HomeStreet, Inc. (Nasdaq: HMST):
Fully diluted EPS
$1.08
ROAE: 13.4%
ROATE: 14.2%
ROAA: 0.91%
HomeStreet, Inc. (Nasdaq: HMST) (including its consolidated
subsidiaries, the "Company," "HomeStreet" or "we"), the parent
company of HomeStreet Bank, today announced the financial results
for the quarter ended September 30, 2022. As we present non-GAAP
measures in this release, the reader should refer to the non-GAAP
reconciliations set forth below under the section “Non-GAAP
Financial Measures.”
“During the third quarter, we grew our loan portfolio by 7% and,
excluding the impact of our sale of branches in eastern Washington,
increased total deposits by 10%.” said Mark K. Mason, HomeStreet’s
Chairman of the Board, President, and Chief Executive Officer. “Our
less volatile net interest income increased by 5% during the third
quarter, offsetting the decline in single family mortgage loan
sales revenue which continues to be adversely impacted by rising
mortgage interest rates. Additionally, despite inflationary
pressures, we were able to decrease our noninterest expenses during
the third quarter to below $50 million. These results are in line
with our strategy of growing our less volatile net interest income
while leveraging our existing expense structure to improve bottom
line results. With the substantial increases in interest rates, our
funding costs increased faster than our loan yields in the quarter.
As a result, our net interest margin declined in the quarter.
However, the growth in earning assets more than offset the impact
of a lower net interest margin and our net interest income grew 5%
quarter over quarter. In the near term we are mitigating the impact
of rising rates on our funding costs through using higher rate
promotional deposit products and over the longer term through
organic growth in core deposits. Fortunately, our retail deposit
franchise is able to attract deposits at interest rates
meaningfully below wholesale borrowing rates.”
Operating Results
Third quarter 2022 compared to second
quarter 2022
- Net income: $20.4 million compared to $17.7 million
- Earnings per fully diluted share: $1.08 compared to $0.94
- Net interest margin: 3.00% compared to 3.27%
- Return on Average Equity ("ROAE"): 13.4% compared to 11.8%
- Return on Average Tangible Equity ("ROATE"): 14.2% compared to
12.6%
- Return on Average Assets ("ROAA"): 0.91% compared to 0.89%
- Efficiency ratio: 68.4% compared to 68.5%
Financial Position
Third quarter 2022 compared to second
quarter 2022
- Loan portfolio originations: $914 million compared to $1.3
billion
- Loans held for investment increased by $453 million in the
third quarter
- Total deposits increased by $618 million excluding the impact
of branch sale
- Period ending cost of deposits: 0.71% compared to 0.24%
- Tangible book value per share: $27.92 compared to
$29.37
“We continued to produce high levels of loan portfolio
originations in the third quarter. In part due to historically low
prepayments in multifamily loans, in the first three quarters of
2022 our total loans held for investment increased 31%,” added Mr.
Mason. “We anticipate continuing low mortgage banking rate locks
volumes and decreased loan portfolio originations in the fourth
quarter due to rising interest rates and economic uncertainty.”
Other
- Entered into an agreement to purchase deposits and three retail
branches in southern California
- Completed sale of five branches in eastern Washington
- Declared and paid a cash dividend of $0.35 per share in the
third quarter
Mr. Mason concluded, “During the third quarter we realized a
$4.3 million gain on the sale of five branches in eastern
Washington which included the divestiture of approximately $190
million in deposits and $40 million in loans. We recently entered
into an agreement to purchase three retail deposit branches in
southern California that include approximately $490 million of
deposits and $22 million in loans. Consumer deposits comprise 83%
of the total and 39% of the deposits are noninterest-bearing. The
weighted average rate for interest-bearing deposits is currently
less than 10 basis points. We are excited about this opportunity to
expand our footprint in the southern California market. We
currently anticipate the closing of this transaction to occur in
the first quarter of 2023. The additional funding from the
completion of this transaction is expected to be used to repay
higher rate borrowings.”
Conference Call
HomeStreet, Inc. (Nasdaq: HMST), the parent company of
HomeStreet Bank, will conduct a quarterly earnings conference call
on Tuesday, October 25, 2022 at 1:00 p.m. ET. Mark K. Mason, CEO
and President, and John M. Michel, CFO, will discuss third quarter
2022 results and provide an update on recent events. A question and
answer session will follow the presentation. Shareholders, analysts
and other interested parties may register in advance at the
following URL:
https://www.netroadshow.com/events/login?show=c17ab50e&confId=41907
or may join the call by dialing directly at 1-833-927-1758
(1-929-526-1599 internationally) shortly before 1:00 p.m. ET using
Access Code 247077.
A rebroadcast will be available approximately one hour after the
conference call by dialing 1-929-458-6194 and entering passcode
875368.
About HomeStreet
HomeStreet, Inc. (Nasdaq: HMST) is a diversified financial
services company headquartered in Seattle, Washington, serving
consumers and businesses in the Western United States and Hawaii.
The Company is principally engaged in real estate lending,
including mortgage banking activities, and commercial and consumer
banking. Its principal subsidiaries are HomeStreet Bank and
HomeStreet Capital Corporation. HomeStreet Bank is the winner of
the 2022 “Best Small Bank" in Washington Newsweek magazine award.
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 is an Equal Housing Lender.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
(the “Reform Act”). Generally, forward-looking statements include
the words “anticipate,” “believe,” “estimate,” “expect,” “intend,”
“may,” “plan,” “potential,” “goal,” “upcoming,” “outlook,”
“guidance” or the negation thereof, or similar expressions. In
addition, all statements that address and/or include beliefs,
assumptions, estimates, projections and expectations of our future
performance, financial condition, long-term value creation, capital
management, reduction in volatility, reliability of earnings,
provisions and allowances for credit losses, cost reduction
initiatives, performance of our continued operations relative to
our past operations, and restructuring activities are
forward-looking statements within the meaning of the Reform Act.
Forward-looking statements involve inherent risks, uncertainties
and other factors, many of which are difficult to predict and are
generally beyond management’s control. Forward-looking statements
are based on the Company’s expectations at the time such statements
are made and speak only as of the date made. The Company does not
assume any obligation or undertake to update any forward-looking
statements after the date of this release as a result of new
information, future events or developments, except as required by
federal securities or other applicable laws, although the Company
may do so from time to time. The Company does not endorse any
projections regarding future performance that may be made by third
parties. For all forward-looking statements, the Company claims the
protection of the safe harbor for forward-looking statements
contained in the Reform Act.
We caution readers that actual results may differ materially
from those expressed in or implied by the Company’s forward-looking
statements. Rather, more important factors could affect the
Company’s future results, including but not limited to the
following: (1) changes in the U.S. and global economies, including
business disruptions, reductions in employment, inflationary
pressures and an increase in business failures, specifically among
our clients; (2) the continued impact of COVID-19 on our business,
employees and our ability to provide services to our customers and
respond to their needs as more cases of COVID-19 may arise in our
primary markets; (3) the timing and occurrence or non-occurrence of
events may be subject to circumstances beyond our control; (4)
there may be increases in competitive pressure among financial
institutions or from non-financial institutions; (5) changes in the
interest rate environment may reduce interest margins; (6) changes
in deposit flows, loan demand or real estate values may adversely
affect the business of our primary subsidiary, the Bank, through
which substantially all of our operations are carried out; (7) our
ability to control operating costs and expenses; (8) our credit
quality and the effect of credit quality on our credit losses
expense and allowance for credit losses; (9) the adequacy of our
allowance for credit losses; (10) changes in accounting principles,
policies or guidelines may cause our financial condition to be
perceived differently; (11) legislative or regulatory changes that
may adversely affect our business or financial condition,
including, without limitation, changes in corporate and/or
individual income tax laws and policies, changes in privacy laws,
and changes in regulatory capital or other rules, and the
availability of resources to address or respond to such changes;
(12) general economic conditions, either nationally or locally in
some or all areas in which we conduct business, or conditions in
the securities markets or banking industry, may be less favorable
than what we currently anticipate; (13) challenges our customers
may face in meeting current underwriting standards may adversely
impact all or a substantial portion of the value of our rate-lock
loan activity we recognize; (14) technological changes may be more
difficult or expensive than what we anticipate; (15) a failure in
or breach of our operational or security systems or information
technology infrastructure, or those of our third-party providers
and vendors, including due to cyber-attacks; (16) success or
consummation of new business initiatives may be more difficult or
expensive than what we anticipate; (17) our ability to grow
efficiently both organically and through acquisitions and to manage
our growth and integration costs; (18) our ability to attract and
retain key members of our senior management team; (19) staffing
fluctuations in response to product demand or the implementation of
corporate strategies that affect our work force and potential
associated charges; (20) litigation or other matters before
regulatory agencies, whether currently existing or commencing in
the future, may delay the occurrence or non-occurrence of events
longer than what we anticipate; (21) our ability to obtain
regulatory approvals or non-objection to take various capital
actions, including the payment of dividends by us or the Bank, or
repurchases of our common stock; and (22) the consummation of our
transaction to purchase three branches in southern California. A
discussion of the factors, risks and uncertainties that could
affect our financial results, business goals and operational and
financial objectives cited in this release, other releases, public
statements and/or filings with the Securities and Exchange
Commission (“SEC”) is also contained in the “Risk Factors” sections
of the Company’s Forms 10-K and 10-Q. We strongly recommend readers
review those disclosures in conjunction with the discussions
herein.
All future written and oral forward-looking statements
attributable to the Company or any person acting on its behalf are
expressly qualified in their entirety by the cautionary statements
contained or referred to above. New risks and uncertainties arise
from time to time, and factors that the Company currently deems
immaterial may become material, and it is impossible for the
Company to predict these events or how they may affect the
Company.
HomeStreet, Inc. and Subsidiaries Non-GAAP Financial
Measures
To supplement our unaudited condensed consolidated financial
statements presented in accordance with GAAP, we use certain
non-GAAP measures of financial performance.
In this press release, we use the following non-GAAP measures:
(i) tangible common equity and tangible assets as we believe this
information is consistent with the treatment by bank regulatory
agencies, which excluded intangible assets from the calculation of
capital ratios; and (ii) an efficiency ratio which is the ratio of
noninterest expenses to the sum of net interest income and
noninterest income, excluding certain items of income or expense
and excluding taxes incurred and payable to the state of Washington
as such taxes are not classified as income taxes and we believe
including them in noninterest expenses impacts the comparability of
our results to those companies whose operations are in states where
assessed taxes on business are classified as income taxes.
These supplemental performance measures may vary from, and may
not be comparable to, similarly titled measures provided by other
companies in our industry. Non-GAAP financial measures are not in
accordance with, or an alternative for, GAAP. Generally, a non-GAAP
financial measure is a numerical measure of a company’s performance
that either excludes or includes amounts that are not normally
excluded or included in the most directly comparable measure
calculated and presented in accordance with GAAP. A non-GAAP
financial measure may also be a financial metric that is not
required by GAAP or other applicable requirements.
We believe that these non-GAAP financial measures, when taken
together with the corresponding GAAP financial measures, provide
meaningful supplemental information regarding our performance by
providing additional information used by management that is not
otherwise required by GAAP or other applicable requirements. Our
management uses, and believes that investors benefit from referring
to, these non-GAAP financial measures in assessing our operating
results and when planning, forecasting and analyzing future
periods. These non-GAAP financial measures also facilitate a
comparison of our performance to prior periods. We believe these
measures are frequently used by securities analysts, investors and
other parties in the evaluation of companies in our industry. These
non-GAAP financial measures should be considered in addition to,
not as a substitute for or superior to, financial measures prepared
in accordance with GAAP. In the information below, we have provided
reconciliations of, where applicable, the most comparable GAAP
financial measures to the non-GAAP measures used in this press
release, or a reconciliation of the non-GAAP calculation of the
financial measure.
HomeStreet, Inc. and Subsidiaries Non-GAAP Financial
Measures
Reconciliations of non-GAAP results of operations to the nearest
comparable GAAP measures:
As of or for the Quarter
Ended
(in thousands, except share and per share
data)
September 30, 2022
June 30, 2022
Tangible book value per share
Shareholders' equity
$
552,789
$
580,767
Less: Goodwill and other intangibles
(30,215
)
(31,219
)
Tangible shareholders' equity
$
522,574
$
549,548
Common shares outstanding
18,717,557
18,712,789
Computed amount
$
27.92
$
29.37
Return on average tangible equity
(annualized)
Average shareholders' equity
$
603,278
$
603,664
Less: Average goodwill and other
intangibles
(30,602
)
(31,380
)
Average tangible equity
$
572,676
$
572,284
Net income
$
20,367
$
17,721
Adjustments (tax effected)
Amortization on core deposit
intangibles
186
191
Tangible income applicable to
shareholders
$
20,553
$
17,912
Ratio
14.2
%
12.6
%
Efficiency ratio
Noninterest expense
Total
$
49,889
$
50,637
Adjustments:
State of Washington taxes
(629
)
(579
)
Adjusted total
$
49,260
$
50,058
Total revenues
Net interest income
$
63,018
$
60,056
Noninterest income
13,322
13,013
Gain on sale of branches
(4,270
)
—
Adjusted total
$
72,070
$
73,069
Ratio
68.4
%
68.5
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221024005910/en/
Executive Vice President and Chief Financial Officer
HomeStreet, Inc. John Michel (206) 515-2291
john.michel@homestreet.com http://ir.homestreet.com
HomeStreet (NASDAQ:HMST)
Historical Stock Chart
From Jun 2024 to Jul 2024
HomeStreet (NASDAQ:HMST)
Historical Stock Chart
From Jul 2023 to Jul 2024