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Section 1: 8-K (FORM 8-K)

Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): July 22, 2019
 
HOMESTREET, INC.
(Exact name of registrant as specified in its charter)
 
 
 
 
 
 
Washington
 
001-35424
 
91-0186600
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
601 Union Street, Ste. 2000, Seattle, WA 98101
(Address of principal executive offices) (Zip Code)
(206) 623-3050
(Registrant’s telephone number, including area code)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, No Par Value
HMST
Nasdaq Stock Market LLC
[ ]
Emerging growth Company
 
 
[ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 12(a) of the Exchange Act.






Item 2.02
Results of Operations and Financial Condition
On July 22, 2019, HomeStreet, Inc. issued a press release reporting results of operations for the second quarter 2019. A copy of the earnings release is attached as Exhibit 99.1. A copy of the press release reporting summary results of operations is attached as Exhibit 99.2.

Item 9.01
Financial Statements and Exhibits
 
 
(d)
Exhibits.
Exhibit 99.1
Exhibit 99.2






Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: July 22, 2019

 
 
 
 
HomeStreet, Inc.
 
 
 
 
By:
 
/s/ Mark R. Ruh
 
 
 
Mark R. Ruh
 
 
 
Executive Vice President and Chief Financial Officer
 
 
 
 
 



(Back To Top)

Section 2: EX-99.1 (EARNINGS RELEASE ISSUED BY HOMESTREET INC. DATED JULY 22, 2019)

Exhibit




398839468_homestreetlogo_image2aa15.jpg
HomeStreet, Inc. Reports Second Quarter 2019 Results

Key highlights and developments for the Second Quarter 2019 and subsequent:

Net income from continuing operations for the second quarter of 2019 was $8.9 million or $0.32 per diluted share, compared with $5.1 million, or $0.19 per diluted share for the first quarter of 2019
Exited our stand-alone home loan center-based mortgage business with the sale of 47 stand-alone home loan centers and transferred to the buyer 464 related personnel
Repurchased 2,656,001 shares, in both the second quarter 2019 and in early July 2019 - open market share repurchases in the second quarter of 963,600 shares repurchased ($29.40 average per share price), and separately a single transaction with the Blue Lion Capital and affiliates completed on July 11, 2019 of 1,692,401 shares repurchased ($31.16 per share price)
Reduced full time equivalent employees to 1,221 at June 30, 2019 compared to 1,937 at March 31, 2019, a 37% reduction
Increased deposits to $5.59 billion, an increase of 8% from March 31, 2019 and 14% from December 31, 2018
Reduced nonperforming assets to 0.16% of total assets, compared with 0.23% at March 31, 2019, and 0.17% at December 31, 2018
SEATTLE –July 22, 2019 – (BUSINESS WIRE) – HomeStreet, Inc. (Nasdaq:HMST) (including its consolidated subsidiaries, the "Company" or "HomeStreet"), the parent company of HomeStreet Bank, today announced the Company had a net loss of $5.6 million, or $0.22 loss per diluted share for the second quarter of 2019 compared with net loss of $1.7 million, or $0.06 loss per diluted share for the first quarter of 2019 and net income of $7.1 million or $0.26 per diluted share for the second quarter of 2018. Net income from continuing operations for the second quarter of 2019 was $8.9 million or $0.32 per diluted share, compared with $5.1 million, or $0.19 per diluted share for the first quarter of 2019 and net income from continuing operations of $4.2 million or $0.15 per diluted share for second quarter of 2018.
Included in the net loss was $9.6 million of loss on disposal and restructuring-related expenses, net of tax, associated with costs related to the plan of exit or disposal which included the sale or closure of substantially all of the assets related to the Bank's stand-alone home loan center-based ("HLC-based") single family mortgage origination business and a related reduction in personnel and the sale of the significant majority of our mortgage servicing portfolio primarily related to our HLC-based mortgage origination business. Pre-tax, we recognized a $12.1 million aggregate loss on disposal and restructuring costs in the second quarter of 2019. These sale and closure costs include severance and benefit related expenses of $3.5 million; facilities, information technology and related expenses of $5.1 million; loss on mortgage servicing sales of $2.0 million and $1.5 million of other expenses.


