This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

HomeStreet, Inc. Reports Third Quarter 2012 Results

Stocks in this article: HMST

We caution readers that a number of important factors could cause actual results to differ materially from those expressed in, implied or projected by, such forward-looking statements. For instance, our ability to expand our banking operations geographically and across market sectors, grow our franchise and capitalize on market opportunities may be limited due to future risks and uncertainties including, but not limited to, changes in general economic conditions that impact our markets and our business, regulatory and legislative actions that may constrain our ability to do business, significant increases in the competition we face in our industry and market and the extent of our success in problem asset resolution efforts. In addition, we may not recognize all or a substantial portion of the value of our rate-lock loan activity due to challenges our customers may face in meeting current underwriting standards, a decrease in interest rates, an increase in competition for such loans, unfavorable changes in general economic conditions, including housing prices, the job market, consumer confidence and spending habits either nationally or in the regional and local market areas in which the Company does business and legislative or regulatory actions or reform (including, without limitation, the Dodd-Frank Wall Street Reform and Consumer Protection Act). A discussion of the factors that we know to pose risk to the achievement of our business goals and our operational and financial objectives is contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2012. These factors are updated from time to time in our filings with the Securities and Exchange Commission, and readers of this release are cautioned to review those disclosures in conjunction with the discussions herein.

Information contained herein, other than information at December 31, 2011, and for the twelve months then ended, is unaudited. All financial data should be read in conjunction with the notes to the consolidated financial statements of HomeStreet, Inc., and subsidiaries as of and for the fiscal year ended December 31, 2011, as contained in the Company's Annual Report on Form 10-K for such fiscal year.

           

HomeStreet, Inc. and Subsidiaries

Summary Financial Data

 
 
Quarter ended Nine months ended

 

Sept. 30,     Jun. 30,     Mar. 31,     Dec. 31, Sept. 30, Sept. 30,     Sept. 30,

(in thousands, except share data)

2012 2012 2012 2011 2011 2012 2011
Operations Data (for the period ended):
Net interest income $ 16,291 $ 14,698 $ 12,905 $ 12,866 $ 11,970 $ 43,894 $ 35,474
Provision for loan losses 5,500 2,000 1,000 7,500 3,300
Noninterest income 68,133 55,502 39,111 27,461 36,979 162,745 69,897
Noninterest expense 45,819   46,847   34,687   33,903   32,329   127,352   92,590
Net income before taxes 33,105 21,353 17,329 6,424 15,620 71,787 9,481
Income taxes 11,762   3,357   (1,721 ) (602 ) 362   13,397   388
Net income $ 21,343   $ 17,996   $ 19,050   $ 7,026   $ 15,258   $ 58,390   $ 9,093
Basic earnings per common share (1) $ 2.98 $ 2.53 $ 3.70 $ 2.60 $ 5.65 $ 9.01 $ 3.37
Diluted earnings per common share (1) $ 2.90 $ 2.43 $ 3.55 $ 2.42 $ 5.31 $ 8.71 $ 3.24
Weighted average common shares
Basic 7,167,975 7,126,060 5,146,283 2,701,749 2,701,749 6,480,106 2,701,749
Diluted 7,349,516 7,412,032 5,360,165 2,898,585 2,872,716 6,707,238 2,804,052
Shareholders’ equity per share $ 33.33 $ 29.88 $ 26.70 $ 31.98 $ 29.73 $ 33.33 $ 29.73
Common shares outstanding (1) 7,177,486 7,162,607 7,162,607 2,701,749 2,701,749 7,177,486 2,701,749
 
Financial position (at period end):
Cash and cash equivalents $ 22,051 $ 75,063 $ 92,953 $ 263,302 $ 138,429 $ 22,051 $ 138,429
Investment securities available for sale 414,050 415,610 446,198 329,047 339,453 414,050 339,453
Loans held for sale 532,580 412,933 290,954 150,409 226,590 532,580 226,590
Loans held for investment, net 1,268,703 1,235,253 1,295,471 1,300,873 1,360,219 1,268,703 1,360,219
Mortgage servicing rights 81,512 78,240 86,801 77,281 74,083 81,512 74,083
Other real estate owned 17,003 40,618 31,640 38,572 64,368 17,003 64,368
Total assets 2,507,941 2,424,947 2,367,497 2,264,957 2,316,839 2,507,941 2,316,839
Deposits 1,981,814 1,904,749 2,000,633 2,009,755 2,056,977 1,981,814 2,056,977
FHLB advances 131,597 65,590 57,919 57,919 67,919 131,597 67,919
Repurchase agreements 100,000
Shareholders’ equity 239,260 214,023 191,230 86,407 80,336 239,260 80,336
 
Financial position (averages):
Investment securities available for sale $ 411,916 $ 431,875 $ 381,129 $ 338,933 $ 272,294 $ 408,320 $ 295,988
Loans held for investment 1,270,652 1,304,740 1,338,552 1,385,037 1,427,763 1,304,526 1,509,296
Total interest earning assets 2,184,791 2,142,451 2,090,180 2,078,506 2,019,243 2,139,310 2,066,943
Total interest bearing deposits 1,625,437 1,640,159 1,705,371 1,745,493 1,787,388 1,656,874 1,837,708
FHLB advances 112,839 79,490 57,919 59,169 72,267 83,523 105,410
Repurchase agreements 18,478 52,369 23,597
Total interest bearing liabilities 1,818,611 1,833,875 1,825,146 1,866,519 1,921,512 1,825,851 2,005,843
Shareholders’ equity 229,762 206,428 140,784 84,038 73,499 192,778 62,958
 
         

HomeStreet, Inc. and Subsidiaries

Summary Financial Data (continued)

 
 
Quarter ended Nine months ended

 

Sept. 30,     Jun. 30,     Mar. 31,     Dec. 31,     Sept. 30, Sept. 30,     Sept. 30,

(in thousands, except share data)

2012 2012 2012 2011 2011 2012 2011
Financial performance:
Return on average common shareholders’ equity (2) 37.16 % 34.87 % 54.13 % 33.44 % 83.04 % 40.38 % 19.26 %
Return on average assets 3.50 % 3.04 % 3.30 % 1.23 % 2.67 % 3.29 % 0.53 %
Net interest margin (3) 3.08 % 2.83 % 2.53 % 2.50 % 2.38 % 2.82 % 2.30 %
Efficiency ratio (4) 54.27 % 66.73 % 66.69 % 84.07 % 66.05 % 61.63 % 87.87 %
Operating efficiency ratio (6) 53.86 % 58.12 % 61.84 % 74.78 % 47.43 % 57.32 % 62.69 %
Credit quality:
Allowance for credit losses $ 27,627 $ 27,125 $ 35,402 $ 42,800 $ 53,386 $ 27,627 $ 53,386
Allowance for credit losses/total loans 2.12 % 2.13 % 2.64 % 3.18 % 3.76 % 2.12 % 3.76 %
Allowance for credit losses/nonaccrual loans 71.80 % 81.28 % 46.58 % 55.81 % 55.91 % 71.80 % 55.91 %
Total classified assets $ 102,385 $ 137,165 $ 208,792 $ 188,167 $ 225,022 $ 102,385 $ 225,022
Classified assets/total assets 4.08 % 5.66 % 8.82 % 8.31 % 9.71 % 4.08 % 9.71 %
Total nonaccrual loans (5) $ 38,247 $ 33,107 $ 75,575 $ 76,484 $ 95,094 $ 38,247 $ 95,094
Nonaccrual loans/total loans 2.94 % 2.62 % 5.66 % 5.69 % 6.73 % 2.94 % 6.73 %
Other real estate owned $ 17,003 $ 40,618 $ 31,640 $ 38,572 $ 64,368 $ 17,003 $ 64,368
Total nonperforming assets $ 55,250 $ 73,725 $ 107,215 $ 115,056 $ 159,462 $ 55,250 $ 159,462
Nonperforming assets/total assets 2.20 % 3.04 % 4.53 % 5.08 % 6.88 % 2.20 % 6.88 %
Net charge-offs $ 4,998 $ 10,277 $ 7,398 $ 10,586 $ 7,673 $ 22,673 $ 14,480
Regulatory capital ratios for the Bank:
Tier 1 capital to total assets (leverage) 10.77 % 10.14 % 9.29 % 6.04 % 5.64 % 10.77 % 5.64 %
Tier 1 risk-based capital 16.65 % 15.75 % 14.18 % 9.88 % 8.51 % 16.65 % 8.51 %
Total risk-based capital 17.90 % 17.01 % 15.45 % 11.15 % 9.79 % 17.90 % 9.79 %
Other data:
Full-time equivalent employees (ending) 998 913 821 613 598 998 598
 

(1)  Per share data shown after giving effect to the 2-for-1 forward stock split implemented on March 6, 2012 as well as the 1-for-2.5 reverse stock split implemented on July 19, 2011.

(2)  Net earnings available to common shareholders divided by average common shareholders’ equity.

(3)  Net interest income divided by total interest earning assets on a tax equivalent basis.

(4)  The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income).

(5)  Generally, loans are placed on nonaccrual status when they are 90 or more days past due.

(6)  We include an operating efficiency ratio which is not calculated based on accounting principles generally accepted in the United States (“GAAP”), but which we believe provides important information regarding our results of operations. Our calculation of the operating efficiency ratio is computed by dividing noninterest expense less costs related to OREO (gains (losses) on sales, valuation allowance adjustments, and maintenance and taxes) by total revenue (net interest income and noninterest income). Management uses this non-GAAP measurement as part of its assessment of performance in managing noninterest expense. We believe that costs related to OREO are more appropriately considered as credit-related costs rather than as an indication of our operating efficiency. The following table provides a reconciliation of non-GAAP to GAAP measurement.

 
         
Quarter ended   Nine months ended  
Sept. 30,     Jun. 30,     Mar. 31,     Dec. 31,     Sept. 30, Sept. 30,     Sept. 30,
2012 2012 2012 2011 2011 2012 2011
Efficiency ratio 54.27 % 66.73 % 66.69 % 84.07 % 66.05 % 61.63 % 87.87 %
Less impact of OREO expenses 0.41 % 8.61 % 4.85 % 9.29 % 18.62 % 4.31 % 25.18 %
Operating efficiency ratio 53.86 % 58.12 % 61.84 % 74.78 % 47.43 % 57.32 % 62.69 %
 
                 

HomeStreet, Inc. and Subsidiaries

Consolidated Statements of Operations

 
 
Quarter ended Sept. 30, % Nine Months Ended Sept. 30, %
(in thousands, except share data) 2012     2011 Change 2012     2011 Change
Interest income:
Loans $ 18,283 $ 17,593 4 $ 52,086 $ 54,208 (4 )
Investment securities available for sale 2,517 1,422 77 7,205 5,128 41
Other 24   117   (79 ) 216       274   (21 )
20,824 19,132 9 59,507 59,610
Interest expense:
Deposits 3,908 5,848 (33 ) 12,985 19,427 (33 )
Federal Home Loan Bank advances 297 855 (65 ) 1,506 3,122 (52 )
Securities sold under agreements to repurchase 19 NM 69 NM
Long-term debt 305 458 (33 ) 1,041 1,586 (34 )
Other 4   1   300 12       1   NM
4,533   7,162   (37 ) 15,613       24,136   (35 )
Net interest income 16,291 11,970 36 43,894 35,474 24
Provision for credit losses 5,500   1,000   450 7,500       3,300   127
Net interest income after provision for credit losses 10,791 10,970 (2 ) 36,394 32,174 13
Noninterest income:
Net gain on mortgage loan origination and sale activities 64,390 15,766 308 138,386 29,702 366
Mortgage servicing income 506 18,532 (97 ) 15,470 32,093 (52 )
Income from Windermere Mortgage Services, Inc. 1,188 902 32 3,748 1,380 172
Gain (loss) on debt extinguishment (939 ) 2,000 NM
Depositor and other retail banking fees 756 778 (3 ) 2,262 2,313 (2 )
Insurance commissions 192 103 86 550 724 (24 )
Gain on securities available for sale 397 642 (38 ) 1,349 643 110
Other 704   256   175 1,919       1,042   84
68,133   36,979   84 162,745       69,897   133
Noninterest expense:
Salaries and related costs 31,573 13,217 139 81,149 37,056 119
General and administrative 7,033 4,310 63 19,030 12,307 55
Legal 312 983 (68 ) 1,471 2,286 (36 )
Consulting 1,069 270 296 1,746 633 176
Federal Deposit Insurance Corporation assessments 794 1,264 (37 ) 2,751 4,278 (36 )
Occupancy 2,279 1,663 37 6,160 5,031 22
Information services 2,411 1,509 60 6,129 4,466 37
Other real estate owned expense 348   9,113   (96 ) 8,916   26,533   (66 )
45,819   32,329   42 127,352   92,590   38
Income before income tax expense 33,105 15,620 112 71,787 9,481 657
Income tax expense 11,762   362   NM 13,397   388   NM
NET INCOME $ 21,343   $ 15,258   40 $ 58,390   $ 9,093   542
 
Basic income per share $ 2.98 $ 5.65 (47 ) $ 9.01 $ 3.37 167
Diluted income per share $ 2.90 $ 5.31 (45 ) $ 8.71 $ 3.24 169
Basic weighted average number of shares outstanding 7,167,975 2,701,749 165 6,480,106 2,701,749 140
Diluted weighted average number of shares outstanding 7,349,516 2,872,716 156 6,707,238 2,804,052 139
 
     

HomeStreet, Inc. and Subsidiaries

Five Quarter Consolidated Statements of Operation

 
 
Quarter ended
Sept. 30,     Jun. 30,     Mar. 31,     Dec. 31,     Sept. 30,
(in thousands, except share data) 2012 2012 2012 2011 2011
Interest income:
Loans $ 18,283 $ 17,250 $ 16,553 $ 17,433 $ 17,593
Investment securities available for sale 2,517 2,449 2,238 1,792 1,422
Other 24   56   137   203   117
20,824 19,755 18,928 19,428 19,132
Interest expense:
Deposits 3,908 4,198 4,879 5,388 5,848
Federal Home Loan Bank advances 297 535 675 699 855
Securities sold under agreements to repurchase 19 50
Long-term debt 305 271 465 459 458
Other 4   3   4   16   1
4,533   5,057   6,023   6,562   7,162
Net interest income 16,291 14,698 12,905 12,866 11,970
Provision for credit losses 5,500   2,000       1,000
Net interest income after provision for credit losses 10,791 12,698 12,905 12,866 10,970
Noninterest income:
Net gain on mortgage loan origination and sale activities 64,390 45,486 28,510 18,919 15,766
Mortgage servicing income 506 7,091 7,873 5,963 18,532
Income from Windermere Mortgage Services, Inc. 1,188 1,394 1,166 739 902
Loss on debt extinguishment (939 )
Depositor and other retail banking fees 756 771 735 748 778
Insurance commissions 192 177 182 186 103
Gain on securities available for sale 397 911 41 459 642
Other 704   611   604   447   256
68,133   55,502   39,111   27,461   36,979
Noninterest expense:
Salaries and related costs 31,573 28,224 21,351 16,462 13,217
General and administrative 7,033 6,725 5,273 6,182 4,310
Legal 312 724 435 1,075 983
Consulting 1,069 322 355 2,011 270
Federal Deposit Insurance Corporation assessments 794 717 1,240 1,256 1,264
Occupancy 2,279 2,092 1,790 1,733 1,663
Information services 2,411 1,994 1,723 1,436 1,509
Other real estate owned expense 348   6,049   2,520   3,748   9,113
45,819   46,847   34,687   33,903   32,329
Income before income tax expense 33,105 21,353 17,329 6,424 15,620
Income tax expense (benefit) 11,762   3,357   (1,721 ) (602 ) 362
NET INCOME $ 21,343   $ 17,996   $ 19,050   $ 7,026   $ 15,258
 
Basic income per share $ 2.98 $ 2.53 $ 3.70 $ 2.60 $ 5.65
Diluted income per share $ 2.90 $ 2.43 $ 3.55 $ 2.42 $ 5.31
Basic weighted average number of shares outstanding 7,167,975 7,126,060 5,146,283 2,701,749 2,701,749
Diluted weighted average number of shares outstanding 7,349,516 7,412,032 5,360,165 2,898,585 2,872,716
 
             

HomeStreet, Inc. and Subsidiaries

Consolidated Statements of Financial Condition

 
 
Sept. 30, Dec. 31, %
(in thousands, except share data) 2012 2011 Change
Assets:
Cash and cash equivalents (including interest-bearing instruments of $11,497 and $246,113) $ 22,051 $ 263,302 (92 )
Investment securities available for sale 414,050 329,047 26
Loans held for sale (includes $525,926 and $130,546 carried at fair value) 532,580 150,409 254
Loans held for investment (net of allowance for loan losses of $27,461 and $42,689) 1,268,703 1,300,873 (2 )
Mortgage servicing rights (includes $73,787 and $70,169 carried at fair value) 81,512 77,281 5
Other real estate owned 17,003 38,572 (56 )
Federal Home Loan Bank stock, at cost 36,697 37,027 (1 )
Premises and equipment, net 13,060 6,569 99
Accounts receivable and other assets 122,285   61,877   98
Total assets 2,507,941   2,264,957   11
Liabilities and Shareholders’ Equity
Liabilities:
Deposits 1,981,814 2,009,755 (1 )
Federal Home Loan Bank advances 131,597 57,919 127
Accounts payable and accrued expenses 93,413 49,019 91
Long-term debt 61,857   61,857  
Total liabilities 2,268,681   2,178,550   4
Shareholders’ equity:
Preferred stock, no par value
Authorized 10,000 shares
Issued and outstanding, 0 shares and 0 shares
Common stock, no par value
Authorized 80,000,000
Issued and outstanding, 7,177,486 shares and 2,701,749 shares 511 511
Additional paid-in capital 89,264 31 NM
Retained earnings 140,136 81,746 71
Accumulated other comprehensive income 9,349   4,119   127
Total shareholders’ equity 239,260   86,407   177
Total liabilities and shareholders’ equity $ 2,507,941   $ 2,264,957   11
 
                     

HomeStreet, Inc. and Subsidiaries

Five Quarter Consolidated Statements of Financial Condition

 
 
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
(in thousands, except share data) 2012 2012 2012 2011 2011
Assets:
Cash and cash equivalents $ 22,051 $ 75,063 $ 92,953 $ 263,302 $ 138,429
Investment securities available for sale 414,050 415,610 446,198 329,047 339,453
Loans held for sale 532,580 412,933 290,954 150,409 226,590
Loans held for investment 1,268,703 1,235,253 1,295,471 1,300,873 1,360,219
Mortgage servicing rights 81,512 78,240 86,801 77,281 74,083
Other real estate owned 17,003 40,618 31,640 38,572 64,368
Federal Home Loan Bank stock, at cost 36,697 37,027 37,027 37,027 37,027
Premises and equipment, net 13,060 10,226 7,034 6,569 6,615
Accounts receivable and other assets 122,285   119,977   79,419   61,877   70,055
Total assets $ 2,507,941   $ 2,424,947   $ 2,367,497   $ 2,264,957   $ 2,316,839
Liabilities and Shareholders’ Equity
Liabilities:
Deposits $ 1,981,814 $ 1,904,749 $ 2,000,633 $ 2,009,755 $ 2,056,977
Federal Home Loan Bank advances 131,597 65,590 57,919 57,919 67,919
Securities sold under agreements to repurchase 100,000
Accounts payable and accrued expenses 93,413 78,728 55,858 49,019 49,750
Long-term debt 61,857   61,857   61,857   61,857   61,857
Total liabilities 2,268,681   2,210,924   2,176,267   2,178,550   2,236,503
Shareholders’ equity:
Preferred stock, no par value
Authorized 10,000 shares
Issued and outstanding, 0 shares
Common stock, no par value
Authorized 80,000,000
Issued and outstanding 511 511 511 511 511
Additional paid-in capital 89,264 88,637 86,755 31 28
Retained earnings 140,136 118,793 100,796 81,746 74,720
Accumulated other comprehensive income (loss) 9,349   6,082   3,168   4,119   5,077
Total shareholders’ equity 239,260   214,023   191,230   86,407   80,336
Total liabilities and shareholders’ equity $ 2,507,941   $ 2,424,947   $ 2,367,497   $ 2,264,957   $ 2,316,839
 
     

HomeStreet, Inc. and Subsidiaries

Average Balances, Yields and Rates Paid (Taxable-equivalent basis)

 
 
Quarter ended Sept. 30,
2012     2011
Average         Average Average         Average
(in thousands) Balance Interest Yield/Cost Balance Interest Yield/Cost
Assets:
Interest-earning assets (1):
Cash & cash equivalents $ 50,056 $ 24 0.15 % $ 192,323 $ 114 0.23 %
Investment securities 411,916 3,013 2.93 % 272,294 1,444 2.14 %
Loans held for sale 452,167 3,854 3.41 % 126,863 1,362 4.33 %
Loans held for investment 1,270,652   14,464   4.54 % 1,427,763   16,268   4.54 %
Total interest-earning assets 2,184,791 21,355 3.90 % 2,019,243 19,188 3.79 %
Noninterest-earning assets (2) 256,631   265,216  
Total assets $ 2,441,422   $ 2,284,459  
Liabilities and Shareholders’ Equity:
Deposits:
Interest-bearing demand accounts $ 155,947 128 0.33 % $ 133,006 140 0.42 %
Savings accounts 98,711 114 0.46 % 58,043 73 0.50 %
Money market accounts 655,123 857 0.52 % 461,278 715 0.62 %
Certificate accounts 715,656   2,809   1.56 % 1,135,061   4,920   1.72 %
Total interest-bearing deposits 1,625,437 3,908 0.96 % 1,787,388 5,848 1.30 %
FHLB advances 112,839 297 1.19 % 72,267 855 4.69 %
Securities sold under agreements to repurchase 18,478 19 0.14 % %
Long-term debt 61,857 305 1.97 % 61,857 459 2.97 %
Other borrowings   4   %     %
Total interest-bearing liabilities 1,818,611 4,533 0.99 % 1,921,512 7,162 1.48 %
Other noninterest-bearing liabilities 393,049   289,448  
Total liabilities 2,211,660   2,210,960  
Shareholders’ equity 229,762   73,499  
Total liabilities and shareholders’ equity $ 2,441,422   $ 2,284,459  
Net interest income (3) $ 16,822   $ 12,026  
Net interest spread 2.91 % 2.31 %
Impact of noninterest-bearing sources 0.17 % 0.07 %
Net interest margin 3.08 % 2.38 %
 

(1)  The average balances of nonaccrual assets and related income, if any, are included in their respective categories.

