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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): January 23, 2020
 
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 January 27, 2020, HomeStreet, Inc. issued a press release reporting results of operations for the fourth quarter and year-end 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 5.02
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On January 23, 2020, the Board of Directors of HomeStreet, Inc. ("HomeStreet" or the "Company"), upon recommendation of the Board's Human Resources and Corporate Governance Committee (the "HRCG"), took action pursuant to the Company's Amended and Restated Bylaws to expand the Board to 11 directors and appoint James R. Mitchell to fill the vacancy created by that expansion for a term that will expire at the next annual meeting of the Company's shareholders. Mr. Mitchell will also serve as a member of the Company's HRCG and the Audit Committee.

Mr. Mitchell has worked in commercial banking for more than 40 years, including founding Puget Sound Bank in 2004, where he served as president and chief executive officer from inception until the merger of that bank with Heritage Bank in January 2018. He was also a member of the Board of Directors of Puget Sound Bank from 2004 through January 2018, serving as chairman of the board from 2004 through 2008. After the merger of Puget Sound Bank and Heritage Bank, Mr. Mitchell then served as the market president for King County for Heritage Bank for the next year, until January 2019, and then as a consultant to Heritage Bank until January 16, 2020. Prior to founding Puget Sound Bank, Mr. Mitchell served as a Senior Vice President at Sterling Bank, where he opened and grew the Seattle corporate banking office, from 2002 to 2004, and a Senior Vice President and team leader for the Seattle corporate banking team of US Bank from 1990 through 2002. Mr. Mitchell served on the Board of Directors of the Washington Bankers Association from 2011 to 2018, on the Board of Directors of the Western Bankers Association from 2015 to 2018, and on the board of Bellevue LifeSpring, a nonprofit organization, from 2009 to 2017. Mr. Mitchell received his bachelor's degree from Seattle University, a Masters of Business Administration from the University of Washington and his juris doctorate from Southwestern University School of Law.
The HRCG recommended that the Board appoint Mr. Mitchell as a director following a thorough assessment of his background and qualifications. Mr. Mitchell's knowledge of the banking industry, experience as a chief executive officer and director of a bank, and expertise in commercial banking were considered important by the HRCG in its evaluation. Mr. Mitchell was not appointed as a director pursuant to any arrangement or understanding with any person, and is not a participant in any related party transaction required to be reported pursuant to Item 404(a) of Regulation S-K.

Mr. Mitchell will receive such compensation as previously described in the Company's proxy statement for the Company's 2019 annual meeting of the shareholders.

On January 27, 2020, the Company issued a press release on Mr. Mitchell's appointment. A copy of the press release is included as Exhibit 99.3 to this report and incorporated herein by reference. The press release is available on HomeStreet's investor relations web site at http://ir.homestreet.com.

Item 8.01.
Other Events

Declaration of Dividend

On January 23, 2020, the Board of Directors of HMST adopted a dividend policy authorizing regular quarterly dividends and declared a cash dividend of $0.15 per outstanding share of HMST’s Common Stock, no par value (the “Common Stock”), payable on February 21, 2020 to shareholders of record at the close of business on February 5, 2020.






Share Repurchase

On January 23, 2020, HMST announced that the Board of Directors has authorized an additional share repurchase program (the "Repurchase Program") pursuant to which the Company may purchase up to $25 million of its issued and outstanding Common Stock, no par value, at prevailing market rates at the time of such purchase. Commencement of this repurchase plan is contingent upon receipt of the approval or non-objection of certain of our regulators.


Item 9.01
Financial Statements and Exhibits
 
 
(d)
Exhibits.
Exhibit 99.1
Exhibit 99.2
Exhibit 99.3






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: January 27, 2020

 
 
 
 
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 JANUARY 27, 2020)

Exhibit




402451382_homestreetlogo_image2aa15.jpg
HomeStreet, Inc. Reports Year End and Fourth Quarter 2019 Results, Initiation of Quarterly Dividend and Authorization of an Additional $25 Million Share Repurchase

Key highlights and developments:

Reported net income from continuing operations for the fourth quarter of 2019 of $13.1 million, or $0.54 per diluted share, compared with $13.7 million, or $0.54 per diluted share for the third quarter of 2019.
Reported core net income from continuing operations for the fourth quarter of 2019 of $14.9 million, or $0.61 per diluted share, compared with $14.3 million, or $0.57 per diluted share for the third quarter of 2019.
Reported Return on Average Equity from Continuing Operations of 7.48%, Return on Average Tangible Equity from Continuing Operations of 7.87%, and Core Return on Average Tangible Equity from Continuing Operations of 8.98%, for the fourth quarter of 2019
Initiated a quarterly dividend of $0.15 per share to holders of our common stock of record on February 5, 2020, to be paid on February 21, 2020
Approved an additional $25 million common stock repurchase that will commence upon the completion of our existing repurchase authorization which is expected during the first quarter of 2020, subject to regulatory non-objection
Repurchased a total of 3,187,259 shares of our common stock at an average price of $30.75 per share in 2019, of which 531,258 shares were purchased during the fourth quarter of 2019 at an average price of $31.87 per share; subsequently repurchased 188,851 of our common stock at an average price of $33.14 from January 2, 2020 through January 23, 2020
Reduced full time equivalent employees to 1,071 at December 31, 2019 compared to 2,036 and 1,221 at December 31, 2018 and June 30, 2019, a 47.4% and 12.3% reduction, respectively; additionally, we expect the number of full time equivalent employees to further decline to 1,027 at February 1, 2020, a 49.6% and 15.9% reduction, respectively
Appointed Nancy D. Pellegrino to our Board of Directors in October 2019 and appointed James R. Mitchell to our Board of Directors in January 2020
Originated $675.3 million of commercial real estate loans in the fourth quarter of 2019, a quarterly record
Increased business and consumer core deposits - checking, savings and money market deposits - by 2.4% and 3.9%, respectively from the third quarter 2019
2019 strategic highlights:

Downsized our mortgage banking business:

1





Adopted and completed a plan to exit our stand-alone home loan center-based mortgage banking business with the sale of 47 stand-alone home loan centers and the transfer to the buyer of 464 related personnel; remaining home loan centers were closed
Completed the sale and transfer of single-family mortgage servicing rights ("MSRs") totaling $14.26 billion in unpaid principal balance, representing $176.9 million in MSR fair value
Finalized the sale of our ownership interest in WMS Series, LLC ("WMS")
Commenced an efficiency and profitability improvement initiative, informed by efficiency consultants, which is resulting in substantial organizational and operational changes to our business model, reflecting our more simplified business strategy and lower growth goals
Consolidated the Lake Oswego, OR retail deposit branch into the nearby Lake Grove, OR branch
Opened two de novo retail branches in San Jose and Santa Clara, CA and completed the acquisition of a retail branch and associated commercial lending team in San Diego County, CA

SEATTLE –January 27, 2020 – (BUSINESS WIRE) – HomeStreet, Inc. (Nasdaq:HMST) (including its consolidated subsidiaries, the "Company" or "HomeStreet"), the parent company of HomeStreet Bank, today announced the Company earned net income for the fourth quarter of 2019 of $11.0 million, or $0.45 income per diluted share compared with net income of $13.8 million, or $0.55 income per diluted share for the third quarter of 2019. Net income from continuing operations for the fourth quarter of 2019 was $13.1 million, or $0.54 per diluted share, compared with $13.7 million, or $0.54 per diluted share for the third quarter of 2019.
"HomeStreet produced solid results in the fourth quarter of 2019, capping off a year of significant change,” said Mark K. Mason, HomeStreet’s Chairman of the Board, President, and Chief Executive Officer. “During the year, after thoughtful consideration by the Board of Directors, we executed on the Board’s decision to substantially reduce our mortgage banking business. Following that decision, we planned and executed the exit of our stand-alone home loan center-based mortgage origination business and related servicing. The successful completion of this downsizing avoided significant costs of liquidation and most of our employees associated with these centers were transferred to the acquirer of the home loan centers. We also sold a majority of the mortgage servicing rights related to loan originators associated with those home loan centers. Finally, during the fourth quarter of 2019, we completed the sale of our ownership interest in our former mortgage joint venture, WMS Series, LLC."
“We have also made progress toward our goals of improving efficiency and profitability with organizational and operational changes which are resulting in substantial reductions in operating costs and headcount, with FTE falling to an expected 1,027 by February 1, 2020. While these reductions are meaningful progress toward achieving our efficiency and profitability improvement goals, the pace of our improvement continues to be challenged by the lower interest rate environment and persistently flat yield curve, which have had an adverse impact on the balances of loans held for investment and our net interest margin and certain operational, technology and real estate cost reductions will occur later than originally anticipated."
“Asset quality remained strong throughout the year, with nonperforming assets totaling 0.21% of total assets at the end of the fourth quarter. Our markets remain some of the strongest in the country with large, diverse economies, however we are keeping a careful eye on fundamentals and remain focused on controlling credit risk.”

2





“The Board recognizes that our shareholders have supported the development of the company and the recent significant changes to our strategy, all of which were pursued with the goals of reducing earnings volatility and improving profitability and, ultimately, enhancing shareholder value. While some these actions, and specifically the current initiative to improve operating efficiency, are obviously still works in process, it is clear to the Board that the foundation for improvement has been laid. As such, the Board is pleased at this time to reflect the accomplishments to date with the initiation of a quarterly common stock dividend and the authorization of the repurchase of up to an additional $25 million of our common stock. The Board declared the quarterly dividend for the first quarter of 2020 at $0.15 per share, to be paid on February 21, 2020 to shareholders of record as of the close of the market on February 5, 2020. These actions underscore the Board’s belief in HomeStreet’s future performance and long-term value creation for shareholders.”
On January 23, 2020, the Board of Directors approved an addition to our share repurchase program for up to $25 million in aggregate amount of shares of the Company’s common stock, no par value, from shareholders, which represents approximately 3.2% of the Company’s currently outstanding common stock based on the closing price of the stock as of January 23, 2020. This authorization is in addition to the 3.4 million shares of common stock that the Company repurchased in 2019 and early 2020. Under this addition to our repurchase program, the Company may again repurchase shares from time to time in the open market, in privately negotiated stock purchases or pursuant to any trading plan that may be adopted in accordance with Rule 10b-18 and Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, and applicable federal securities laws. The share repurchase plan does not obligate the Company to acquire any particular amount of common stock, and it may be modified or suspended at any time at the Company's discretion. This additional authorization is subject to regulatory approval and repurchases under this authorization will not be commenced unless and until such non-objection is received.






3



Conference Call
HomeStreet, Inc., the parent company of HomeStreet Bank, will conduct a quarterly earnings conference call on Monday, January 27, 2020 at 1:00 p.m. EST. Mark K. Mason, President and CEO, and Mark R. Ruh, Executive Vice President and Chief Financial Officer, will discuss fourth quarter and year end 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/10137552 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. EST.
A rebroadcast will be available approximately one hour after the conference call by dialing 1-877-344-7529 and entering passcode 10137552.

The information to be discussed in the conference call will be posted on the Company's web-site before the market opens on Monday, January 27, 2020.
About HomeStreet
Almost 100 years old, 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
 
  
 
  
http://ir.homestreet.com


4





HomeStreet, Inc. and Subsidiaries
Summary Financial Data
 
Quarter Ended
 
Year Ended
(dollars in thousands, except share data)
Dec. 31, 2019

Sept. 30, 2019
 
June 30, 2019
 
Mar. 31,
2019
 
Dec. 31,
2018
 
Dec. 31, 2019
 
Dec. 31,
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income statement data (for the period ended):
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
$
45,512

 
$
47,134

 
$
49,187

 
$
47,557

 
$
48,910

 
$
189,390

 
$
189,963

Provision for credit losses
(2,000
)
 

 

 
1,500

 
500

 
(500
)
 
3,000

Noninterest income
21,931

 
24,580

 
19,829

 
8,092

 
10,382

 
74,432

 
36,533

Noninterest expense
53,215

 
55,721

 
58,832

 
47,846

 
47,892

 
215,614

 
195,241

Income from continuing operations before income taxes
16,228

 
15,993

 
10,184

 
6,303

 
10,900

 
48,708

 
28,255

Income tax expense (benefit) from continuing operations
3,123

 
2,328

 
1,292

 
1,245

 
(1,309
)
 
7,988

 
2,032

Income from continuing operations
13,105

 
13,665

 
8,892

 
5,058

 
12,209

 
40,720

 
26,223

(Loss) income from discontinued operations before income taxes
(3,357
)
 
190

 
(16,678
)
 
(8,440
)
 
3,959

 
(28,285
)
 
17,610

Income tax (benefit) expense from discontinued operations
(1,240
)
 
28

 
(2,198
)
 
(1,667
)
 
941

 
(5,077
)
 
3,806

(Loss) income from discontinued operations
(2,117
)
 
162

 
(14,480
)
 
(6,773
)
 
3,018

 
(23,208
)
 
13,804

NET INCOME (LOSS)
$
10,988

 
$
13,827

 
$
(5,588
)
 
$
(1,715
)
 
$
15,227

 
$
17,512

 
$
40,027

Basic income (loss) per common share:
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations
$
0.54

 
$
0.55

 
$
0.32

 
$
0.19

 
$
0.45

 
$
1.57

 
$
0.97

(Loss) income from discontinued operations
(0.09
)
 
0.01

 
(0.54
)
 
(0.25
)
 
0.11

 
(0.91
)
 
0.51

Basic income (loss) per common share
$
0.45

 
$
0.55

 
$
(0.22
)
 
$
(0.06
)
 
$
0.56

 
$
0.66

 
$
1.48

Diluted income (loss) per common share:
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations
$
0.54

 
$
0.54

 
$
0.32

 
$
0.19

 
$
0.45

 
$
1.55

 
$
0.97

(Loss) income from discontinued operations
(0.09
)
 
0.01

 
(0.54
)
 
(0.25
)
 
0.11

 
(0.90
)
 