1





As a result of the Board of Directors' approval of the plan of exit or disposal, the results of operations of our single family mortgage origination and servicing businesses, historically reported in our former Mortgage Banking segment, are now reported as discontinued operations. In accordance with generally accepted accounting principles, expenses reported in discontinued operations include only direct operating expenses incurred by the discontinued businesses that are identifiable as costs of the businesses sold, but only to the extent that we do not expect to continue to recognize such classes of expenses after the close of the transactions. Certain indirect costs, such as those related to corporate overhead and shared service functions that were previously allocated to the discontinued former Mortgage Banking segment and other expenses that do not meet the foregoing criteria, are now reported in continuing operations; we refer to these as stranded costs.
Prior to the second quarter, discontinued operations included our entire mortgage banking business. In the first quarter, we announced that we had adopted a plan of exit or disposal of our HLC-based mortgage banking business and that we would retain our substantially smaller bank location-based mortgage banking business. Beginning in April 2019, the revenues, and expenses of the retained mortgage banking business are included in continuing operations.

"The second quarter of 2019 marked a significant milestone in achieving our long-term strategic goals," said Mark K. Mason, HomeStreet’s Chairman of the Board, President, and Chief Executive Officer. "We completed the sale of substantially all of our stand-alone home loan centers and transferred most of our related personnel to Homebridge Financial Services, Inc. The remaining offices that were not sold were closed during the quarter, which left us with no remaining stand-alone residential lending centers. Much of this activity took place in June, so our consolidated results of operations included almost an entire quarter of our historical mortgage banking activities."
"Unfortunately, this year’s annual meeting again included a proxy contest for Board positions and certain governance proposals. Final voting by shareholders for board nominees and proposals received strong proxy support from our shareholders reflecting shareholders' support for the Company’s strategy.
Subsequent to quarter end, upon receiving Federal Reserve Bank non-objection, we repurchased Blue Lion Capital’s 1.7 million shares representing 100% of Blue Lion Capital and its affiliates' ownership position. We are pleased to reach this amicable resolution with Blue Lion Capital, which allows us to focus on our business going forward."
"As a part of our decision to reduce our exposure to mortgage banking, in July we entered into a non-binding letter of interest to sell our ownership interest in WMS Series, LLC. The successful completion of this transaction will further reduce the single family mortgage loan volume we generate going forward. For perspective, during the second quarter we originated $166.1 million of held for sale volume and $5.3 million of held for investment volume from WMS."
"Now that we have completed the asset sale portion of our mortgage banking restructuring plan, we have turned our focus to improving our operating efficiency and reducing our cost structure to reflect our simplified business model and lower growth expectations. In addition to the expense reductions that management has completed or planned, the bank efficiency consultants that we engaged have identified a range of additional potential expense reductions, which involve meaningful technology, organization, and personnel changes.
These include:

Simplifying the organizational structure by reducing management levels and management redundancy
Consolidating similar functions currently residing in multiple organizations
Renegotiating where possible major contracts - primarily technology

2





Identifying and eliminating where possible all redundant or unnecessary systems and services
Adjusting staffing to recognize the significant changes in work volumes and company direction


The timing of these potential reductions will vary depending on the nature of the expense. Some reductions have already occurred and a meaningful amount are expected to be realized in early 2020."


Conference Call
HomeStreet, Inc., the parent company of HomeStreet Bank, will conduct a quarterly earnings conference call on Tuesday, July 23, 2019 at 1:00 p.m. EDT. Mark K. Mason, President and CEO, and Mark R. Ruh, Executive Vice President and Chief Financial Officer, will discuss second quarter 2019 results and provide an update on recent activities. A question and answer session will follow the presentation. Shareholders, analysts and other interested parties may register in advance at http://dpregister.com/10132855 or may join the call by dialing 1-877-508-9589 (1-855-669-9657 in Canada and 1-412-317-1075 internationally) shortly before 1:00 p.m. EDT.
A rebroadcast will be available approximately one hour after the conference call by dialing 1-877-344-7529 and entering passcode 10132855.

The information to be discussed in the conference call will be posted on the Company's web site shortly after the market closes on Monday, July 22, 2019.
About HomeStreet
Now in its 98th year, HomeStreet, Inc. (Nasdaq:HMST) is a diversified financial services company headquartered in Seattle, Washington and is the holding company for HomeStreet Bank, a state-chartered, FDIC-insured commercial bank. HomeStreet offers consumer, commercial and private banking services, investment and insurance products, and originates residential and commercial mortgages and construction loans for borrowers located in the Western United States and Hawaii. Certain information about our business can be found on our investor relations web site located at http://ir.homestreet.com. HomeStreet Bank is a member of the FDIC and an Equal Housing Lender.



Contact:
  
Investor Relations:
 
 
HomeStreet, Inc.
 
  
Gerhard Erdelji (206) 515-4039
 
  
Gerhard.Erdelji@HomeStreet.com
 
  
http://ir.homestreet.com


3





HomeStreet, Inc. and Subsidiaries
Summary Financial Data
 
Quarter Ended
 
Six Months Ended
(dollars in thousands, except share data)
June 30, 2019

Mar. 31, 2019
 
Dec. 31, 2018
 
Sept. 30,
2018
 
June 30,
2018
 
June 30, 2019
 
June 30,
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income statement data (for the period ended):
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
$
49,187

 
$
47,557

 
$
48,910

 
$
47,860

 
$
47,745

 
$
96,744

 
$
93,193

Provision for credit losses

 
1,500

 
500

 
750

 
1,000

 
1,500

 
1,750

Noninterest income
19,829

 
8,092

 
10,382

 
10,650

 
8,405

 
27,921

 
15,501

Noninterest expense
58,832

 
47,846

 
47,892

 
47,914

 
49,964

 
106,678

 
99,435

Income from continuing operations before income taxes
10,184

 
6,303

 
10,900

 
9,846

 
5,186

 
16,487

 
7,509

Income tax expense (benefit) from continuing operations
1,292

 
1,245

 
(1,575
)
 
1,757

 
1,015

 
2,537

 
1,584

Income from continuing operations
8,892

 
5,058

 
12,475

 
8,089

 
4,171

 
13,950

 
5,925

(Loss) income from discontinued operations before income taxes
(16,678
)
 
(8,440
)
 
3,959

 
4,561

 
3,641

 
(25,118
)
 
9,090

Income tax (benefit) expense from discontinued operations
(2,198
)
 
(1,667
)
 
1,207

 
815

 
713

 
(3,865
)
 
2,050

(Loss) income from discontinued operations
(14,480
)
 
(6,773
)
 
2,752

 
3,746

 
2,928

 
(21,253
)
 
7,040

NET (LOSS) INCOME
$
(5,588
)
 
$
(1,715
)
 
$
15,227

 
$
11,835

 
$
7,099

 
$
(7,303
)
 
$
12,965

Basic income (loss) per common share:
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations
$
0.32

 
$
0.19

 
$
0.46

 
$
0.30

 
$
0.15

 
$
0.51

 
$
0.22

(Loss) income from discontinued operations
(0.54
)
 
(0.25
)
 
0.10

 
0.14

 
0.11

 
(0.79
)
 
0.26

Basic (loss) income per common share
$
(0.22
)
 
$
(0.06
)
 
$
0.56

 
$
0.44

 
$
0.26

 
$
(0.28
)
 
$
0.48

Diluted income (loss) per common share:
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations
$
0.32

 
$
0.19

 
$
0.46

 
$
0.30

 
$
0.15

 
$
0.51

 
$
0.22

(Loss) income from discontinued operations
(0.54
)
 
(0.25
)
 
0.10

 
0.14

 
0.11

 
(0.79
)
 
0.26

Diluted (loss) income per common share
$
(0.22
)
 
$
(0.06
)
 
$
0.56

 
$
0.44

 
$
0.26

 
$
(0.28
)
 
$
0.48

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common shares outstanding
26,085,164

 
27,038,257

 
26,995,348

 
26,989,742

 
26,978,229

 
26,085,164

 
26,978,229

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Core net income (2)
$
3,951

 
$
8,139

 
$
9,721

 
$
12,253

 
$
12,547

 
$
12,090

 
$
18,144

Core diluted income per common share (2)
$
0.13

 
$
0.30

 
$
0.36

 
$
0.45

 
$
0.46

 
$
0.44

 
$
0.67

Weighted average number of shares outstanding:
 
 
 
 


 
 
 
 
 
 
 
 
Basic
26,619,216

 
27,021,507

 
26,993,885

 
26,985,425

 
26,976,892

 
26,820,361

 
26,952,178

Diluted
26,802,130

 
27,185,175

 
27,175,522

 
27,181,688

 
27,156,329

 
26,993,653

 
27,157,664

Shareholders' equity per share
$
27.75

 
$
27.63

 
$
27.39

 
$
26.48

 
$
26.19

 
$
27.75

 
$
26.19

Tangible book value per share (2)
$
26.34

 
$
26.26

 
$
26.36

 
$
25.43

 
$
25.12

 
$
26.34

 
$
25.12

 
 
 
 
 

 
 
 
 
 
 
 
 
Financial position (at period end):
 
 
 
 

 
 
 
 
 
 
 
 
Loans held for investment, net
$
5,287,859

 
$
5,345,969

 
$
5,075,371

 
$
5,026,301

 
$
4,883,310

 
$
5,287,859

 
$
4,883,310

Total assets
7,200,790

 
7,171,405

 
7,042,221

 
7,029,082

 
7,163,877

 
7,200,790

 
7,163,877

Deposits
5,590,893

 
5,178,334

 
4,888,558

 
4,943,545

 
4,901,164

 
5,590,893

 
4,901,164

Shareholders' equity
671,175

 
747,031

 
739,520

 
714,782

 
706,459

 
671,175

 
706,459

 
 
