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HomeStreet, Inc. Reports Second Quarter 2012 Results

Stocks in this article: HMST

HomeStreet, Inc. (NASDAQ:HMST)(the “Company” or “HomeStreet”), the parent company of HomeStreet Bank (the “Bank”), today announced net income of $18.0 million, or $2.43 per diluted share, for the second quarter of 2012, compared to net income of $1.3 million, or $0.45 per share, for the second quarter of 2011.

Highlights for the second quarter of 2012 include:

  • Pre-tax income of $21.4 million increased 23% from the prior quarter driven by net gain on mortgage loan origination and sale activities, up $17.0 million, or 60%, from the prior quarter.
  • In recognition of the expected realization of the Company's net deferred tax assets, the effective income tax rate for the second quarter and the remainder of 2012 will reflect the full reversal of the valuation allowance of $7.7 million that was remaining at March 31, 2012.
  • Record single family mortgage production volume: $1.07 billion of closed loan production designated for sale, up 50% from the first quarter, and $1.23 billion of interest rate lock commitments, up 33% from the first quarter.
  • HomeStreet became the number two lender of single family mortgages by origination volume in the five-county Puget Sound area of Washington State, which includes King, Kitsap, Pierce, Snohomish and Thurston counties, as well as in Spokane and Clark counties. (1)
  • Net interest margin increased to 2.83%, up from 2.53% in the prior quarter.
  • Nonperforming assets declined to $73.7 million or 3.04% of total assets, down $33.5 million or 31% from the prior quarter. Loan delinquencies declined to $83.9 million, or 6.6% of total loans, from $150.5 million, or 11.3% of total loans, in the prior quarter.
  • Regulatory capital ratios for the Bank increased, with a Tier 1 leverage ratio of 10.1% and a total risk-based capital ratio of 17.0% at June 30, 2012.

(1) Combined results for HomeStreet and Windermere Mortgage Services Series LLC

“We made considerable progress in improving our risk profile and profitability in the second quarter,” said President and Chief Executive Officer Mark K. Mason. “We have substantially completed the integration of the mortgage lending personnel previously employed with MetLife Home Loans and they made a significant contribution to our origination volume in the quarter. We continue to see benefits from expanding our mortgage lending market share as we continue recruiting origination and support personnel, allowing us to further increase our production capacity and serve the recovering housing market. We are equally pleased with our asset quality improvement in the quarter, with meaningful reductions in classified and nonperforming assets. Going forward, our focus is on growing our community banking and traditional portfolio lending as we continue to expand our market share in current and new markets.”

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