, excluding the goodwill charge, and anticipates some increases in single-family lock volume [70][71] Question: What is the company's strategy regarding deposit ratios? - The company is comfortable operating at current loan-to-deposit ratios and prioritizes managing liquidity and net interest margin over increasing this ratio [76] Question: What are the expected cash flows from the securities portfolio? - The monthly cash flow from the securities portfolio is approximately 40 million to $50 million [100][114] Question: What is the company's approach to non-essential expenses? - Non-essential expenses include advertising and marketing, which can be reduced without significant impact on brand awareness [112]