0.51

Diluted income (loss) per common share
$
0.45

 
$
0.55

 
$
(0.22
)
 
$
(0.06
)
 
$
0.56

 
$
0.65

 
$
1.47

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common shares outstanding
23,890,855

 
24,408,513

 
26,085,164

 
27,038,257

 
26,995,348

 
23,890,855

 
26,995,348

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Core net income (2)
$
12,715

 
$
13,505

 
$
4,076

 
$
8,139

 
$
9,721

 
$
38,435

 
$
40,118

Core diluted income per common share (2)
$
0.52

 
$
0.54

 
$
0.14

 
$
0.30

 
$
0.36

 
$
1.46

 
$
1.48

Core net income from continuing operations (2)
$
14,944

 
$
14,338

 
$
10,018

 
$
5,255

 
$
7,383

 
$
44,555

 
$
21,378

Core diluted income from continuing operations per common share (2)
$
0.61

 
$
0.57

 
$
0.36

 
$
0.20

 
$
0.27

 
$
1.70

 
$
0.79

Weighted average number of shares outstanding:
 
 
 
 


 
 
 
 
 
 
 
 
Basic
24,233,434

 
24,419,793

 
26,619,216

 
27,021,507

 
26,993,885

 
25,573,488

 
26,970,916

Diluted
24,469,891

 
24,625,938

 
26,802,130

 
27,185,175

 
27,175,522

 
25,770,783

 
27,168,135

Shareholders' equity per share
$
28.45

 
$
28.32

 
$
27.75

 
$
27.63

 
$
27.39

 
$
28.45

 
$
27.39

Tangible book value per share (2)
$
27.02

 
$
26.83

 
$
26.34

 
$
26.26

 
$
26.36

 
$
27.02

 
$
26.36

 
 
 
 
 

 
 
 
 
 
 
 
 
Financial position (at period end):
 
 
 
 

 
 
 
 
 
 
 
 
Loans held for investment, net
$
5,072,784

 
$
5,139,108

 
$
5,287,859

 
$
5,345,969

 
$
5,075,371

 
$
5,072,784

 
$
5,075,371

Total assets
6,812,435

 
6,835,878

 
7,200,790

 
7,171,405

 
7,042,221

 
6,812,435

 
7,042,221

Deposits
5,339,959

 
5,804,307

 
5,590,893

 
5,178,334

 
4,888,558

 
5,339,959

 
4,888,558

Shareholders' equity
679,723

 
691,136

 
723,910

 
747,031

 
739,520

 
679,723

 
739,520

 
 
 
 
 

 
 
 
 
 
 
 
 
Other data:
 
 
 
 


 
 
 
 
 
 
 
 
Full-time equivalent employees (ending)
1,071

 
1,132

 
1,221

 
1,937

 
2,036

 
1,071

 
2,036


5








HomeStreet, Inc. and Subsidiaries
Summary Financial Data (continued)
 
Quarter Ended
 
Year Ended
(dollars in thousands, except share data)
Dec. 31, 2019
 
Sept. 30, 2019
 
June 30, 2019
 
Mar. 31,
2019
 
Dec. 31,
2018
 
Dec. 31, 2019
 
Dec. 31,
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial performance, continuing and discontinued:
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on average shareholders' equity (1)
6.27
%
 
7.98
%
 
(3.02
)%
 
(0.91
)%
 
8.30
%
 
2.43
%
 
5.40
%
Return on average shareholders' equity, excluding income tax reform-related benefit, loss on exit or disposal and restructuring-related and acquisition-related expenses (net of tax) (2)
7.26
%
 
7.79
%
 
2.19
 %
 
4.34
 %
 
5.30
%
 
5.33
%
 
5.41
%
Return on average tangible shareholders' equity, excluding income tax reform-related benefit, loss on exit or disposal and restructuring-related and acquisition-related expenses (net of tax) (2)
7.64
%
 
8.22
%
 
2.31
 %
 
4.51
 %
 
5.51
%
 
5.59
%
 
5.63
%
Return on average assets
0.64
%
 
0.79
%
 
(0.31
)%
 
(0.10
)%
 
0.86
%
 
0.25
%
 
0.57
%
Return on average assets, excluding income tax reform-related benefit, loss on exit or disposal and restructuring-related and acquisition-related expenses (net of tax) (2)
0.74
%
 
0.77
%
 
0.22
 %
 
0.45
 %
 
0.55
%
 
0.54
%
 
0.57
%
Net interest margin (3)
2.87
%

2.96
%

3.11
 %
 
3.11
 %
 
3.19
%
 
3.01
%
 
3.23
%
Efficiency ratio (4)
83.87
%
 
78.08
%
 
106.83
 %
 
100.66
 %
 
84.64
%
 
94.02
%
 
88.88
%
Core efficiency ratio (2)(5)
80.63
%
 
78.63
%
 
93.96
 %
 
87.81
 %
 
85.43
%
 
86.08
%
 
87.45
%
Financial performance, continuing operations:
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on average shareholders' equity (1)
7.48
%
 