(2)  Includes loan balances that have been foreclosed and are now reclassified to other real estate owned.

(3)  Includes taxable-equivalent adjustments, which is a non-GAAP measure, primarily related to tax-exempt income on certain loans and securities of $531 thousand for the quarter ended September 30, 2012 and $56 thousand for the quarter ended September 30, 2011, respectively. The Company's estimated marginal tax rate was 36% for the periods presented.

 
     

HomeStreet, Inc. and Subsidiaries

Average Balances, Yields and Rates Paid (Taxable-equivalent basis) (continued)

 
 
Nine Months Ended Sept. 30,
2012     2011
Average         Average Average         Average
(in thousands) Balance Interest Yield/Cost Balance Interest Yield/Cost
Assets:
Interest-earning assets (1):
Cash & cash equivalents $ 116,789 $ 208 0.24 % $ 151,763 $ 265 0.23 %
Investment securities 408,320 8,383 2.74 % 295,988 5,215 2.35 %
Loans held for sale 309,675 8,289 3.57 % 109,896 3,566 4.33 %
Loans held for investment 1,304,526   43,906   4.49 % 1,509,296   50,756   4.49 %
Total interest-earning assets 2,139,310 60,786 3.79 % 2,066,943 59,802 3.86 %
Noninterest-earning assets (2) 223,816   241,181  
Total assets $ 2,363,126   $ 2,308,124  
Liabilities and Shareholders’ Equity:
Deposits:
Interest-bearing demand accounts $ 148,288 368 0.33 % $ 126,769 458 0.48 %
Savings accounts 85,376 290 0.45 % 55,367 257 0.62 %
Money market accounts 592,195 2,390 0.54 % 438,922 2,297 0.70 %
Certificate accounts 831,015   9,937   1.60 % 1,216,650   16,415   1.80 %
Total interest-bearing deposits 1,656,874 12,985 1.05 % 1,837,708 19,427 1.41 %
FHLB advances 83,523 1,506 2.40 % 105,410 3,122 3.95 %
Securities sold under agreements to repurchase 23,597 69 0.39 % %
Long-term debt 61,857 1,041 2.24 % 62,725 1,586 3.37 %
Other borrowings   12   %   1   %
Total interest-bearing liabilities 1,825,851 15,613 1.14 % 2,005,843 24,136 1.61 %
Other noninterest-bearing liabilities 344,497   239,323  
Total liabilities 2,170,348   2,245,166  
Shareholders’ equity 192,778   62,958  
Total liabilities and shareholders’ equity $ 2,363,126   $ 2,308,124  
Net interest income (3) $ 45,173   $ 35,666  
Net interest spread 2.65 % 2.25 %
Impact of noninterest-bearing sources 0.17 % 0.05 %
Net interest margin 2.82 % 2.30 %
 

(1)  The average balances of nonaccrual assets and related income, if any, are included in their respective categories.

(2)  Includes loan balances that have been foreclosed and are now reclassified to other real estate owned.

(3)  Includes taxable-equivalent adjustments, which is a non-GAAP measure, primarily related to tax-exempt income on certain loans and securities of $1.3 million for the nine months ended September 30, 2012 and $192 thousand for the nine months ended September 30, 2011, respectively. The Company's estimated marginal tax rate was 36% for the periods presented.

 
                         

HomeStreet, Inc. and Subsidiaries

Five Quarter Investment Securities Available for Sale

 
 
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
(in thousands, except for duration data) 2012 2012 2012 2011 2011
Mortgage backed:
Residential $ 63,365 $ 48,136 $ 40,575 $ $
Commercial 14,532 14,602 14,410 14,483 8,393
Municipal bonds 128,595 126,681 79,051 49,584 1,059
Collateralized mortgage obligations:
Residential 167,513 185,970 245,889 223,390 251,856
Commercial 9,110 9,165 10,019 10,070 10,174
Agency 25,007
US Treasury 30,935   31,056   31,247   31,520   67,971
$ 414,050   $ 415,610   $ 446,198   $ 329,047   $ 339,453
Weighted average duration in years 5.0 5.1 5.1 4.4 3.9
 
                         

Five Quarter Loans Held for Investment

 
 
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
(in thousands) 2012 2012 2012 2011 2011
Consumer loans
Single family residential $ 602,164 $ 537,174 $ 506,103 $ 496,934 $ 496,741
Home equity 141,343   147,587   152,924   158,936   167,453  
743,507 684,761 659,027 655,870 664,194
Commercial loans
Commercial real estate 360,919 370,064 391,727 402,139 407,891
Multifamily residential 36,912 47,069 56,328 56,379 58,972
Construction/land development 77,912 83,797 158,552 173,405 213,001
Commercial business 80,056   79,980   68,932   59,831   73,559  
555,799 580,910 675,539 691,754 753,423
1,299,306 1,265,671 1,334,566 1,347,624 1,417,617
Net deferred loan fees and discounts (3,142 ) (3,508 ) (3,891 ) (4,062 ) (4,231 )
1,296,164 1,262,163 1,330,675 1,343,562 1,413,386
Allowance for loan losses (27,461 ) (26,910 ) (35,204 ) (42,689 ) (53,167 )
$ 1,268,703   $ 1,235,253   $ 1,295,471   $ 1,300,873   $ 1,360,219  
 
