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TheStreet Open House

HomeStreet, Inc. Reports First Quarter 2012 Results

Stocks in this article: HMST

Mortgage Banking

Mortgage Originations

Single family mortgage originations designated for sale totaled $712.3 million, increasing $88.2 million, or 14.1%, from the fourth quarter of 2011 and increasing $436.7 million, or 158.5%, from the first quarter of 2011. Single family mortgage interest rate lock commitments, net of estimated fall out, totaled $920.2 million during the first quarter, up $377.1 million, or 69.4%, from the fourth quarter of 2011 and up $666.5 million, or 262.7%, from the first quarter of 2011. Net gain on mortgage loan origination and sales activities was $28.9 million, an increase of $10.0 million, or 52.7%, over the fourth quarter of 2011 and up $24.0 million, or 484.5%, over the first quarter of 2011.

Our mortgage loan origination and sales revenue growth reflects both an elevated demand for mortgage loan products driven by continued low mortgage interest rates and the expansion of our mortgage banking business through the addition during the quarter of approximately 170 mortgage originators, processors, funders, underwriters and other support personnel that were previously with MetLife Home Loans. These personnel contributed approximately $207.0 million of single family interest rate lock commitments during the quarter, $59.0 million of which was closed by March 31, 2012. Our results also reflect strong secondary market profit margins that began to increase in the latter half of 2011 and continued through the first quarter of 2012, reflecting elevated refinancing activity and industry consolidation.

Mortgage Servicing

Mortgage servicing income of $7.9 million increased $1.9 million, or 32.0%, over the fourth quarter of 2011 and $2.0 million, or 34.6%, over the first quarter of 2011. The increase on a linked-quarter basis was primarily due to $1.9 million of net valuation gains on mortgage servicing rights and related hedge instruments, as compared with a net valuation loss of $189,000 during the fourth quarter of 2011. The total loans serviced for others portfolio increased to $7.77 billion compared with $7.70 billion as of December 31, 2011.

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