 
 
 

 
 
 
 
 
 
 
 
Other data:
 
 
 
 


 
 
 
 
 
 
 
 
Full-time equivalent employees (ending)
1,221

 
1,937

 
2,036

 
2,053

 
2,253

 
1,221

 
2,253





4





HomeStreet, Inc. and Subsidiaries
Summary Financial Data (continued)
 
Quarter Ended
 
Six Months Ended
(dollars in thousands, except share data)
June 30, 2019
 
Mar. 31, 2019
 
Dec. 31, 2018
 
Sept. 30,
2018
 
June 30,
2018
 
June 30, 2019
 
June 30,
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial performance, continuing and discontinued: (8)
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on average shareholders' equity (1)
(3.02
)%
 
(0.91
)%
 
8.30
%
 
6.23
%
 
3.78
%
 
(1.96
)%
 
3.53
%
Return on average shareholders' equity, excluding income tax reform-related benefit, restructuring-related and acquisition-related expenses (net of tax) (2)
2.12
 %
 
4.34
 %
 
5.30
%
 
6.45
%
 
6.68
%
 
3.24
 %
 
4.94
%
Return on average tangible shareholders' equity, excluding income tax reform-related benefit, restructuring-related and acquisition-related expenses (net of tax) (2)
2.24
 %
 
4.51
 %
 
5.51
%
 
6.70
%
 
6.95
%
 
3.39
 %
 
5.14
%
Return on average assets
(0.31
)%
 
(0.10
)%
 
0.86
%
 
0.66
%
 
0.40
%
 
(0.20
)%
 
0.37
%
Return on average assets, excluding income tax reform-related benefit, restructuring-related and acquisition-related expenses (net of tax) (2)
0.21
 %
 
0.45
 %
 
0.55
%
 
0.69
%
 
0.71
%
 
0.34
 %
 
0.52
%
Net interest margin (3)
3.11
 %

3.11
 %

3.19
%

3.20
%
 
3.25
%
 
3.11
 %
 
3.25
%
Efficiency ratio (4)
106.83
 %
 
100.66
 %
 
84.64
%
 
86.19
%
 
91.84
%
 
103.71
 %
 
92.01
%
Core efficiency ratio (2)(5)
94.13
 %
 
87.81
 %
 
85.43
%
 
85.71
%
 
86.11
%
 
90.93
 %
 
89.16
%
Financial performance, continuing operations:
 
 
 
 
 
 
 
 
 
 
 
 
 
Efficiency ratio (4)
85.24
 %
 
85.98
 %
 
80.77
%
 
81.89
%
 
88.98
%
 
85.57
 %
 
91.48
%
Asset quality:
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses/total loans (6)
0.81
 %
 
0.80
 %
 
0.81
%
 
0.80
%
 
0.80
%
 
0.81
 %
 
0.80
%
Allowance for loan losses/nonaccrual loans
435.59
 %
 
271.99
 %
 
356.92
%
 
419.57
%
 
409.97
%
 
435.59
 %
 
409.97
%
Nonaccrual loans/total loans
0.19
 %
 
0.29
 %
 
0.23
%
 
0.19
%
 
0.20
%
 
0.19
 %
 
0.20
%
Nonperforming assets/total assets
0.16
 %
 
0.23
 %
 
0.17
%
 
0.15
%
 
0.14
%
 
0.16
 %
 
0.14
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Regulatory capital ratios for the Bank: (7)
 
 
 
 
 
 
 
 
 
 
 
 
 
Tier 1 leverage capital (to average assets)
9.86
 %
 
11.17
 %
 
10.15
%
 
9.70
%
 
9.72
%
 
9.86
 %
 
9.72
%
Tier 1 common equity risk-based capital (to risk-weighted assets)
13.26
 %
 
14.88
 %
 
13.82
%
 
13.26
%
 
12.69
%
 
13.26
 %
 
12.69
%
Tier 1 risk-based capital (to risk-weighted assets)
13.26
 %
 
14.88
 %
 
13.82
%
 
13.26
%
 
12.69
%
 
13.26
 %
 
12.69
%
Total risk-based capital (to risk-weighted assets)
14.15
 %
 
15.77
 %
 
14.72
%
 
14.15
%
 
13.52
%
 
14.15
 %
 
13.52
%
Risk-weighted assets
$
5,350,351

 
$
5,347,115

 
$
5,121,575

 
$
5,072,821

 
$
5,291,165

 
$
5,350,351

 
$
5,291,165

Regulatory capital ratios for the Company: (7)
 
 
 
 
 
 
 
 
 
 
 