Allowance as a % of loans held for investment 2.12 % 2.13 % 2.64 % 3.18 % 3.76 %
Allowance as a % of nonaccrual loans 71.80 % 81.28 % 46.58 % 55.81 % 55.91 %
 
         

HomeStreet, Inc. and Subsidiaries

Five Quarter Credit Quality Activity

 
 

Allowance for Credit Losses (roll-forward)

 
 
Quarter ended
Sept. 30,     June 30,     Mar. 31,     Dec. 31,     Sept. 30,
(in thousands) 2012 2012 2012 2011 2011
 
Allowance for Credit Losses (roll-forward):
Beginning balance $ 27,125 $ 35,402 $ 42,800 $ 53,386 $ 60,059
Provision for credit losses 5,500 2,000 1,000
(Charge-offs), net of recoveries (4,998 ) (10,277 ) (7,398 ) (10,586 ) (7,673 )
Ending balance $ 27,627   $ 27,125   $ 35,402   $ 42,800   $ 53,386  
 
         

Nonperforming assets (NPAs) roll-forward

 
 
Quarter ended
Sept. 30,     June 30,     Mar. 31,     Dec. 31,     Sept. 30,
(in thousands) 2012 2012 2012 2011 2011
 
Beginning balance $ 73,725 $ 107,215 $ 115,056 $ 159,462 $ 193,609
Additions 20,703 13,208 18,776 7,251 20,900
Reductions:
Charge-offs (4,441 ) (10,277 ) (7,398 ) (10,586 ) (7,673 )
OREO sales (25,946 ) (9,804 ) (8,878 ) (26,037 ) (33,814 )
OREO writedowns (2,623 ) (5,578 ) (2,754 ) (3,564 ) (8,217 )
Principal paydown, payoff advances (4,794 ) (12,037 ) (1,321 ) (3,871 ) (2,437 )
Transferred back to accrual status (1,374 ) (9,002 ) (6,266 ) (7,599 ) (2,906 )
Total reductions (39,178 ) (46,698 ) (26,617 ) (51,657 ) (55,047 )
Net additions/(reductions) (18,475 ) (33,490 ) (7,841 ) (44,406 ) (34,147 )
Ending balance $ 55,250   $ 73,725   $ 107,215   $ 115,056   $ 159,462  
 
                         

HomeStreet, Inc. and Subsidiaries

Five Quarter Nonperforming Assets by Loan Class

 
 
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
(in thousands) 2012 2012 2012 2011 2011
 
Nonaccrual loans:
Consumer loans
Single family residential $ 12,900 $ 7,530 $ 14,290 $ 12,104 $ 15,469
Home equity 1,024   1,910   1,853   2,464   2,772  
13,924 9,440 16,143 14,568 18,241
Commercial loans
Commercial real estate 16,186 14,265 9,222 10,184 10,959
Multifamily residential 2,394 5,196
Construction/land development 5,848 9,373 49,708 48,387 58,705
Commercial business 2,289   29   502   951   1,993  
24,323   23,667   59,432   61,916   76,853  
Total nonaccrual loans $ 38,247   $ 33,107   $ 75,575   $ 76,484   $ 95,094  
Nonaccrual loans to total loans 2.94 % 2.62 % 5.66 % 5.69 % 6.73 %
 
Other real estate owned:
Consumer loans
Single family residential $ 2,787   $ 3,142   $ 3,243   $ 6,600   $ 10,419  
2,787 3,142 3,243 6,600 10,419
Commercial loans
Commercial real estate 3,489 3,184 284 2,055 2,152
Construction/land development 10,727 34,292 28,113 29,917 51,797
14,216   37,476   28,397   31,972   53,949  
Total other real estate owned $ 17,003   $ 40,618   $ 31,640   $ 38,572   $ 64,368  
 
Nonperforming assets:
Consumer loans
Single family residential $ 15,687 $ 10,672 $ 17,533 $ 18,704 $ 25,888
Home equity 1,024   1,910   1,853   2,464   2,772  
16,711 12,582 19,386 21,168 28,660
Commercial loans
Commercial real estate 19,675 17,449 9,506 12,239 13,111
Multifamily residential 2,394 5,196
Construction/land development 16,575 43,665 77,821 78,304 110,502
Commercial business 2,289   29   502   951   1,993  
38,539   61,143   87,829   93,888   130,802  
Total nonperforming assets $ 55,250   $ 73,725   $ 107,215   $ 115,056   $ 159,462  
Nonperforming assets to total assets 2.20 % 3.04 % 4.53 % 5.08 % 6.88 %
 
                         

HomeStreet, Inc. and Subsidiaries

Delinquencies by Loan Class

 
 
90 days or
more
30-59 days 60-89 days past Total past Total
(in thousands) past due past due

due (1)

due Current loans
 
September 30, 2012
Consumer loans
Single family residential (1) $ 9,658 $ 10,374 $ 48,048 $ 68,080 $ 534,084 $ 602,164
Home equity 929   1,389   1,024   3,342   138,001   141,343  
10,587 11,763 49,072 71,422 672,085 743,507
Commercial loans
Commercial real estate 16,186 16,186 344,733 360,919
Multifamily residential 36,912 36,912
Construction/land development 5,848 5,848 72,064 77,912
Commercial business     2,289   2,289   77,767   80,056  
    24,323   24,323   531,476   555,799  
$ 10,587   $ 11,763   $ 73,395   $ 95,745   $ 1,203,561   $ 1,299,306  
As a % of total loans 0.81 % 0.91 % 5.65 % 7.37 % 92.63 % 100.00 %
 