7.88
%
 
4.80
 %
 
2.70
 %
 
6.65
%
 
5.64
%
 
3.54
%
Return on average shareholders' equity, excluding income tax reform-related benefit, restructuring-related and acquisition-related expenses (net of tax) (2)
8.53
%
 
8.27
%
 
5.41
 %
 
2.80
 %
 
4.02
%
 
6.17
%
 
2.88
%
Return on average tangible shareholders' equity
7.87
%
 
8.32
%
 
5.05
 %
 
2.80
 %
 
6.92
%
 
5.93
%
 
3.68
%
Return on average tangible shareholders' equity, excluding, restructuring-related and acquisition-related expenses (net of tax) (2)
8.98
%
 
8.73
%
 
5.69
 %
 
2.91
 %
 
4.18
%
 
6.49
%
 
2.99
%
Return on average assets (8)
0.76
%
 
0.78
%
 
0.49
 %
 
0.28
 %
 
0.69
%
 
0.57
%
 
0.37
%
Return on average assets, excluding income tax reform-related benefit, restructuring-related and acquisition-related expenses (net of tax) (2)
0.87
%
 
0.82
%
 
0.55
 %
 
0.29
 %
 
0.42
%
 
0.62
%
 
0.30
%
Efficiency ratio (4)
78.90
%
 
77.70
%
 
85.24
 %
 
85.98
 %
 
80.77
%
 
81.73
%
 
86.20
%
Core efficiency ratio (2)(5)
75.45
%
 
76.51
%
 
83.17
 %
 
85.53
 %
 
80.65
%
 
79.89
%
 
86.18
%
Financial performance, continuing and discontinued:
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset quality:
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses/total loans (6)
0.82
%
 
0.84
%
 
0.81
 %
 
0.80
 %
 
0.81
%
 
0.82
%
 
0.81
%
Allowance for loan losses/nonaccrual loans
324.80
%
 
349.37
%
 
435.59
 %
 
271.99
 %
 
356.92
%
 
324.80
%
 
356.92
%
Nonaccrual loans/total loans
0.25
%
 
0.24
%
 
0.19
 %
 
0.29
 %
 
0.23
%
 
0.25
%
 
0.23
%
Nonperforming assets/total assets
0.21
%
 
0.21
%
 
0.16
 %
 
0.23
 %
 
0.17
%
 
0.21
%
 
0.17
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Regulatory capital ratios for the Bank: (7)
 
 
 
 
 
 
 
 
 
 
 
 
 
Tier 1 leverage capital (to average assets)
10.56
%
 
10.17
%
 
9.86
 %
 
11.17
 %
 
10.15
%
 
10.56
%
 
10.15
%

6





Tier 1 common equity risk-based capital (to risk-weighted assets)
13.56
%
 
13.45
%
 
13.26
 %
 
14.88
 %
 
13.82
%
 
13.56
%
 
13.82
%
Tier 1 risk-based capital (to risk-weighted assets)
13.56
%
 
13.45
%
 
13.26
 %
 
14.88
 %
 
13.82
%
 
13.56
%
 
13.82
%
Total risk-based capital (to risk-weighted assets)
14.43
%
 
14.37
%
 
14.15
 %
 
15.77
 %
 
14.72
%
 
14.43
%
 
14.72
%
Risk-weighted assets
$
5,253,819

 
$
5,207,244

 
$
5,350,351

 
$
5,347,115

 
$
5,121,575

 
$
5,253,819

 
$
5,121,575

Regulatory capital ratios for the Company: (7)
 
 
 
 
 
 
 
 
 
 
 
 
 
Tier 1 leverage capital (to average assets)
10.06
%
 
10.04
%
 
10.12
 %
 
10.73
 %
 
9.51
%
 
10.06
%
 
9.51
%
Tier 1 common equity risk-based capital (to risk-weighted assets)
11.38
%
 
11.67
%
 
11.99
 %
 
12.62
 %
 
11.26
%
 
11.38
%
 
11.26
%
Tier 1 risk-based capital (to risk-weighted assets)
12.47
%
 
12.77
%
 
13.06
 %
 
13.68
 %
 
12.37
%
 
12.47
%
 
12.37
%
Total risk-based capital (to risk-weighted assets)
13.36
%
 
13.69
%
 
13.95
 %
 
14.58
 %
 
13.27
%
 
13.36
%
 
13.27
%
Risk-weighted assets
$
5,493,669

 
$
5,456,964

 
$
5,628,362

 
$
5,626,399

 
$
5,396,261

 
$
5,493,669

 
$
5,396,261


(1)
Net earnings available to common shareholders divided by average shareholders' equity.
(2)
Core net income; core diluted income per common share; core net income from continuing operations, core diluted income from continuing operations 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.
(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 from acquisitions. Excluding acquired loans, allowance for loan losses /total loans was 0.86%, 0.89%, 0.86%, 0.86% and 0.85% at December 31, 2019, September 30, 2019, June 30, 2019, March 31, 2019 and December 31, 2018, respectively.
(7)
Regulatory capital ratios at December 31, 2019 are preliminary.
(8)
Includes assets of both continuing and discontinued operations.



7



HomeStreet, Inc. and Subsidiaries
Five Quarter and Year to Date Consolidated Statements of Operations
 
Quarter Ended
 
Year Ended
(in thousands, except share data)
Dec. 31, 2019

Sept. 30, 2019

June 30, 2019

Mar. 31,
2019

Dec. 31,
2018
 
Dec. 31, 2019
 
Dec. 31,
2018
 
 
 




 
 
 
 
 
 
 
Interest income:
 
 




 
 
 
 
 
 
 
Loans
$
61,443

 
$
64,803


$
67,015


$
62,931

 
$
62,070

 
$
256,192

 
$
228,350

Investment securities
5,204

 
4,879


4,884


5,564

 
5,979

 
20,531

 
22,645

Other
120

 
395


180


188

 
204

 
883

 
467

 
66,767

 
70,077


72,079


68,683


68,253

 
277,606

 
251,462

Interest expense:


 




 
 
 
 
 
 
 
Deposits
18,635

 
20,502


16,940


14,312

 
13,359

 
70,389

 
41,995

Federal Home Loan Bank advances
564

 
501


3,635


4,642

 
4,088

 
9,342

 
12,374

Federal funds purchased and securities sold under agreements to repurchase
227

 
39


463


304

 
159

 
1,033

 
298

Long-term debt
1,655

 
1,698


1,725


1,744

 
1,706

 
6,822

 
6,647

Other
174

 
203


129


124

 
31

 
630

 
185

 
21,255

 
22,943

 
22,892

 
21,126

 
19,343

 
88,216

 
61,499

Net interest income
45,512

 
47,134


49,187


47,557


48,910

 
189,390

 
189,963

Provision for credit losses
(2,000
)
 




1,500

 
500

 
(500
)
 
3,000

Net interest income after provision for credit losses
47,512

 
47,134


49,187


46,057


48,410

 
189,890

 
186,963

Noninterest income:
 
 




 
 
 
 
 
 
 
Net gain on loan origination and sale activities
13,386

 
15,951


12,178


2,607

 
3,516

 
44,122

 
11,866

Loan servicing income
1,896

 
2,687


2,176


1,043

 
872

 
7,802

 
3,671

Depositor and other retail banking fees
2,078

 
2,079


2,024


1,745

 
2,104

 
7,926

 
8,019

Insurance agency commissions
491

 
603


573


625

 
535

 
2,292

 
2,193

Gain (loss) on sale of investment securities available for sale
121

 
(18
)

137


(247
)
 
1

 
(7
)
 
235

Other
3,959

 
3,278


2,741


2,319

 
3,354

 
12,297

 
10,549

 
21,931

 
24,580


19,829


8,092

 
10,382

 
74,432

 
36,533

Noninterest expense:
 
 
 
 
 
 
 
 
 
 
 
 
 
Salaries and related costs
29,878

 
32,793

 
34,239

 
25,279

 
25,649

 
122,189

 
105,042

General and administrative
8,297

 
9,539

 
7,844

 
8,182

 
7,274

 
33,862

 
32,932

Amortization of core deposit intangibles
411

 
429

 
461

 
333

 
406

 
1,634

 
1,625

Legal
(655
)
 
594

 
1,824

 
(204
)
 
980

 
1,559

 
3,373

Consulting
894

 
866

 
887

 
1,408

 
746

 
4,055

 
2,469

Federal Deposit Insurance Corporation assessments (recoveries)
860

 
(694
)
 
833

 
821

 
1,069

 
1,820

 
3,808

Occupancy
6,592

 
4,856

 
5,826

 
4,968

 
4,572

 
22,242

 
18,103

Information services
6,964

 
7,325

 
6,948

 
7,088

 
7,246

 
28,325

 
28,028

Net (benefit) cost from operation and sale of other real estate owned
(26
)
 
13

 
(30
)
 
(29
)
 
(50
)
 
(72
)
 
(139
)
 
53,215

 
55,721

 
58,832

 
47,846

 
47,892

 
215,614

 
195,241

Income from continuing operations before income taxes
16,228

 
15,993


10,184


6,303


10,900


48,708


28,255

Income tax expense (benefit) from continuing operations
3,123

 
2,328

 
1,292

 
1,245

 
(1,309
)
 
7,988

 
2,032

Income from continuing operations
13,105

 
13,665

 
8,892

 
5,058

 
12,209

 
40,720

 
26,223

(Loss) income from discontinued operations before income taxes
(3,357
)
 
190


(16,678
)

(8,440
)

3,959

 
(28,285
)
 
17,610

Income tax (benefit) expense for discontinued operations
(1,240
)
 
28


(2,198
)

(1,667
)

941

 
(5,077
)
 
3,806

(Loss) income from discontinued operations
(2,117
)
 
162

 
(14,480
)
 
(6,773
)
 
3,018

 
(23,208
)
 
13,804

NET INCOME (LOSS)
$
10,988

 
$
13,827

 
$
(5,588
)
 
$
(1,715
)
 
$
15,227

 
$
17,512

 
$
40,027

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic income (loss) per common share:
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations
$
0.54


$
0.55


$
0.32


$
0.19


$
0.45

 
$
1.57

 
$
0.97

(Loss) income from discontinued operations
(0.09
)

0.01


(0.54
)

(0.25
)

0.11

 
(0.91
)
 
0.51

Basic income (loss) per share
$
0.45

 
$
0.55

 
$
(0.22
)
 
$
(0.06
)

$
0.56


$
0.66


$
1.48

Diluted income (loss) per common share:
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations
$
0.54

 
$
0.54

 
$
0.32

 
$
0.19

 
$
0.45

 
$
1.55

 
$
0.97

(Loss) income from discontinued operations
(0.09
)
 
0.01

 
(0.54
)
 
(0.25
)
 
0.11

 
(0.90
)
 
0.51

Diluted income (loss) per share
$
0.45

 
$
0.55

 
$
(0.22
)
 
$
(0.06
)
 
$
0.56

 
$
0.65

 
$
1.47

Basic weighted average number of shares outstanding
24,233,434

 
24,419,793

 
26,619,216

 
27,021,507

 
26,993,885

 
25,573,488

 
26,970,916

Diluted weighted average number of shares outstanding
24,469,891

 
24,625,938

 
26,802,130

 
27,185,175

 
27,175,522

 
25,770,783

 
27,168,135


8





HomeStreet, Inc. and Subsidiaries
Five Quarter Consolidated Statements of Financial Condition
 
(in thousands, except share data)
 
Dec. 31, 2019
 
Sept. 30, 2019
 
June 30, 2019
 
Mar. 31,
2019
 
Dec. 31,
2018
 
 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
57,880

 
$
74,788

 
$
99,602

 
$
67,690

 
$
57,982

Investment securities
 
943,150

 
866,736

 
803,819

 
816,878

 
923,253

Loans held for sale
 
208,177

 
172,958

 
145,252

 
56,928

 
77,324

Loans held for investment, net
 
5,072,784

 
5,139,108

 
5,287,859

 
5,345,969

 
5,075,371

Mortgage servicing rights
 
97,603

 
90,624

 
94,950

 
95,942

 
103,374

Other real estate owned
 
1,393

 
1,753

 
1,753

 
838

 
455

Federal Home Loan Bank stock, at cost
 
22,399

 
8,764

 
24,048

 
32,533

 
45,497

Premises and equipment, net
 
76,973

 
78,925

 
81,167

 
85,635

 
88,112

Lease right-of-use assets
 
94,873

 
101,843

 
102,353

 
113,083

 

Goodwill
 
28,492

 
30,170

 
30,170

 
29,857

 
22,564

Other assets
 
180,083

 
187,298

 
176,888

 
169,268

 
171,255

Assets of discontinued operations
 
28,628

 
82,911

 
352,929

 
356,784

 
477,034

Total assets
 
$
6,812,435

 
$
6,835,878

 
$
7,200,790

 
$
7,171,405

 
$
7,042,221

Liabilities and shareholders' equity:
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
Deposits
 
$
5,339,959

 
$
5,804,307

 
$
5,590,893

 
$
5,178,334

 
$
4,888,558

Federal Home Loan Bank advances
 
346,590

 
5,590

 
387,590

 
599,590

 
932,590

Accounts payable and other liabilities
 
79,818

 
84,095

 
102,943

 
126,546

 
169,970

Federal funds purchased and securities sold under agreements to repurchase
 
125,000

 

 

 
27,000

 
19,000

Long-term debt
 
125,650

 
125,603

 
125,556

 
125,509

 
125,462

Lease liabilities
 
113,092

 
120,072

 
121,677

 
130,221

 

Liabilities of discontinued operations
 
2,603

 
5,075

 
148,221

 
237,174

 
167,121

Total liabilities
 
6,132,712

 
6,144,742

 
6,476,880

 
6,424,374

 
6,302,701

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
 
300,218

 
309,649

 
308,705

 
342,049

 
342,439

Retained earnings
 
374,673

 
372,981

 
359,252

 
411,826

 
412,009

Accumulated other comprehensive income (loss)
 
4,321

 
7,995

 
2,707

 
(7,355
)
 
(15,439
)
Total permanent shareholders' equity
 
679,723

 
691,136

 
671,175

 
747,031

 
739,520

Total liabilities, temporary shareholders' equity and permanent shareholders' equity
 
$
6,812,435

 
$
6,835,878

 
$
7,200,790

 
$
7,171,405

 
$
7,042,221




9





HomeStreet, Inc. and Subsidiaries
Average Balances, Yields and Rates Paid (Taxable-equivalent basis)
 
Quarter Ended December 31,
 
Quarter Ended September 30,
 
Quarter Ended December 31,
 
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
$
64,158

 
$
127

 
0.78
%
 
$
91,381

 
$
342

 
1.48
%
 
$
75,747

 
$
275

 
1.44
%
Investment securities
892,833

 
5,620

 
2.52
%
 
803,355

 
5,291

 
2.63
%
 
917,300

 
6,532

 
2.85
%
Loans held for sale (4)
187,099

 
1,818

 
3.89
%
 
265,581

 
2,704

 
4.07
%
 
431,666

 
5,234

 
4.85
%
Loans held for investment
5,184,089

 
59,965

 
4.55
%
 
5,277,586

 
63,226

 
4.72
%
 
5,035,953

 
60,875

 
4.76
%
Total interest-earning assets
6,328,179


67,530

 
4.21
%
 
6,437,903

 
71,563

 
4.38
%
 
6,460,666

 
72,916

 
4.46
%
Noninterest-earning assets (2)(4)
535,775

 
 
 
 
 
566,305

 
 
 
 
 
652,321

 
 
 
 
Total assets
$
6,863,954

 
 
 
 
 
$
7,004,208

 
 
 
 
 
$
7,112,987

 
 
 
 
Liabilities and shareholders' equity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposits:(4)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand accounts
$
374,084

 
$
366

 
0.39
%
 
$
384,937

 
$
371

 
0.38
%
 
$
392,695

 
$
392

 
0.40
%
Savings accounts
224,239

 
120

 
0.21
%
 
221,446

 
122

 
0.22
%
 
257,247

 
174

 
0.27
%
Money market accounts
2,229,704

 
7,437

 
1.32
%
 
2,016,600

 
7,129

 
1.40
%
 
1,924,671

 
5,195

 
1.07
%
Certificate accounts
1,846,770

 
10,809

 
2.32
%
 
2,223,602

 
13,093

 
2.34
%
 
1,637,537

 
7,805

 
1.89
%
Total interest-bearing deposits (5)
4,674,797

 
18,732

 
1.59
%
 
4,846,585

 
20,715

 
1.69
%
 
4,212,150

 
13,566

 
1.28
%
Federal Home Loan Bank advances
125,414

 
636

 
1.99
%
 
85,894

 
593

 
2.71
%
 
828,648

 
5,363

 
2.53
%
Federal funds purchased and securities sold under agreements to repurchase
53,163

 
227

 
1.67
%
 
6,930

 
39

 
2.22
%
 
26,421

 
159

 
2.36
%
Other borrowings
9,119

 
78

 
3.42
%
 
9,446

 
83

 
3.52
%
 

 

 
%
Long-term debt
125,619

 
1,655

 
5.23
%
 
125,574

 
1,698

 
5.37
%
 
125,435

 
1,705

 
5.40
%
Total interest-bearing liabilities
4,988,112

 
21,328

 
1.69
%
 
5,074,429

 
23,128

 
1.81
%
 
5,192,654

 
20,793

 
1.58
%
Noninterest-bearing liabilities (4) (5)
1,174,824

 
 
 
 
 
1,236,304

 
 
 
 
 
1,186,364

 
 
 
 
Total liabilities
6,162,936

 
 
 
 
 
6,310,733

 
 
 
 
 
6,379,018

 
 
 
 
Temporary shareholders' equity

 
 
 
 
 
2,378

 
 
 
 
 

 
 
 
 
Permanent shareholders' equity
701,018

 
 
 
 
 
691,097

 
 
 
 
 
733,969

 
 
 
 
Total liabilities and shareholders' equity
$
6,863,954

 
 
 
 
 
$
7,004,208

 
 
 
 
 
$
7,112,987

 
 
 
 
Net interest income (3)
 
 
$
46,202

 
 
 
 
 
$
48,435

 
 
 
 
 
$
52,123