 
 
Tier 1 leverage capital (to average assets)
10.12
 %
 
10.73
 %
 
9.51
%
 
9.17
%
 
9.18
%
 
10.12
 %
 
9.18
%
Tier 1 common equity risk-based capital (to risk-weighted assets)
11.99
 %
 
12.62
 %
 
11.26
%
 
10.84
%
 
10.48
%
 
11.99
 %
 
10.48
%
Tier 1 risk-based capital (to risk-weighted assets)
13.06
 %
 
13.68
 %
 
12.37
%
 
11.94
%
 
11.56
%
 
13.06
 %
 
11.56
%
Total risk-based capital (to risk-weighted assets)
13.95
 %
 
14.58
 %
 
13.27
%
 
12.82
%
 
12.38
%
 
13.95
 %
 
12.38
%
Risk-weighted assets
$
5,628,362

 
$
5,626,399

 
$
5,396,261

 
$
5,363,263

 
$
5,524,116

 
$
5,628,362

 
$
5,524,116


(1)
Net earnings available to common shareholders divided by average shareholders' equity.
(2)
Core net income; core diluted income per common share; tangible book value per share of common share; core efficiency ratio; return on average shareholders' equity, return on average tangible shareholders' equity, and return on average assets, in each case excluding income tax reform-related items, restructuring related items and acquisition-related items, are non-GAAP financial measures. For additional information on these non-GAAP financial measures and for corresponding reconciliations to GAAP financial measures, see Non-GAAP Financial Measures in this earnings release.
(3)
Net interest income divided by total average interest-earning assets on a tax equivalent basis.

5





(4)
Noninterest expense divided by total net revenue (net interest income and noninterest income).
(5)
Noninterest expense divided by total net revenue (net interest income and noninterest income), adjusted for restructuring-related and acquisition-related items.
(6)
Includes loans acquired with bank acquisitions. Excluding acquired loans, allowance for loan losses /total loans was 0.86%, 0.86%, 0.85%, 0.84% and 0.85% at June 30, 2019, March 31, 2019, December 31, 2018, September 30, 2018 and June 30, 2018, respectively.
(7)
Regulatory capital ratios at June 30, 2019 are preliminary.
(8)
Consolidated operations include both continuing and discontinued operations.

6



HomeStreet, Inc. and Subsidiaries
Five Quarter and Year to Date Consolidated Statements of Operations
 
Quarter Ended
 
Six Months Ended
(in thousands, except share data)
June 30, 2019

Mar. 31, 2019

Dec. 31, 2018

Sept. 30,
2018

June 30,
2018
 
June 30, 2019
 
June 30,
2018
 
 
 




 
 
 
 
 
 
 
Interest income:
 
 




 
 
 
 
 
 
 
Loans
$
67,015

 
$
62,931


$
62,070


$
58,624

 
$
56,168

 
$
129,946

 
$
107,656

Investment securities
4,884

 
5,564


5,979


5,580

 
5,527

 
10,448

 
11,086

Other
180

 
188


204


76

 
123

 
368

 
187

 
72,079

 
68,683


68,253


64,280


61,818

 
140,762

 
118,929

Interest expense:


 




 
 
 
 
 
 
 
Deposits
16,940

 
14,312


13,359


11,286

 
9,562

 
31,252

 
17,350

Federal Home Loan Bank advances
3,635

 
4,642


4,088


3,277

 
2,780

 
8,277

 
5,009

Federal funds purchased and securities sold under agreements to repurchase
463

 
304


159


83

 
24

 
767

 
56

Long-term debt
1,725

 
1,744


1,706


1,695

 
1,662

 
3,469

 
3,246

Other
129

 
124


31


79

 
45

 
253

 
75

 
22,892

 
21,126

 
19,343

 
16,420

 
14,073

 
44,018

 
25,736

Net interest income
49,187

 
47,557


48,910


47,860


47,745

 
96,744

 
93,193

Provision for credit losses

 
1,500


500


750

 
1,000

 
1,500

 
1,750

Net interest income after provision for credit losses
49,187

 
46,057


48,410


47,110


46,745

 
95,244

 
91,443

Noninterest income:
 
 




 
 
 
 
 
 
 
Net gain on loan origination and sale activities
12,178

 
2,607


3,516


4,193

 
2,710

 
14,785

 
4,157

Loan servicing income
2,176

 
1,043


872


954

 
937

 
3,219

 
1,845

Depositor and other retail banking fees
2,024

 
1,745


2,104


2,031

 
1,947

 
3,769

 
3,884

Insurance agency commissions
573

 
625


535


588

 
527

 
1,198

 
1,070

Gain (loss) on sale of investment securities available for sale
137

 
(247
)

1


(4
)
 
16

 
(110
)
 
238

Other
2,741

 
2,319


3,354


2,888

 
2,268

 
5,060

 
4,307

 
19,829

 
8,092


10,382


10,650

 
8,405

 
27,921

 
15,501

Noninterest expense:
 
 
 
 
 
 
 
 
 
 
 
 
 
Salaries and related costs
34,239

 
25,279

 
25,649

 
25,183

 
27,005

 
59,518

 
54,210

General and administrative
7,844

 
8,182

 
7,274

 
8,591

 
8,701

 
16,026

 
17,067

Amortization of core deposit intangibles
461

 
333

 
406

 
406

 
407

 
794

 
813

Legal
1,824

 
(204
)
 
980

 
873

 
816

 
1,620

 
1,520

Consulting
887

 
1,408

 
746

 
426

 
615

 
2,295

 
1,297

Federal Deposit Insurance Corporation assessments
833

 
821

 
1,069

 
880

 
998

 
1,654

 
1,859

Occupancy
5,826

 
4,968

 
4,572

 
4,548

 
4,453

 
10,794

 
8,983

Information services
6,948

 
7,088

 
7,246

 
7,005

 
6,967

 
14,036

 
13,777

Net (benefit) cost from operation and sale of other real estate owned
(30
)
 
(29
)
 
(50
)
 
2

 
2

 
(59
)
 
(91
)
 
58,832

 
47,846

 
47,892

 
47,914

 
49,964

 
106,678

 
99,435

Income from continuing operations before income taxes
10,184

 
6,303


10,900


9,846


5,186


16,487


7,509

Income tax expense (benefit) from continuing operations
1,292

 
1,245

 
(1,575
)
 
1,757

 
1,015

 
2,537

 
1,584

Income from continuing operations
8,892

 
5,058

 
12,475

 
8,089

 
4,171

 
13,950

 
5,925

(Loss) income from discontinued operations before income taxes
(16,678
)
 
(8,440
)
 
3,959

 
4,561

 
3,641

 
(25,118
)
 
9,090

Income tax (benefit) expense for discontinued operations
(2,198
)
 
(1,667
)
 
1,207

 
815

 
713

 
(3,865
)
 
2,050

(Loss) income from discontinued operations
(14,480
)
 
(6,773
)
 
2,752

 
3,746

 
2,928

 
(21,253
)
 
7,040

NET (LOSS) INCOME
$
(5,588
)
 
$
(1,715
)
 
$
15,227

 
$
11,835

 
$
7,099

 
$
(7,303
)
 
$
12,965

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic income (loss) per common share:
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations
$
0.32

 
$
0.19

 
$
0.46

 
$
0.30

 
$
0.15

 
$
0.51

 
$
0.22

(Loss) income from discontinued operations
(0.54
)
 
(0.25
)
 
0.10

 
0.14

 
0.11

 
(0.79
)
 
0.26

Basic (loss) income per share
$
(0.22
)
 
$
(0.06
)
 
$
0.56

 
$
0.44

 
$
0.26

 
$
(0.28
)
 
$
0.48

Diluted income (loss) per common share:
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations
$
0.32

 
$
0.19

 
$
0.46

 
$
0.30

 
$
0.15

 
$
0.51

 
$
0.22

(Loss) income from discontinued operations
(0.54
)
 
(0.25
)
 
0.10

 
0.14

 
0.11

 
(0.79
)
 
0.26

Diluted (loss) income per share
$
(0.22
)
 
$
(0.06
)
 
$
0.56

 
$
0.44

 
$
0.26

 
$
(0.28
)
 
$
0.48

Basic weighted average number of shares outstanding
26,619,216

 
27,021,507

 
26,993,885

 
26,985,425

 
26,976,892

 
26,820,361

 
26,952,178

Diluted weighted average number of shares outstanding
26,802,130

 
27,185,175

 
27,175,522

 
27,181,688

 
27,156,329

 
26,993,653

 
27,157,664


7





HomeStreet, Inc. and Subsidiaries
Five Quarter Consolidated Statements of Financial Condition
 
(in thousands, except share data)
 
June 30, 2019
 
Mar. 31, 2019
 
Dec. 31, 2018
 
Sept. 30,
2018
 
June 30,
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
99,602

 
$
67,690

 
$
57,982

 
$
59,006

 
$
176,218

 
Investment securities
 
803,819

 
816,878

 
923,253

 
903,685

 
907,457

 
Loans held for sale
 
202,258

 
56,928

 
77,324

 
103,763

 
110,258

 
Loans held for investment, net
 
5,287,859

 
5,345,969

 
5,075,371

 
5,026,301

 
4,883,310

 
Mortgage servicing rights
 
94,950

 
95,942

 
103,374

 
106,592

 
99,595

 
Other real estate owned
 
1,753

 
838

 
455

 
751

 
752

 
Federal Home Loan Bank stock, at cost
 
24,048

 
32,533

 
45,497

 
40,732

 
48,157

 
Premises and equipment, net
 
81,167

 
85,635

 
88,112

 
88,799

 
91,967

 
Lease right-of-use assets
 
102,353

 
113,083

 

 

 

 
Goodwill
 
30,170

 
29,857

 
22,564

 
22,564

 
22,564

 
Other assets
 
176,888

 
169,268

 
171,255

 
162,650

 
160,109

 
Assets of discontinued operations
 
295,923

 
356,784

 
477,034

 
514,239

 
663,490

 
Total assets
 
$
7,200,790

 
$
7,171,405

 
$
7,042,221

 
$
7,029,082

 
$
7,163,877

 
Liabilities and shareholders' equity:
 
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
Deposits
 
$
5,590,893

 
$
5,178,334

 
$
4,888,558

 
$
4,943,545

 
$
4,901,164

 
Federal Home Loan Bank advances
 
387,590

 
599,590

 
932,590

 
816,591

 
1,008,613

 
Accounts payable and other liabilities
 
102,943

 
126,546

 
169,970

 
156,283

 
168,464

 
Federal funds purchased and securities sold under agreements to repurchase
 

 
27,000

 
19,000

 
55,000

 

 
Other borrowings
 

 

 

 

 
30,007

(1) 
Long-term debt
 
125,556

 
125,509

 
125,462

 
125,415

 
125,368

 
Lease liabilities
 
121,677

 
130,221

 

 

 

 
Liabilities of discontinued operations
 
148,221

 
237,174

 
167,121

 
217,466

 
223,802

 
Total liabilities
 
6,476,880

 
6,424,374

 
6,302,701

 
6,314,300

 
6,457,418

 
Shareholders' equity:
 
 
 
 
 
 
 
 
 
 
 
Temporary shareholders' equity
 
 
 
 
 
 
 
 
 
 
 
Shares subject to repurchase
 
52,735

 

 

 

 

 
Permanent shareholders' equity
 
 
 
 
 
 
 
 
 
 
 
Preferred stock, no par value
 
 
 
 
 
 
 
 
 
 
 
Authorized 10,000 shares
 

 

 

 

 

 
Common stock, no par value
 
 
 
 
 
 
 
 
 
 
 
Authorized 160,000,000 shares
 
511

 
511

 
511

 
511

 
511

 
Additional paid-in capital
 
308,705

 
342,049

 
342,439

 
341,606

 
340,723

 
Retained earnings
 
359,252

 
411,826

 
412,009

 
396,782

 
384,947

 
Accumulated other comprehensive income (loss)
 
2,707

 
(7,355
)
 
(15,439
)
 
(24,117
)
 
(19,722
)
 
Total permanent shareholders' equity
 
671,175

 
747,031

 
739,520

 
714,782

 
706,459

 
Total liabilities, temporary shareholders' equity and permanent shareholders' equity
 
$
7,200,790

 
$
7,171,405

 
$
7,042,221

 
$
7,029,082

 
$
7,163,877

 

(1)
Balance represents the annual test draw down on our HomeStreet Inc., line of credit. This balance was subsequently paid off in July 2018.

8






HomeStreet, Inc. and Subsidiaries
Average Balances, Yields and Rates Paid (Taxable-equivalent basis)
 
Quarter Ended June 30,
 
Quarter Ended March 31,
 
Quarter Ended June 30,
 
2019
 
2019
 
2018
(in thousands)
Average
Balance
 
Interest
 
Average
Yield/Cost
 
Average
Balance
 
Interest
 
Average
Yield/Cost
 
Average
Balance
 
Interest
 
Average
Yield/Cost
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-earning assets: (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
55,270

 
$
141

 
1.03
%
 
$
58,650

 
$
184

 
1.27
%
 
$
87,898

 
$
252

 
1.15
%
Investment securities
815,287

 
5,351

 
2.63
%
 
891,813

 
6,048

 
2.71
%
 
911,678

 
6,029

 
2.64
%
Loans held for sale (4)
393,790

 
4,235

 
4.30
%
 
285,080

 
3,344

 
4.69
%
 
533,453

 
6,081

 
4.56
%
Loans held for investment
5,435,474

 
66,047

 
4.83
%
 
5,236,387

 
63,034

 
4.82
%
 
4,836,644

 
55,537

 
4.59
%
Total interest-earning assets
6,699,821


75,774

 
4.50
%
 
6,471,930

 
72,610

 
4.50
%
 
6,369,673

 
67,899

 
4.26
%
Noninterest-earning assets (2)(4)
601,893

 
 
 
 
 
721,795

 
 
 
 
 
711,206

 
 
 
 
Total assets
$
7,301,714

 
 
 
 
 
$
7,193,725

 
 
 
 
 
$
7,080,879

 
 
 
 
Liabilities and shareholders' equity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposits:(4)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand accounts
$
394,768

 
$
393

 
0.40
%
 
$
375,530

 
$
375

 
0.41
%
 
$
445,128

 
$
430

 
0.39
%
Savings accounts
233,387

 
139

 
0.24
%
 
240,900

 
150

 
0.25
%
 
292,156

 
217

 
0.30
%
Money market accounts
2,021,601

 
6,890

 
1.36
%
 
1,932,317

 
5,803

 
1.21
%
 
1,926,662

 
4,064

 
0.85
%
Certificate accounts
1,712,094

 
9,662

 
2.26
%
 
1,597,031

 
8,153

 
2.07
%
 
1,382,351

 
4,999

 
1.45
%
Total interest-bearing deposits
4,361,850

 
17,084

 
1.57
%
 
4,145,778

 
14,481

 
1.41
%
 
4,046,297

 
9,710

 
0.96
%
Federal Home Loan Bank advances
594,810

 
3,973

 
2.64
%
 
833,478

 
5,614

 
2.69
%
 
943,539

 
4,782

 
2.03
%
Federal funds purchased and securities sold under agreements to repurchase
73,189

 
463

 
2.50
%
 
47,778

 
304

 
2.54
%
 
5,253

 
24

 
1.84
%
Other borrowings
10,562

 
87

 
3.29
%
 
7,339

 
94

 
5.15
%
 
659

 
7

 
4.40
%
Long-term debt
125,528

 
1,725

 
5.47
%
 
125,480

 
1,744

 
5.56
%
 
125,337

 
1,662

 
5.32
%
Total interest-bearing liabilities
5,165,939

 
23,332

 
1.80
%
 
5,159,853

 
22,237

 
1.74
%
 
5,121,085

 
16,185

 
1.27
%
Noninterest-bearing liabilities (4)
1,394,445

 
 
 
 
 
1,283,406

 
 
 
 
 
1,208,201

 
 
 
 
Total liabilities
6,560,384

 
 
 
 
 
6,443,259

 
 
 
 
 
6,329,286

 
 
 
 
Temporary shareholders' equity
6,375

 
 
 
 
 

 
 
 
 
 

 
 
 
 
Permanent shareholders' equity
734,955

 
 
 
 
 
750,466

 
 
 
 
 
751,593

 
 
 
 
Total liabilities and shareholders' equity
$
7,301,714

 
 
 
 
 
$
7,193,725

 
 
 
 
 
$
7,080,879

 
 
 
 
Net interest income (3)
 
 
$
52,442

 
 
 
 
 
$
50,373

 
 
 
 
 
$
51,714

 
 
Net interest spread
 
 
 
 
2.70
%
 
 
 
 
 
2.76
%
 
 
 
 
 
2.99
%
Impact of noninterest-bearing sources
 
 
 
 
0.41
%
 
 
 
 
 
0.35
%
 
 
 
 
 
0.26
%
Net interest margin
 
 
 
 
3.11
%
 
 
 
 
 
3.11
%
 
 
 
 
 
3.25
%
(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 recorded in other real estate owned.
(3)
Includes taxable-equivalent adjustments primarily related to tax-exempt income on certain loans and securities of $641 thousand, $670 thousand and $711 thousand for the quarters ended June 30, 2019, March 31, 2019 and June 30, 2018, respectively. The estimated federal statutory tax rate was 21% for all the periods presented. 
(4)
Includes average balances of discontinued operations, which were impractical to remove for the periods presented. The NIM related to discontinued operations is immaterial.

9






HomeStreet, Inc. and Subsidiaries
Average Balances, Yields and Rates Paid (Taxable-equivalent basis)
 
 
Six Months Ended June 30,
 
 
2019
 
2018
(in thousands)
 
Average
Balance
 
Interest
 
Average
Yield/Cost
 
Average
Balance
 
Interest
 
Average
Yield/Cost
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
Interest-earning assets: (1)
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
56,950

 
$
325

 
1.15
%
 
$
83,487

 
$
432

 
1.04
%
Investment securities
 
853,339

 
11,400

 
2.67
%
 
913,609

 
12,115

 
2.65
%
Loans held for sale (4)
 
339,735

 
7,579

 
4.46
%
 
495,369

 
10,734

 
4.33
%
Loans held for investment