December 31, 2011
Consumer loans
Single family residential (1) $ 7,694 $ 8,552 $ 47,861 $ 64,107 $ 432,827 $ 496,934
Home equity 957   500   2,464   3,921   155,015   158,936  
8,651 9,052 50,325 68,028 587,842 655,870
Commercial loans
Commercial real estate 10,184 10,184 391,955 402,139
Multifamily residential 2,394 2,394 53,985 56,379
Construction/land development 9,916 48,387 58,303 115,102 173,405
Commercial business     951   951   58,880   59,831  
9,916     61,916   71,832   619,922   691,754  
$ 18,567   $ 9,052   $ 112,241   $ 139,860   $ 1,207,764   $ 1,347,624  
As a % of total loans 1.38 % 0.67 % 8.33 % 10.38 % 89.62 % 100.00 %
 

(1)  Includes $35.1 million and $35.8 million of single family residential loans past due and still accruing at September 30, 2012 and December 31, 2011, respectively, whose repayments are insured by the FHA or guaranteed by the VA.

 
                         

HomeStreet, Inc. and Subsidiaries

Troubled Debt Restructurings (TDRs)

 
 
Sept. 30, June 30, Mar. 31, Dec. 31,

Sept. 30,

(in thousands) 2012 2012 2012 2011 2011
 
Consumer loans
Single family residential $ 64,785 $ 65,699 $ 65,078 $ 56,581 $ 42,315
Home equity 2,769   2,769   2,492   2,475   2,319
67,554 68,468 67,570 59,056 44,634
Commercial loans
Commercial real estate 24,256 25,576 25,778 25,040 25,090
Multifamily residential 5,521 5,529 6,045 6,053 5,563
Construction/land development 19,647 17,245 25,907 27,432 18,237
Commercial business 176   191   647   878   943
49,600   48,541   58,377   59,403   49,833
Total TDRs $ 117,154   $ 117,009   $ 125,947   $ 118,459   $ 94,467
 
     

HomeStreet, Inc. and Subsidiaries

Five Quarter Mortgage Banking Operations

 
 

Mortgage Servicing Income

 
 
Quarter ended
Sept. 30,     June 30,     Mar. 31,     Dec. 31,     Sept. 30,
(in thousands) 2012 2012 2012 2011 2011
 
Servicing income, net:
Servicing fees and other $ 7,168 $ 6,705 $ 6,436 $ 6,518 $ 6,793
Changes in fair value of single family MSRs due to modeled amortization (1) (5,360 ) (4,052 ) (4,969 ) (4,176 ) (4,155 )
Amortization of multifamily MSRs (598 ) (462 ) (491 ) (366 ) (455 )
1,210 2,191 976 1,976 2,183
Risk management, single family MSRs:
Changes in fair value of MSR due to changes in model inputs and/or assumptions (2) (5,565 ) (15,354 ) 7,411 (3,910 ) (21,986 )
Net gain (loss) from derivatives economically hedging MSR 4,861   20,254   (514 ) 7,897   38,335  
(704 ) 4,900   6,897   3,987   16,349  
Mortgage servicing income $ 506   $ 7,091   $ 7,873   $ 5,963   $ 18,532  
 

(1)  Represents changes due to collection/realization of expected cash flows and curtailments over time.

(2)  Principally reflects changes in model assumptions and prepayment speed assumptions, which are primarily affected by changes in interest rates.

 
                     

Loans Serviced for Others

 
 
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
(in thousands) 2012 2012 2012 2011 2011
 
Single family residential
U.S. government agency MBS $ 7,724,562 $ 7,061,232 $ 6,530,578 $ 6,464,815 $ 6,217,086
Other 385,107   407,750   416,700   420,470   432,460
8,109,669 7,468,982 6,947,278 6,885,285 6,649,546
Commercial
Multifamily 760,820 772,473 766,433 758,535 770,401
Other 53,617   56,840   59,370   56,785   57,151
814,437   829,313   825,803   815,320   827,552
Total loans serviced for others $ 8,924,106   $ 8,298,295   $ 7,773,081   $ 7,700,605   $ 7,477,098
 
     

HomeStreet, Inc. and Subsidiaries

Five Quarter Mortgage Banking Operations (continued)

 
 

Single Family Capitalized Mortgage Servicing Rights

 
 
Quarter ended
Sept. 30,     June 30,    

Mar. 31,

    Dec. 31,     Sept. 30,
(in thousands) 2012 2012 2012 2011 2011
Beginning balance $ 70,585 $ 79,381 $ 70,169 $ 67,471 $ 87,712
Originations 14,121 10,598 6,723 10,759 5,873
Purchases 6 12 47 25 27
Changes due to modeled amortization (1) (5,360 ) (4,052 ) (4,969 ) (4,176 ) (4,155 )
Net additions and amortization 8,767 6,558 1,801 6,608 1,745
Changes in fair value due to changes in model inputs and/or assumptions (2) (5,565 ) (15,354 ) 7,411   (3,910 ) (21,986 )
Ending balance $ 73,787   $ 70,585   $ 79,381   $ 70,169   $ 67,471  
Ratio of MSR carrying value to related loans serviced for others 0.91 % 0.95 % 1.14 % 1.02 % 1.01 %
MSR servicing fee multiple (3) 2.81 2.82 3.30 2.91 2.92
Weighted-average note rate (loans serviced for others) 4.52 % 4.69 % 4.83 % 4.93 % 5.04 %
Weighted-average servicing fee (loans serviced for others) 0.33 % 0.34 % 0.35 % 0.35 % 0.35 %
 

(1)  Represents changes due to collection/realization of expected future cash flows over time

(2)  Principally reflects changes in model assumptions and prepayment speed assumptions, which are primarily affected by changes in interest rates.

(3)  Represents the ratio of MSR carrying value to related loans serviced for others divided by the weighted-average servicing fee for loans serviced for others.

 
     

Commercial Multifamily Capitalized Mortgage Servicing Rights

 
 
Quarter ended
Sept. 30,     June 30,     Mar. 31,     Dec. 31,     Sept. 30,
(in thousands) 2012 2012 2012 2011 2011
Beginning balance $ 7,655 $ 7,420 $ 7,112 $ 6,612 $ 6,608
Originations 668 697 799 866 459
Amortization (598 ) (462 ) (491 ) (366 ) (455 )
Ending balance $ 7,725   $ 7,655   $ 7,420   $ 7,112   $ 6,612  
Ratio of MSR carrying value to related loans serviced for others 0.95 % 0.92 % 0.90 % 0.87 % 0.80 %
MSR servicing fee multiple (1) 2.47 2.45 2.41 2.42 2.27
Weighted-average note rate (loans serviced for others) 5.48 % 5.54 % 5.60 % 5.67 % 5.74 %
Weighted-average servicing fee (loans serviced for others) 0.38 % 0.38 % 0.37 % 0.36 % 0.35 %
 

(1)  Represents the ratio of MSR carrying value to related loans serviced for others divided by the weighted-average servicing fee for loans serviced for others.

 
     

HomeStreet, Inc. and Subsidiaries

Five Quarter Mortgage Banking Operations (continued)

 
 

Mortgage Banking Activity

 
 
Quarter ended
Sept. 30,     June 30,     Mar. 31,     Dec. 31,     Sept. 30,
(in thousands) 2012 2012 2012 2011 2011
 
Production volumes:
Single family mortgage closed loan volume (1) $ 1,368,238 $ 1,068,656 $ 712,302 $ 624,111 $ 478,024
Single family mortgage interest rate lock commitments 1,313,182 1,303,390 915,141 543,164 630,919
Single family mortgage loans sold 1,238,879 962,704 534,310 710,706 370,250
 
Multifamily mortgage originations $ 20,209 $ 35,908 $ 15,713 $ 49,071 $ 26,125
Multifamily mortgage loans sold 26,515 27,178 31,423 33,461 25,144
 
Net gain on mortgage loan origination and sale activities:
Single family:
Secondary marketing gains $ 41,178 $ 28,709 $ 16,071 $ 2,587 $ 6,374
Provision for repurchase losses (526 ) (1,930 ) (390 ) (12 ) (289 )
Net gain from secondary marketing activities 40,652 26,779 15,681 2,575 6,085
Mortgage servicing rights originated 14,121 10,598 6,723 10,758 5,872
Loan origination and funding fees 8,577   7,070   4,944   4,401   3,309  
Total single family 63,350 44,447 27,348 17,734 15,266
Multifamily 1,040   1,039   1,162   1,185   500  
Total net gain on mortgage loan origination and sale activities $ 64,390   $ 45,486   $ 28,510   $ 18,919   $ 15,766  
Ratio of single family mortgage servicing rights originated to related loans sold 1.14 % 1.10 % 1.26 % 1.51 % 1.59 %
 

(1)  Represents single family mortgage production volume designated for sale during each respective period.

 
                     

HomeStreet, Inc. and Subsidiaries

Five Quarter Deposits

 
 
Sept. 30, June 30, Mar. 31, Dec. 31, Sept. 30,
(in thousands) 2012 2012 2012 2011 2011
 
Deposits by Product:
Noninterest bearing accounts - checking and savings $ 77,149 $ 64,404 $ 68,245 $ 69,276 $ 58,570
Interest bearing transaction and savings deposits:
NOW accounts 172,086 170,098 154,670 138,936 145,668
Statement savings accounts due on demand 104,239 88,104 79,438 66,898 59,974
Money market accounts due on demand 675,363   630,798   559,563   499,457   469,289  
Total interest bearing transaction and savings deposits 951,688   889,000   793,671   705,291   674,931  
Total transaction and savings deposits 1,028,837   953,404   861,916   774,567   733,501  
Certificates of deposit 684,604 755,646 890,694 1,033,798 1,094,184
Noninterest bearing accounts - other 268,373   195,699   248,023   201,390   229,292  
Total deposits $ 1,981,814   $ 1,904,749   $ 2,000,633   $ 2,009,755   $ 2,056,977  
 
 
Percent of total deposits:
Noninterest bearing accounts - checking and savings 3.9 % 3.4 % 3.4 % 3.4 % 2.8 %
Interest bearing transaction and savings deposits:
NOW accounts 8.7 % 8.9 % 7.7 % 6.9 % 7.1 %
Statement savings accounts due on demand 5.3 % 4.6 % 4.0 % 3.3 % 2.9 %
Money market accounts due on demand 34.1 % 33.1 % 28.0 % 24.9 % 22.8 %
Total interest bearing transaction and savings deposits 48.1 % 46.6 % 39.7 % 35.1 % 32.8 %
Total transaction and savings deposits 52.0 % 50.0 % 43.1 % 38.5 % 35.6 %
Certificates of deposit 34.5 % 39.7 % 44.5 % 51.4 % 53.2 %
Noninterest bearing accounts - other 13.5 % 10.3 % 12.4 % 10.1 % 11.2 %
Total deposits 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %




7 of 8

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,390.52 +195.10 1.13%
S&P 500 0.00 -2.75 -0.14%
NASDAQ 4,630.7410 +64.6030 1.41%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs