HomeStreet, Inc. (NASDAQ:HMST) (the “Company” or “HomeStreet”), the parent company of HomeStreet Bank (the “Bank”), today announced a net loss of $861 thousand, or $(0.06) per diluted share for the fourth quarter of 2013. Excluding acquisition-related expenses of $4.1 million, net income for the quarter was $1.8 million, (1) or $0.12 (1) per diluted share, compared to net income of $2.0 million, (1) or $0.13 (1) per share, for the third quarter of 2013 and $21.5 million, or $1.46 per share, for the fourth quarter of 2012. For the full year 2013, net income was $23.8 million, or $1.61 per share. Excluding acquisition-related expenses of $4.5 million, net income for 2013 was $26.8 million, (1) or $1.81 (1) per diluted share, compared to $82.1 million, or $5.98 per share for 2012.
Fourth quarter 2013
- HomeStreet successfully closed the acquisitions of Fortune Bank and Yakima National Bank during the fourth quarter of 2013. Additionally, the acquisition of two retail deposit branches from AmericanWest Bank was completed during the quarter. Through these acquisitions, the Company acquired $208.7 million of portfolio loans and $260.8 million of deposits.
- The Company recorded $4.1 million of acquisition-related expenses during the quarter ended December 31, 2013 and $4.5 million of acquisition-related expenses during the year ended December 31, 2013.
- Net interest margin of 3.34% compared to 3.41% in the third quarter of 2013.
- Loans held for investment of $1.87 billion at December 31, 2013 increased $362.5 million, or 24.0%, from September 30, 2013.
- Classified assets and nonperforming assets ended the quarter at 1.65% and 1.26% of total assets, respectively, down from 1.90% and 1.37% of total assets at September 30, 2013.
- In response to lower than anticipated loan volume in the commercial lending units and falling loan volume in existing mortgage markets, the Company reduced under-performing production personnel and mortgage operations and fulfillment personnel in existing markets. Also in the quarter, the Company added personnel from acquired banks and increased mortgage production and fulfillment personnel in new markets, primarily in California. During the fourth quarter, we hired, or added through acquisition, 216 employees, which was partially offset by the departure of 111 employees.
- Net interest margin of 3.17%, up from 2.89% for 2012.
- The Company's annual effective income tax rate for the year was 31.6% compared to 20.8% for 2012. The prior year effective income tax rate reflects the benefit of the full reversal of deferred tax asset valuation allowances.
- Fourth quarter 2013
Fourth quarter segment results:
Commercial and Consumer Banking - loan and deposit growth from
strong originations and acquisitions
- Commercial and Consumer Banking segment net income of $244 thousand. Excluding acquisition-related expenses, net income of $2.9 million, (1) down $1.2 million from the third quarter of 2013.
- Loans held for investment of $1.87 billion at December 31, 2013 increased $362.5 million, or 24.0%, from September 30, 2013. Excluding the impact of loans added from acquisitions, loans held for investment increased over 11% in the quarter. New loan commitments totaled $378.8 million, up 56.2% from $242.5 million in the third quarter of 2013.
- Total deposits of $2.20 billion increased 5.0% from September 30, 2013, primarily due to the addition of $260.8 million of deposits from acquisitions.
Mortgage Banking - reduced loan production volume due to lower
refinance volume, expected seasonality and a lack of housing
- Mortgage Banking segment net loss of $1.1 million, compared to net loss of $2.1 million in the third quarter of 2013 and net income of $25.8 million in the fourth quarter of 2012.
- Single family mortgage interest rate lock commitments of $662.0 million, down 15.8% from the third quarter of 2013 and down 47.2% from the fourth quarter of 2012.
- Single family mortgage closed loan production of $773.1 million, down 34.9% from the third quarter of 2013 and down 49.1% from the fourth quarter of 2012.
- Net gain on single family mortgage origination and sale activities of $23.3 million, down 25.7% from the third quarter of 2013 and down 65.3% from the fourth quarter of 2012.
- The portfolio of single family loans serviced for others increased to $11.80 billion at quarter end, up 4.5% from $11.29 billion at September 30, 2013 and up 32.97% from $8.87 billion at December 31, 2012.
- Single family mortgage servicing income of $7.4 million, up from $3.7 million in the third quarter of 2013 and up from $287 thousand in the fourth quarter of 2012.
- HomeStreet regained its overall ranking as the number two originator by volume of refinance and purchase mortgages in the Pacific Northwest (Washington, Oregon and Idaho), based on the combined results of HomeStreet originations and loans originated through an affiliated business arrangement known as WMS Series LLC.
- Commercial and Consumer Banking - loan and deposit growth from strong originations and acquisitions
- On January 23, 2014, HomeStreet, Inc.'s board of directors approved a special cash dividend of $0.11 per common share, payable on February 24, 2014 to shareholders of record as of the close of business on February 3, 2014.
"As we execute our strategy to diversify our earnings by expanding our commercial and consumer banking business, we continue to be frustrated by falling mortgage lending volumes driven by macroeconomic forces, volume changes and continuing low levels of new and resale homes. Our strategy of continuing to grow our mortgage banking market share in new and existing markets while reducing operations staff in response to lower mortgage volume levels have not been able to fully offset these forces,” said CEO Mark K. Mason. “On a positive note, lower interest rates in October and early November spurred additional mortgage refinance activity compared to earlier months. Despite the challenging market, we continue to be successful in growing our mortgage originator ranks with top-level people and we expanded our market share, regaining our number two ranking overall for refinance and purchase mortgage loans in the Pacific Northwest.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- 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 + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV