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| 8-K - FORM 8-K - HomeStreet, Inc. | form8-k4q13earningsrelease.htm |
HomeStreet, Inc. Reports Fourth Quarter and Year-End 2013 Results
2013 Net Income of $23.8 Million, or $1.61 per Diluted Share
SEATTLE – January 28, 2014 – (BUSINESS WIRE) – 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.
• | Consolidated results: |
◦ | 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. |
◦ | Year-ended 2013 |
▪ | 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 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. |
▪ | 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. |
◦ | Mortgage Banking - reduced loan production volume due to lower refinance volume, expected seasonality and a lack of housing inventory |
▪ | 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. |
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• | Other highlights: |
◦ | 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.
“We made substantial progress in the fourth quarter toward our goal of business diversification. We increased our loans held for investment by 24 percent over the quarter, and of that amount, over 11 percent came from organic loan growth, primarily in multifamily, construction and C&I lending. We successfully closed three high quality bank and deposit branch acquisitions, adding six retail deposit branches and teams of seasoned commercial lenders and customer service personnel. Additionally, we recently announced our entry into the California market as a diversified commercial real estate lender.”
Consolidated Results of Operations
Net Interest Income
Net interest income in the fourth quarter of 2013 was $21.4 million, up $1.0 million, or 4.8%, from the third quarter of 2013 and up $4.8 million, or 28.9%, from the fourth quarter of 2012. In the fourth quarter of 2013, net interest margin, on a tax equivalent basis, was 3.34% compared to 3.41% in the third quarter of 2013, and 3.06% in the fourth quarter of 2012. The decline in the net interest margin from the third quarter of 2013 primarily reflects a lower yield on investment securities due to premium amortization caused primarily by higher than expected prepayments.
Improvement in our net interest margin from the fourth quarter of 2012 resulted primarily from a 42 basis point decline in average interest-bearing cost of funds, due in part to the re-pricing of maturing time deposits.
Total average interest-earning assets increased from the three and twelve months ended December 31, 2012 primarily as a result of growth in portfolio loans, both from originations and from acquisitions, and in the investment securities portfolio, partially offset by a decrease in loans held for sale. The increase in average balances of portfolio loans primarily reflects year-over-year growth in loan production volume from all commercial and consumer business lines. Total average interest-bearing deposit balances increased from the prior periods primarily due to acquisition-related growth in transaction and savings deposits, partially offset by a decline in higher-cost retail certificates of deposit.
Noninterest Income
Noninterest income in the fourth quarter of 2013 was $36.1 million, down $2.1 million, or 5.5%, from $38.2 million in the third quarter of 2013 and down $35.9 million, or 49.9%, from $71.9 million in the fourth quarter of 2012. The decrease from the prior quarter was primarily driven by lower mortgage loan origination and sale revenue, due in part to expected seasonality and continuing low levels of new and resale housing inventory that has led to substantially lower loan origination volume. The decrease from the fourth quarter of
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2012 was primarily due to the significant reduction in mortgage refinance volumes driven by higher mortgage interest rates in 2013.
Partially offsetting the decrease in noninterest income during the fourth quarter of 2013 was a $3.8 million increase in mortgage servicing income from the third quarter of 2013, primarily driven by higher mortgage servicing rights ("MSR") values net of risk management results and increased servicing fees collected in the quarter on the Company's single family mortgage servicing. Higher MSR values were the result of lower expected prepayments. Additionally, gain on sale of investment securities increased $2.0 million from the third quarter of 2013, as the Company decreased the overall size of its securities portfolio to provide liquidity for the growth in lending volumes.
Noninterest Expense
Noninterest expense for the fourth quarter of 2013 was $58.9 million compared to $58.1 million in the third quarter of 2013. Excluding acquisition-related expenses, noninterest expense was $54.8 million(1) in the fourth quarter of 2013, a decrease of $2.9 million, or 5.0%, from $57.7 million(1) in the third quarter of 2013, and a decrease of $1.2 million, or 2.1%, from $56.0 million in the fourth quarter of 2012. The decreases from both periods are primarily due to a decrease in mortgage origination commissions and incentives, partially offset by increased salary and related costs and general and administrative expenses, including marketing expenses. During the quarter, the Company added seven home loan centers, related to increased expansion in California. At December 31, 2013, our full-time equivalent employees had increased 5.3% from September 30, 2013 and our retail deposit branch system increased 32% to 30 branches.
Income Taxes
The Company's income tax benefit was $553 thousand for the quarter. The Company's annual effective income tax rate was 31.6% as 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.
Business Segments
Commercial and Consumer Banking Segment
Commercial and Consumer Banking segment net income in the fourth quarter of 2013 was $244 thousand, compared to $3.8 million in the third quarter of 2013. Excluding acquisition-related expenses of $4.1 million, net income was $2.9 million(1) in the fourth quarter of 2013, compared to net income of $4.1 million(1) in the third quarter of 2013 and a net loss of $4.4 million in the fourth quarter of 2012. The variance in net income from the third quarter of 2013 was primarily due to the third quarter reversal of loan loss provision of $1.5 million. For the full year 2013, Commercial and Consumer Banking had net income of $2.6 million. Excluding acquisition-related expenses of $4.5 million, net income was $5.6 million(1) for 2013, improving from a net loss of $14.5 million for the full year 2012.
Loans Held for Investment
Loans held for investment, net, were $1.87 billion at December 31, 2013, an increase of $362.5 million, or 24.0%, from September 30, 2013 and an increase of $563.7 million, or 43.1%, from December 31, 2012. Additions to the loan portfolio from acquisitions were $208.7 million. New loan commitments totaled $378.8 million for the fourth quarter of 2013, up 56.2% from $242.5 million in the third quarter of 2013.
Asset Quality
Classified assets of $50.6 million, or 1.65% of total assets at December 31, 2013, decreased by $3.8 million, or 6.9%, from $54.4 million, or 1.90% of total assets, at September 30, 2013. Nonperforming assets (NPAs) were $38.6 million, or 1.26% of total assets at December 31, 2013, as compared to $39.0 million, or 1.37% of total assets at September 30, 2013.
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Nonaccrual loans of $25.7 million, or 1.36% of total loans at December 31, 2013, decreased from $26.8 million, or 1.74% of total loans at September 30, 2013. OREO balances were $12.9 million at December 31, 2013, an increase of 5% from $12.3 million at September 30, 2013. Delinquent loans of $84.3 million, or 4.44% of total loans at December 31, 2013, decreased from $86.7 million, or 5.64% of total loans at September 30, 2013. Excluding FHA-insured and Department of Veterans' Affairs (VA)-guaranteed single family mortgage loans, delinquent loans were $29.5 million, or 1.63% of total non-FHA/VA loans at December 31, 2013, as compared to $31.3 million, or 2.16% of total non-FHA/VA loans at September 30, 2013. Included in nonaccrual loans at December 31, 2013 are $6.5 million of acquisition-related loans that are guaranteed by the Small Business Administration ("SBA").
The allowance for credit losses was $24.1 million at December 31, 2013 compared to $24.9 million at September 30, 2013. The allowance for loan losses as a percentage of total loans was 1.26% at December 31, 2013. Excluding acquired loans, the allowance for loan losses as a percentage of total loans was 1.40% of total loans compared to 1.61% of total loans at September 30, 2013. Due to improving credit trends, we recorded no provision for credit losses in the fourth quarter of 2013, compared to a reversal of provision of $1.5 million in the third quarter of 2013 and provision of $4.0 million recorded in the fourth quarter of 2012. Net charge-offs in the fourth quarter of 2013 totaled $805 thousand, down from net charge-offs of $1.5 million in the third quarter of 2013 and $3.9 million in the fourth quarter of 2012. Of the $805 thousand in net charge-offs during the quarter, $392 thousand had been specifically reserved as of September 30, 2013.
Deposits
Deposit balances were $2.20 billion at December 31, 2013 as compared to $2.10 billion at September 30, 2013 and $1.98 billion at December 31, 2012. Transaction and savings deposits increased $109.0 million, or 7.7%, from September 30, 2013, while certificates of deposit increased $54.2 million, or 11.8%, from the prior quarter, mostly the result of our fourth quarter acquisitions which added six retail deposit branches to our network.
Mortgage Banking Segment
Mortgage Banking segment net loss was $1.1 million for the fourth quarter of 2013, driven primarily by a significant decline in interest rate lock commitment volume, compared to net loss of $2.1 million for the third quarter of 2013 and net income of $25.8 million for the fourth quarter of 2012. For the full year 2013, Mortgage Banking net income was $21.2 million, a decrease of 78.1% from $96.6 million in 2012.
Mortgage Origination for Sale
Single family mortgage interest rate lock commitments, net of estimated fallout, totaled $662.0 million in the fourth quarter of 2013, a decrease of $124.1 million, or 15.8%, from $786.1 million in the third quarter of 2013 and down $592.9 million, or 47.2%, from the fourth quarter of 2012. The decrease in interest rate lock commitments in the fourth quarter of 2013 compared to the third quarter of 2013 was primarily the result of a decline in mortgage refinance volume and the expected seasonality of the mortgage loan business as well as continuing low levels of new and resale housing inventory. The decrease from the fourth quarter of 2012 primarily reflects the drop in refinance volume following the rise in mortgage interest rates beginning in June 2013, partially offset by increased loan volume from the expansion of our mortgage production offices and a 35% increase in mortgage production personnel year over year.
Single family closed loan volume designated for sale was $773.1 million in the fourth quarter of 2013, down $413.9 million, or 34.9%, from $1.19 billion in the third quarter of 2013 and down $745.8 million, or 49.1%, from $1.52 billion in the fourth quarter of 2012. At December 31, 2013, the combined pipeline of interest rate lock commitments, net of estimated fallout, and mortgage loans held for sale was $476.0 million, compared to $631.1 million at September 30, 2013.
Net gain on single family mortgage loan origination and sale activities in the fourth quarter of 2013 was $23.3 million, a decrease of $8.1 million, or 25.7%, from the third quarter of 2013 and a decrease of $43.9 million,
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or 65.3%, from the fourth quarter of 2012. The decrease from the prior quarter is primarily the result of the 15.8% decrease in interest rate lock commitments. The decrease from the fourth quarter of 2012 was primarily due to a decrease in refinance mortgage volume, partially offset by the increase in mortgage production offices and personnel in 2013.
Due to differences in the timing of revenue recognition between components of the gain on loan origination and sale activities, the Company analyzes the profitability of these activities using a 'Composite Margin,' which is comprised of the ratios of the components to their respective populations of interest rate lock commitments and closed loans. The Composite Margin for the fourth quarter of 2013 was 350 basis points, down from 375 basis points in the third quarter of 2013.
Mortgage Servicing
Single family mortgage servicing income of $7.4 million in the fourth quarter of 2013 increased $3.8 million, or 103.3%, from the third quarter of 2013 and increased $7.1 million from $287 thousand in the fourth quarter of 2012. The increase from the third quarter of 2013 was primarily driven by higher MSR values net of risk management results due to lower expected prepayments and increased servicing fees collected in the quarter on the Company's single family mortgage servicing.
Single family mortgage servicing fees collected in the fourth quarter of 2013 increased $698 thousand, or 8.6%, from the third quarter of 2013 and $2.1 million, or 32.1%, from the fourth quarter of 2012 resulting from growth in the portfolio of single family loans serviced for others. The portfolio of single family loans serviced for others increased to $11.80 billion at year-end compared to $11.29 billion at September 30, 2013.
Noninterest Expense
Mortgage Banking segment noninterest expense of $38.0 million decreased $6.3 million, or 14.1%, from the third quarter of 2013. This decrease was primarily attributable to lower commission and incentive expense as closed loan volumes declined 34.9% from the third quarter of 2013. Partially offsetting this decrease was an increase in salaries and related expenses resulting from the net addition of 28 mortgage originators during the quarter.
Capital
Regulatory capital ratios for the Bank are as follows:
Dec. 31, 2013 (1) | Sept. 30, 2013 | Dec. 31, 2012 | Well-capitalized ratios | |||||||||
Tier 1 leverage capital (to average assets) | 9.99 | % | 10.85 | % | 11.78 | % | 5.00 | % | ||||
Tier 1 risk-based capital (to risk-weighted assets) | 14.33 | % | 17.19 | % | 18.05 | % | 6.00 | % | ||||
Total risk-based capital (to risk-weighted assets) | 15.51 | % | 18.44 | % | 19.31 | % | 10.00 | % | ||||
(1) | Regulatory capital ratios at December 31, 2013 are preliminary. |
The decline in the Bank's capital ratios was primarily attributable to the fourth quarter acquisitions of Fortune Bank and Yakima National Bank, which created $12.6 million of intangible assets not includable in regulatory capital and resulted in an increase in average and risk-weighted assets as well as the consolidated net loss for the quarter.
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Special Cash Dividend Declaration
As we announced on January 24, 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.
(1) The press release contains certain non-GAAP financial disclosures for consolidated net income excluding acquisition-related expenses, diluted earnings per share, excluding acquisition-related expenses, and Commercial and Consumer Banking segment net income, excluding acquisition-related expenses. The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company's operational performance and to enhance investors' overall understanding of such financial performance. For corresponding reconciliations to GAAP financial measures, see Non-GAAP Financial Measures beginning on page 30 of this earnings release.
Conference Call
HomeStreet, Inc. will conduct a quarterly earnings conference call on Tuesday, January 28, 2014 at 1:00 p.m. EST. The Company will discuss fourth quarter 2013 results and provide an update on recent activities. A question and answer session will follow the presentation. Shareholders, analysts and other interested parties may join the call by dialing 1-888-317-6016 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 10037782.
About HomeStreet, Inc.
HomeStreet, Inc. (NASDAQ:HMST) is a diversified financial services company headquartered in Seattle, Washington, and the holding company for HomeStreet Bank, a Washington state-chartered, FDIC-insured savings bank. HomeStreet Bank offers Commercial and Consumer banking, investment and insurance products and services in Washington, Oregon and Hawaii. HomeStreet Bank conducts lending activities in Washington, Oregon, Hawaii, Idaho, California, Arizona, Utah and Alaska. For more information, visit http://ir.homestreet.com. Information contained in or linked from our website is not incorporated into, and does not form a part of, this release.
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Forward-Looking Statements
This press release contains forward-looking statements concerning HomeStreet, Inc. and HomeStreet Bank and their operations, performance, financial conditions and likelihood of success. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements are based on many beliefs, assumptions, estimates and expectations of our future performance, taking into account information currently available to us, and include statements about the competitiveness of the banking industry. When used in this press release, the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “should,” “will” and “would” and similar expressions (including the negative of these terms) may help identify forward-looking statements. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company. Forward-looking statements speak only as of the date made, and we do not undertake to update them to reflect changes or events that occur after that date.
We caution readers that a number of factors could cause actual results to differ materially from those expressed in, implied or projected by, such forward-looking statements. Among other things, our ability to expand our banking operations geographically and across market sectors, grow our franchise and capitalize on market opportunities, and generate positive net income and cash flow, may be limited due to future risks and uncertainties including, but not limited to, changes in general economic conditions that impact our markets and our business, actions by the Federal Reserve affecting monetary and fiscal policy, regulatory and legislative actions that may constrain our ability to do business, significant increases in the competition we face in our industry and market and the extent of our success in problem asset resolution efforts. We may not immediately realize the benefits expected from our recently completed bank and branch acquisitions and may incur unexpected costs in integrating these acquisitions into our operations. In addition, we may not recognize all or a substantial portion of the value of our rate-lock loan activity due to challenges our customers may face in meeting current underwriting standards, a decrease in interest rates, an increase in competition for such loans, unfavorable changes in general economic conditions, including housing prices, the job market, consumer confidence and spending habits either nationally or in the regional and local market areas in which the Company does business and legislative or regulatory actions or reform (including, without limitation, the Dodd-Frank Wall Street Reform and Consumer Protection Act). Further, our ability to pay cash dividends in the future is dependent upon a variety of factors, including our net income, liquidity, capital resources, regulatory and financial condition, and our compliance with the terms of our trust preferred securities and applicable banking laws and regulations. A discussion of the factors that we recognize to pose risk to the achievement of our business goals and our operational and financial objectives is contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012. These factors are updated from time to time in our filings with the Securities and Exchange Commission, and readers of this release are cautioned to review those disclosures in conjunction with the discussions herein.
Information contained herein, other than information at December 31, 2012 and for the twelve months then ended, is unaudited. All financial data should be read in conjunction with the notes to the consolidated financial statements of HomeStreet, Inc., and subsidiaries as of and for the fiscal year ended December 31, 2012, as contained in the Company's Annual Report on Form 10-K for such fiscal year.
Source: HomeStreet, Inc.
Contact: | Investor Relations & Media: | |
HomeStreet, Inc. | ||
Terri Silver, 206-389-6303 | ||
terri.silver@homestreet.com | ||
http://ir.homestreet.com | ||
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HomeStreet, Inc. and Subsidiaries
Summary Financial Data
Quarter Ended | Year Ended | |||||||||||||||||||||||||||
(dollars in thousands, except share data) | Dec. 31, 2013 | Sept. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | |||||||||||||||||||||
Income statement data (for the period ended): | ||||||||||||||||||||||||||||
Net interest income | $ | 21,382 | $ | 20,412 | $ | 17,415 | $ | 15,235 | $ | 16,591 | $ | 74,444 | $ | 60,743 | ||||||||||||||
Provision (reversal of provision) for loan losses | — | (1,500 | ) | 400 | 2,000 | 4,000 | 900 | 11,500 | ||||||||||||||||||||
Noninterest income | 36,072 | 38,174 | 57,556 | 58,943 | 71,932 | 190,745 | 238,020 | |||||||||||||||||||||
Noninterest expense | 58,868 | 58,116 | 56,712 | 55,799 | 55,966 | 229,495 | 183,591 | |||||||||||||||||||||
Acquisition-related expenses (included in noninterest expense) | 4,080 | 463 | 6 | — | — | 4,549 | — | |||||||||||||||||||||
Net income before taxes | (1,414 | ) | 1,970 | 17,859 | 16,379 | 28,557 | 34,794 | 103,672 | ||||||||||||||||||||
Income tax expense | (553 | ) | 308 | 5,791 | 5,439 | 7,060 | 10,985 | 21,546 | ||||||||||||||||||||
Net income | $ | (861 | ) | $ | 1,662 | $ | 12,068 | $ | 10,940 | $ | 21,497 | $ | 23,809 | $ | 82,126 | |||||||||||||
Basic earnings per common share (1) | $ | (0.06 | ) | $ | 0.12 | $ | 0.84 | $ | 0.76 | $ | 1.50 | $ | 1.65 | $ | 6.17 | |||||||||||||
Diluted earnings per common share(1) | $ | (0.06 | ) | $ | 0.11 | $ | 0.82 | $ | 0.74 | $ | 1.46 | $ | 1.61 | $ | 5.98 | |||||||||||||
Common shares outstanding (1) | 14,799,991 | 14,422,354 | 14,406,676 | 14,400,206 | 14,382,638 | 14,799,991 | 14,382,638 | |||||||||||||||||||||
Weighted average common shares | ||||||||||||||||||||||||||||
Basic | 14,523,405 | 14,388,559 | 14,376,580 | 14,359,691 | 14,371,120 | 14,412,059 | 13,312,939 | |||||||||||||||||||||
Diluted | 14,812,391 | 14,790,671 | 14,785,481 | 14,804,129 | 14,714,166 | 14,798,168 | 13,739,398 | |||||||||||||||||||||
Dividends per share | $ | 0.11 | $ | 0.11 | $ | 0.11 | $ | — | $ | — | $ | 0.33 | $ | — | ||||||||||||||
Book value per share | $ | 17.97 | $ | 18.60 | $ | 18.62 | $ | 18.78 | $ | 18.34 | $ | 17.97 | $ | 18.34 | ||||||||||||||
Tangible book value per share (2) | $ | 17.08 | $ | 18.57 | $ | 18.60 | $ | 18.75 | $ | 18.31 | $ | 17.08 | $ | 18.31 | ||||||||||||||
Financial position (at period end): | ||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 33,908 | $ | 37,906 | $ | 21,645 | $ | 18,709 | $ | 25,285 | $ | 33,908 | $ | 25,285 | ||||||||||||||
Investment securities | 498,816 | 574,894 | 539,480 | 416,561 | 416,517 | 498,816 | 416,517 | |||||||||||||||||||||
Loans held for sale | 279,941 | 385,110 | 471,191 | 430,857 | 620,799 | 279,941 | 620,799 | |||||||||||||||||||||
Loans held for investment, net | 1,872,716 | 1,510,169 | 1,416,439 | 1,358,982 | 1,308,974 | 1,872,716 | 1,308,974 | |||||||||||||||||||||
Mortgage servicing rights | 162,463 | 146,300 | 137,385 | 111,828 | 95,493 | 162,463 | 95,493 | |||||||||||||||||||||
Other real estate owned | 12,911 | 12,266 | 11,949 | 21,664 | 23,941 | 12,911 | 23,941 | |||||||||||||||||||||
Total assets | 3,066,054 | 2,854,323 | 2,776,124 | 2,508,251 | 2,631,230 | 3,066,054 | 2,631,230 | |||||||||||||||||||||
Deposits | 2,203,238 | 2,098,076 | 1,963,123 | 1,934,704 | 1,976,835 | 2,203,238 | 1,976,835 | |||||||||||||||||||||
FHLB advances | 446,590 | 338,690 | 409,490 | 183,590 | 259,090 | 446,590 | 259,090 | |||||||||||||||||||||
Shareholders’ equity | 265,926 | 268,208 | 268,321 | 270,405 | 263,762 | 265,926 | 263,762 | |||||||||||||||||||||
Financial position (averages): | ||||||||||||||||||||||||||||
Investment securities | $ | 565,869 | $ | 556,862 | $ | 512,475 | $ | 422,761 | $ | 418,261 | $ | 515,000 | $ | 410,819 | ||||||||||||||
Loans held for investment | 1,732,955 | 1,475,011 | 1,397,219 | 1,346,100 | 1,297,615 | 1,496,146 | 1,303,010 | |||||||||||||||||||||
Total interest-earning assets | 2,624,287 | 2,474,397 | 2,321,195 | 2,244,563 | 2,244,727 | 2,422,136 | 2,167,363 | |||||||||||||||||||||
Total interest-bearing deposits | 1,698,550 | 1,488,076 | 1,527,732 | 1,543,645 | 1,609,075 | 1,590,492 | 1,644,859 | |||||||||||||||||||||
FHLB advances | 343,366 | 374,682 | 307,296 | 147,097 | 122,516 | 293,871 | 93,325 | |||||||||||||||||||||
Repurchase agreements | — | — | 10,913 | — | 558 | 2,721 | 17,806 | |||||||||||||||||||||
Total interest-bearing liabilities | 2,268,826 | 2,045,155 | 1,917,098 | 1,752,599 | 1,794,006 | 2,023,409 | 1,817,847 | |||||||||||||||||||||
Shareholders’ equity | 268,328 | 271,286 | 280,783 | 274,355 | 262,163 | 249,081 | 211,329 | |||||||||||||||||||||
9
HomeStreet, Inc. and Subsidiaries
Summary Financial Data (continued)
Quarter Ended | Year Ended | |||||||||||||||||||||||||||
(dollars in thousands, except share data) | Dec. 31, 2013 | Sept. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | |||||||||||||||||||||
Financial performance: | ||||||||||||||||||||||||||||
Return on average common shareholders’ equity (3) | (1.28 | )% | 2.45 | % | 17.19 | % | 15.95 | % | 32.80 | % | 9.56 | % | 38.86 | % | ||||||||||||||
Return on average tangible common shareholders' equity(2) | (1.33 | )% | 2.45 | % | 17.22 | % | 15.97 | % | 32.85 | % | 9.66 | % | 38.94 | % | ||||||||||||||
Return on average assets | (0.12 | )% | 0.24 | % | 1.86 | % | 1.75 | % | 3.46 | % | 0.88 | % | 3.42 | % | ||||||||||||||
Net interest margin (4) | 3.34 | % | 3.41 | % | 3.10 | % | 2.81 | % | (5) | 3.06 | % | 3.17 | % | (5) | 2.89 | % | ||||||||||||
Efficiency ratio (6) | 102.46 | % | 99.20 | % | 75.65 | % | 75.22 | % | 63.22 | % | 86.54 | % | 61.45 | % | ||||||||||||||
Asset quality: | ||||||||||||||||||||||||||||
Allowance for credit losses | $ | 24,089 | $ | 24,894 | $ | 27,858 | $ | 28,594 | $ | 27,751 | 24,089 | $ | 27,751 | |||||||||||||||
Allowance for loan losses/total loans | 1.26 | % | (7) | 1.61 | % | 1.92 | % | 2.05 | % | 2.06 | % | 1.26 | % | (7) | 2.06 | % | ||||||||||||
Allowance for loan losses/nonaccrual loans | 93.00 | % | 92.30 | % | 93.11 | % | 88.40 | % | 92.20 | % | 93.00 | % | 92.20 | % | ||||||||||||||
Total classified assets | $ | 50,600 | $ | 54,355 | $ | 74,721 | $ | 90,076 | $ | 86,270 | $ | 50,600 | $ | 86,270 | ||||||||||||||
Classified assets/total assets | 1.65 | % | 1.90 | % | 2.69 | % | 3.59 | % | 3.28 | % | 1.65 | % | 3.28 | % | ||||||||||||||
Total nonaccrual loans(8) | $ | 25,707 | (9) | $ | 26,753 | $ | 29,701 | $ | 32,133 | $ | 29,892 | $ | 25,707 | (9) | $ | 29,892 | ||||||||||||
Nonaccrual loans/total loans | 1.36 | % | 1.74 | % | 2.06 | % | 2.32 | % | 2.24 | % | 1.36 | % | 2.24 | % | ||||||||||||||
Other real estate owned | $ | 12,911 | $ | 12,266 | $ | 11,949 | $ | 21,664 | $ | 23,941 | $ | 12,911 | $ | 23,941 | ||||||||||||||
Total nonperforming assets | $ | 38,618 | (9) | $ | 39,019 | $ | 41,650 | $ | 53,797 | $ | 53,833 | $ | 38,618 | (9) | $ | 53,833 | ||||||||||||
Nonperforming assets/total assets | 1.26 | % | 1.37 | % | 1.50 | % | 2.14 | % | 2.05 | % | 1.26 | % | 2.05 | % | ||||||||||||||
Net charge-offs | $ | 805 | $ | 1,464 | $ | 1,136 | $ | 1,157 | $ | 3,876 | $ | 4,562 | $ | 26,549 | ||||||||||||||
Regulatory capital ratios for the Bank: | ||||||||||||||||||||||||||||
Tier 1 leverage capital (to average assets) | 9.99 | % | (10) | 10.85 | % | 11.89 | % | 11.97 | % | 11.78 | % | 9.99 | % | (10) | 11.78 | % | ||||||||||||
Tier 1 risk-based capital (to risk-weighted assets) | 14.33 | % | (10) | 17.19 | % | 17.89 | % | 19.21 | % | 18.05 | % | 14.33 | % | (10) | 18.05 | % | ||||||||||||
Total risk-based capital (to risk-weighted assets) | 15.51 | % | (10) | 18.44 | % | 19.15 | % | 20.47 | % | 19.31 | % | 15.51 | % | (10) | 19.31 | % | ||||||||||||
Other data: | ||||||||||||||||||||||||||||
Full-time equivalent employees (ending) | 1,502 | 1,426 | 1,309 | 1,218 | 1,099 | 1,502 | 1,099 | |||||||||||||||||||||
(1) | Share and per share data shown after giving effect to the 2-for-1 forward stock splits effective March 6, 2012 and November 5, 2012. |
(2) | Tangible equity ratios and tangible book value per share of common stock are non-GAAP financial measures. Other companies may define or calculate these measures differently. Tangible book value is calculated by dividing shareholders' common equity less average goodwill and intangible assets, net (excluding MSRs) by the number of common shares outstanding. The return on average tangible common shareholders' equity is calculated by dividing net earnings available to common shareholders (annualized) by average shareholders' common equity less average goodwill and intangible assets, net (excluding MSRs). For additional information on these ratios and for corresponding reconciliations to GAAP financial measures, see Non-GAAP Financial Measures in this earnings release. |
(3) | Net earnings available to common shareholders (annualized) divided by average common shareholders’ equity. |
(4) | Net interest income divided by total average interest-earning assets on a tax equivalent basis. |
(5) | Net interest margin for the first quarter of 2013 included $1.4 million in interest expense related to the correction of the cumulative effect of an error in prior years, resulting from the under accrual of interest due on the TruPS for which the Company had deferred the payment of interest. Excluding the impact of the prior period interest expense correction, the net interest margin was 3.06% for the quarter ended March 31, 2013 and 3.23% for the year ended December 31, 2013. |
(6) | Noninterest expense divided by total net revenue (net interest income and noninterest income). |
(7) | Includes acquired loans. Excluding acquired loans, allowance for loan losses/total loans is 1.40% at December 31, 2013. |
(8) | Generally, loans are placed on nonaccrual status when they are 90 or more days past due. |
(9) | Includes $6.5 million of nonperforming loans at December 31, 2013 that are guaranteed by the SBA. |
(10) | Regulatory capital ratios at December 31, 2013 are preliminary. |
10
HomeStreet, Inc. and Subsidiaries
Consolidated Statements of Operations
Three Months Ended December 31, | % | Year Ended December 31, | % | |||||||||||||||||||
(in thousands, except share data) | 2013 | 2012 | Change | 2013 | 2012 | Change | ||||||||||||||||
Interest income: | ||||||||||||||||||||||
Loans | $ | 21,522 | $ | 18,713 | 15 | % | $ | 76,442 | $ | 71,057 | 8 | |||||||||||
Investment securities available for sale | 2,839 | 2,186 | 30 | 12,391 | 9,391 | 32 | ||||||||||||||||
Other | 61 | 27 | 126 | 143 | 243 | (41 | ) | |||||||||||||||
24,422 | 20,926 | 17 | 88,976 | 80,691 | 10 | |||||||||||||||||
Interest expense: | ||||||||||||||||||||||
Deposits | 2,338 | 3,756 | (38 | ) | 10,416 | 16,741 | (38 | ) | ||||||||||||||
Federal Home Loan Bank advances | 419 | 282 | 49 | 1,532 | 1,788 | (14 | ) | |||||||||||||||
Securities sold under agreements to repurchase | — | 1 | (100 | ) | 11 | 70 | (84 | ) | ||||||||||||||
Long-term debt | 272 | 292 | (7 | ) | 2,546 | 1,333 | 91 | |||||||||||||||
Other | 11 | 4 | 175 | 27 | 16 | 69 | ||||||||||||||||
3,040 | 4,335 | (30 | ) | 14,532 | 19,948 | (27 | ) | |||||||||||||||
Net interest income | 21,382 | 16,591 | 29 | 74,444 | 60,743 | 23 | ||||||||||||||||
Provision for credit losses | — | 4,000 | (100 | ) | 900 | 11,500 | (92 | ) | ||||||||||||||
Net interest income after provision for credit losses | 21,382 | 12,591 | 70 | 73,544 | 49,243 | 49 | ||||||||||||||||
Noninterest income: | ||||||||||||||||||||||
Net gain on mortgage loan origination and sale activities | 24,842 | 68,881 | (64 | ) | 164,712 | 210,564 | (22 | ) | ||||||||||||||
Mortgage servicing income | 7,807 | 651 | NM | 17,073 | 16,121 | 6 | ||||||||||||||||
(Loss) income from WMS Series LLC | (359 | ) | 516 | (170 | ) | 704 | 4,264 | (83 | ) | |||||||||||||
Loss on debt extinguishment | — | — | NM | — | (939 | ) | NM | |||||||||||||||
Depositor and other retail banking fees | 899 | 800 | 12 | 3,172 | 3,062 | 4 | ||||||||||||||||
Insurance commissions | 252 | 193 | 31 | 864 | 743 | 16 | ||||||||||||||||
Gain on sale of investment securities available for sale | 1,766 | 141 | NM | 1,772 | 1,490 | 19 | ||||||||||||||||
Other | 865 | 750 | 15 | 2,448 | 2,715 | (10 | ) | |||||||||||||||
36,072 | 71,932 | (50 | ) | 190,745 | 238,020 | (20 | ) | |||||||||||||||
Noninterest expense: | ||||||||||||||||||||||
Salaries and related costs | 36,110 | 38,680 | (7 | ) | 149,440 | 119,829 | 25 | |||||||||||||||
General and administrative | 9,932 | 8,534 | 16 | 40,366 | 27,838 | 45 | ||||||||||||||||
Legal | 498 | 325 | 53 | 2,552 | 1,796 | 42 | ||||||||||||||||
Consulting | 3,294 | 1,291 | 155 | 5,637 | 3,037 | 86 | ||||||||||||||||
Federal Deposit Insurance Corporation assessments | 496 | 803 | (38 | ) | 1,433 | 3,554 | (60 | ) | ||||||||||||||
Occupancy | 4,098 | 2,425 | 69 | 13,765 | 8,585 | 60 | ||||||||||||||||
Information services | 4,369 | 2,739 | 60 | 14,491 | 8,867 | 63 | ||||||||||||||||
Net cost of operation and sale of other real estate owned | 71 | 1,169 | (94 | ) | 1,811 | 10,085 | (82 | ) | ||||||||||||||
58,868 | 55,966 | 5 | 229,495 | 183,591 | 25 | |||||||||||||||||
(Loss) income before income taxes | (1,414 | ) | 28,557 | (105 | ) | 34,794 | 103,672 | (66 | ) | |||||||||||||
Income tax (benefit) expense | (553 | ) | 7,060 | (108 | ) | 10,985 | 21,546 | (49 | ) | |||||||||||||
NET (LOSS) INCOME | $ | (861 | ) | $ | 21,497 | (104 | ) | $ | 23,809 | $ | 82,126 | (71 | ) | |||||||||
Basic (loss) income per share | $ | (0.06 | ) | $ | 1.50 | (104 | ) | $ | 1.65 | $ | 6.17 | (73 | ) | |||||||||
Diluted (loss) income per share | $ | (0.06 | ) | $ | 1.46 | (104 | ) | $ | 1.61 | $ | 5.98 | (73 | ) | |||||||||
Basic weighted average number of shares outstanding | 14,523,405 | 14,371,120 | 1 | 14,412,059 | 13,312,939 | 8 | ||||||||||||||||
Diluted weighted average number of shares outstanding | 14,812,391 | 14,714,166 | 1 | 14,798,168 | 13,739,398 | 8 | ||||||||||||||||
Dividends per share | $ | 0.11 | $ | — | N/A | $ | 0.33 | $ | — | N/A | ||||||||||||
11
HomeStreet, Inc. and Subsidiaries
Five Quarter Consolidated Statements of Operation
Quarter ended | ||||||||||||||||||||
(in thousands, except share data) | Dec. 31, 2013 | Sept. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | |||||||||||||||
Interest income: | ||||||||||||||||||||
Loans | $ | 21,522 | $ | 19,425 | $ | 17,446 | $ | 18,049 | $ | 18,713 | ||||||||||
Investment securities available for sale | 2,839 | 3,895 | 2,998 | 2,659 | 2,186 | |||||||||||||||
Other | 61 | 28 | 24 | 30 | 27 | |||||||||||||||
24,422 | 23,348 | 20,468 | 20,738 | 20,926 | ||||||||||||||||
Interest expense: | ||||||||||||||||||||
Deposits | 2,338 | 2,222 | 2,367 | 3,489 | 3,756 | |||||||||||||||
Federal Home Loan Bank advances | 419 | 434 | 387 | 292 | 282 | |||||||||||||||
Securities sold under agreements to repurchase | — | — | 11 | — | 1 | |||||||||||||||
Long-term debt | 272 | 274 | 283 | 1,717 | 292 | |||||||||||||||
Other | 11 | 6 | 5 | 5 | 4 | |||||||||||||||
3,040 | 2,936 | 3,053 | 5,503 | 4,335 | ||||||||||||||||
Net interest income | 21,382 | 20,412 | 17,415 | 15,235 | 16,591 | |||||||||||||||
Provision (reversal of provision) for credit losses | — | (1,500 | ) | 400 | 2,000 | 4,000 | ||||||||||||||
Net interest income after provision for credit losses | 21,382 | 21,912 | 17,015 | 13,235 | 12,591 | |||||||||||||||
Noninterest income: | ||||||||||||||||||||
Net gain on mortgage loan origination and sale activities | 24,842 | 33,491 | 52,424 | 53,955 | 68,881 | |||||||||||||||
Mortgage servicing income | 7,807 | 4,011 | 2,183 | 3,072 | 651 | |||||||||||||||
(Loss) income from WMS Series LLC | (359 | ) | (550 | ) | 993 | 620 | 516 | |||||||||||||
Depositor and other retail banking fees | 899 | 791 | 761 | 721 | 800 | |||||||||||||||
Insurance commissions | 252 | 242 | 190 | 180 | 193 | |||||||||||||||
Gain (loss) on sale of investment securities available for sale | 1,766 | (184 | ) | 238 | (48 | ) | 141 | |||||||||||||
Other | 865 | 373 | 767 | 443 | 750 | |||||||||||||||
36,072 | 38,174 | 57,556 | 58,943 | 71,932 | ||||||||||||||||
Noninterest expense: | ||||||||||||||||||||
Salaries and related costs | 36,110 | 39,689 | 38,579 | 35,062 | 38,680 | |||||||||||||||
General and administrative | 9,932 | 9,234 | 10,270 | 10,930 | 8,534 | |||||||||||||||
Legal | 498 | 844 | 599 | 611 | 325 | |||||||||||||||
Consulting | 3,294 | 884 | 763 | 696 | 1,291 | |||||||||||||||
Federal Deposit Insurance Corporation assessments | 496 | 227 | 143 | 567 | 803 | |||||||||||||||
Occupancy | 4,098 | 3,484 | 3,381 | 2,802 | 2,425 | |||||||||||||||
Information services | 4,369 | 3,552 | 3,574 | 2,996 | 2,739 | |||||||||||||||
Net cost (benefit) of operation and sale of other real estate owned | 71 | 202 | (597 | ) | 2,135 | 1,169 | ||||||||||||||
58,868 | 58,116 | 56,712 | 55,799 | 55,966 | ||||||||||||||||
(Loss) income before income tax expense | (1,414 | ) | 1,970 | 17,859 | 16,379 | 28,557 | ||||||||||||||
Income tax (benefit) expense | (553 | ) | 308 | 5,791 | 5,439 | 7,060 | ||||||||||||||
NET (LOSS) INCOME | $ | (861 | ) | $ | 1,662 | $ | 12,068 | $ | 10,940 | $ | 21,497 | |||||||||
Basic (loss) income per share | $ | (0.06 | ) | $ | 0.12 | $ | 0.84 | $ | 0.76 | $ | 1.50 | |||||||||
Diluted (loss) income per share | $ | (0.06 | ) | $ | 0.11 | $ | 0.82 | $ | 0.74 | $ | 1.46 | |||||||||
Basic weighted average number of shares outstanding | 14,523,405 | 14,388,559 | 14,376,580 | 14,359,691 | 14,371,120 | |||||||||||||||
Diluted weighted average number of shares outstanding | 14,812,391 | 14,790,671 | 14,785,481 | 14,804,129 | 14,714,166 | |||||||||||||||
Dividends per share | $ | 0.11 | $ | 0.11 | $ | 0.11 | $ | — | $ | — | ||||||||||
12
HomeStreet, Inc. and Subsidiaries
Consolidated Statements of Financial Condition
(in thousands, except share data) | Dec. 31, 2013 | Dec. 31, 2012 | % Change | ||||||||
Assets: | |||||||||||
Cash and cash equivalents (including interest-bearing instruments of $9,436 and $12,414) | $ | 33,908 | $ | 25,285 | 34 | % | |||||
Investment securities (includes $481,683 and $416,329 carried at fair value) | 498,816 | 416,517 | 20 | ||||||||
Loans held for sale (includes $279,385 and $607,578 carried at fair value) | 279,941 | 620,799 | (55 | ) | |||||||
Loans held for investment (net of allowance for loan losses of $24,089 and $27,561) | 1,872,716 | 1,308,974 | 43 | ||||||||
Mortgage servicing rights (includes $153,128 and $87,396 carried at fair value) | 162,463 | 95,493 | 70 | ||||||||
Other real estate owned | 12,911 | 23,941 | (46 | ) | |||||||
Federal Home Loan Bank stock, at cost | 35,288 | 36,367 | (3 | ) | |||||||
Premises and equipment, net | 36,260 | 15,232 | 138 | ||||||||
Goodwill | 10,849 | 424 | NM | ||||||||
Accounts receivable and other assets | 122,902 | 88,198 | 39 | ||||||||
Total assets | $ | 3,066,054 | $ | 2,631,230 | 17 | ||||||
Liabilities and shareholders’ equity: | |||||||||||
Liabilities: | |||||||||||
Deposits | $ | 2,203,238 | $ | 1,976,835 | 11 | ||||||
Federal Home Loan Bank advances | 446,590 | 259,090 | 72 | ||||||||
Accounts payable and other liabilities | 85,489 | 69,686 | 23 | ||||||||
Long-term debt | 64,811 | 61,857 | 5 | ||||||||
Total liabilities | 2,800,128 | 2,367,468 | 18 | ||||||||
Shareholders’ equity: | |||||||||||
Preferred stock, no par value | |||||||||||
Authorized 10,000 shares | |||||||||||
Issued and outstanding, 0 shares and 0 shares | — | — | — | ||||||||
Common stock, no par value | |||||||||||
Authorized 160,000,000 | |||||||||||
Issued and outstanding, 14,799,991 shares and 14,382,638 shares | 511 | 511 | — | ||||||||
Additional paid-in capital | 94,474 | 90,189 | 5 | ||||||||
Retained earnings | 182,935 | 163,872 | 12 | ||||||||
Accumulated other comprehensive (loss) income | (11,994 | ) | 9,190 | NM | |||||||
Total shareholders’ equity | 265,926 | 263,762 | 1 | ||||||||
Total liabilities and shareholders’ equity | $ | 3,066,054 | $ | 2,631,230 | 17 | ||||||
13
HomeStreet, Inc. and Subsidiaries
Five Quarter Consolidated Statements of Financial Condition
(in thousands, except share data) | Dec. 31, 2013 | Sept. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | |||||||||||||||
Assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 33,908 | $ | 37,906 | $ | 21,645 | $ | 18,709 | $ | 25,285 | ||||||||||
Investment securities | 498,816 | 574,894 | 539,480 | 416,561 | 416,517 | |||||||||||||||
Loans held for sale | 279,941 | 385,110 | 471,191 | 430,857 | 620,799 | |||||||||||||||
Loans held for investment, net | 1,872,716 | 1,510,169 | 1,416,439 | 1,358,982 | 1,308,974 | |||||||||||||||
Mortgage servicing rights | 162,463 | 146,300 | 137,385 | 111,828 | 95,493 | |||||||||||||||
Other real estate owned | 12,911 | 12,266 | 11,949 | 21,664 | 23,941 | |||||||||||||||
Federal Home Loan Bank stock, at cost | 35,288 | 35,370 | 35,708 | 36,037 | 36,367 | |||||||||||||||
Premises and equipment, net | 36,260 | 24,684 | 18,362 | 16,893 | 15,232 | |||||||||||||||
Goodwill | 10,849 | 424 | 424 | 424 | 424 | |||||||||||||||
Accounts receivable and other assets | 122,902 | 127,200 | 123,541 | 96,296 | 88,198 | |||||||||||||||
Total assets | $ | 3,066,054 | $ | 2,854,323 | $ | 2,776,124 | $ | 2,508,251 | $ | 2,631,230 | ||||||||||
Liabilities and shareholders’ equity: | ||||||||||||||||||||
Liabilities: | ||||||||||||||||||||
Deposits | $ | 2,203,238 | $ | 2,098,076 | $ | 1,963,123 | $ | 1,934,704 | $ | 1,976,835 | ||||||||||
Federal Home Loan Bank advances | 446,590 | 338,690 | 409,490 | 183,590 | 259,090 | |||||||||||||||
Accounts payable and other liabilities | 85,489 | 87,492 | 73,333 | 57,695 | 69,686 | |||||||||||||||
Long-term debt | 64,811 | 61,857 | 61,857 | 61,857 | 61,857 | |||||||||||||||
Total liabilities | 2,800,128 | 2,586,115 | 2,507,803 | 2,237,846 | 2,367,468 | |||||||||||||||
Shareholders’ equity: | ||||||||||||||||||||
Preferred stock, no par value | ||||||||||||||||||||
Authorized 10,000 shares | — | — | — | — | — | |||||||||||||||
Common stock, no par value | ||||||||||||||||||||
Authorized 160,000,000 | 511 | 511 | 511 | 511 | 511 | |||||||||||||||
Additional paid-in capital | 94,474 | 91,415 | 91,054 | 90,687 | 90,189 | |||||||||||||||
Retained earnings | 182,935 | 185,379 | 185,300 | 173,229 | 163,872 | |||||||||||||||
Accumulated other comprehensive (loss) income | (11,994 | ) | (9,097 | ) | (8,544 | ) | 5,978 | 9,190 | ||||||||||||
Total shareholders’ equity | 265,926 | 268,208 | 268,321 | 270,405 | 263,762 | |||||||||||||||
Total liabilities and shareholders’ equity | $ | 3,066,054 | $ | 2,854,323 | $ | 2,776,124 | $ | 2,508,251 | $ | 2,631,230 | ||||||||||
14
HomeStreet, Inc. and Subsidiaries
Average Balances, Yields and Rates Paid (Taxable-equivalent basis)
Quarter Ended December 31, | ||||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||||
(in thousands) | Average Balance | Interest | Average Yield/Cost | Average Balance | Interest | Average Yield/Cost | ||||||||||||||||
Assets: | ||||||||||||||||||||||
Interest-earning assets: (1) | ||||||||||||||||||||||
Cash & cash equivalents | $ | 46,718 | $ | 27 | 0.23 | % | $ | 28,029 | $ | 26 | 0.39 | % | ||||||||||
Investment securities | 565,869 | 3,433 | 2.43 | % | 418,261 | 2,682 | 2.56 | % | ||||||||||||||
Loans held for sale | 278,745 | 2,962 | 4.25 | % | 500,822 | 4,175 | 3.36 | % | ||||||||||||||
Loans held for investment | 1,732,955 | 18,589 | 4.28 | % | 1,297,615 | 14,571 | 4.48 | % | ||||||||||||||
Total interest-earning assets | 2,624,287 | 25,011 | 3.80 | % | 2,244,727 | 21,454 | 3.82 | % | ||||||||||||||
Noninterest-earning assets (2) | 298,965 | 238,433 | ||||||||||||||||||||
Total assets | $ | 2,923,252 | $ | 2,483,160 | ||||||||||||||||||
Liabilities and shareholders’ equity: | ||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||
Interest-bearing demand accounts | $ | 290,028 | 269 | 0.37 | % | $ | 159,192 | 130 | 0.32 | % | ||||||||||||
Savings accounts | 148,029 | 187 | 0.50 | % | 104,748 | 105 | 0.40 | % | ||||||||||||||
Money market accounts | 912,739 | 1,009 | 0.44 | % | 677,135 | 855 | 0.50 | % | ||||||||||||||
Certificate accounts | 347,754 | 736 | 0.84 | % | 668,000 | 2,666 | 1.59 | % | ||||||||||||||
Total interest-bearing deposits | 1,698,550 | 2,201 | 0.51 | % | 1,609,075 | 3,756 | 0.93 | % | ||||||||||||||
FHLB advances | 343,366 | 419 | 0.48 | % | 122,516 | 282 | 0.95 | % | ||||||||||||||
Securities sold under agreements to repurchase | — | — | —% | 558 | 1 | 0.26 | % | |||||||||||||||
Long-term debt | 63,784 | 272 | 1.67 | % | 61,857 | 292 | 1.89 | % | ||||||||||||||
Other borrowings | 163,126 | 148 | 0.36 | % | — | 4 | — | % | ||||||||||||||
Total interest-bearing liabilities | 2,268,826 | 3,040 | 0.53 | % | 1,794,006 | 4,335 | 0.96 | % | ||||||||||||||
Noninterest-bearing liabilities | 386,098 | 426,991 | ||||||||||||||||||||
Total liabilities | 2,654,924 | 2,220,997 | ||||||||||||||||||||
Shareholders’ equity | 268,328 | 262,163 | ||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 2,923,252 | $ | 2,483,160 | ||||||||||||||||||
Net interest income (3) | $ | 21,971 | $ | 17,119 | ||||||||||||||||||
Net interest spread | 3.31 | % | 2.86 | % | ||||||||||||||||||
Impact of noninterest-bearing sources | 0.07 | % | 0.20 | % | ||||||||||||||||||
Net interest margin | 3.34 | % | 3.06 | % | ||||||||||||||||||
(1) | The average balances of nonaccrual assets and related income, if any, are included in their respective categories. |
(2) | Includes loan balances that have been foreclosed and are now reclassified to other real estate owned. |
(3) | Includes taxable-equivalent adjustments primarily related to tax-exempt income on certain loans and securities of $589 thousand and $528 thousand for the quarters ended December 31, 2013 and December 31, 2012, respectively. The estimated federal statutory tax rate was 35% for the periods presented. |
15
HomeStreet, Inc. and Subsidiaries
Average Balances, Yields and Rates Paid (Taxable-equivalent basis)
Year Ended December 31, | ||||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||||
(in thousands) | Average Balance | Interest | Average Yield/Cost | Average Balance | Interest | Average Yield/Cost | ||||||||||||||||
Assets: | ||||||||||||||||||||||
Interest-earning assets: (1) | ||||||||||||||||||||||
Cash & cash equivalents | $ | 29,861 | $ | 73 | 0.24 | % | $ | 94,478 | $ | 231 | 0.24 | % | ||||||||||
Investment securities | 515,000 | 14,608 | 2.84 | % | 410,819 | 11,040 | 2.69 | % | ||||||||||||||
Loans held for sale | 381,129 | 14,180 | 3.72 | % | 359,056 | 12,719 | 3.56 | % | ||||||||||||||
Loans held for investment | 1,496,146 | 62,384 | 4.17 | % | 1,303,010 | 58,490 | 4.49 | % | ||||||||||||||
Total interest-earning assets | 2,422,136 | 91,245 | 3.77 | % | 2,167,363 | 82,480 | 3.81 | % | ||||||||||||||
Noninterest-earning assets (2) | 296,078 | 236,497 | ||||||||||||||||||||
Total assets | $ | 2,718,214 | $ | 2,403,860 | ||||||||||||||||||
Liabilities and shareholders’ equity: | ||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||
Interest-bearing demand accounts | $ | 241,348 | 925 | 0.38 | % | $ | 151,029 | 498 | 0.33 | % | ||||||||||||
Savings accounts | 122,602 | 545 | 0.44 | % | 90,246 | 395 | 0.44 | % | ||||||||||||||
Money market accounts | 810,666 | 3,899 | 0.48 | % | 613,546 | 3,243 | 0.53 | % | ||||||||||||||
Certificate accounts | 415,876 | 4,816 | 1.16 | % | 790,038 | 12,605 | 1.60 | % | ||||||||||||||
Total interest-bearing deposits | 1,590,492 | 10,185 | 0.64 | % | 1,644,859 | 16,741 | 1.02 | % | ||||||||||||||
FHLB advances | 293,871 | 1,532 | 0.52 | % | 93,325 | 1,788 | 1.91 | % | ||||||||||||||
Securities sold under agreements to repurchase | 2,721 | 11 | 0.40 | % | 17,806 | 70 | 0.39 | % | ||||||||||||||
Long-term debt | 62,349 | 2,546 | 4.03 | % | (3) | 61,857 | 1,333 | 2.16 | % | |||||||||||||
Other borrowings | 73,976 | 257 | 0.36 | % | — | 16 | — | % | ||||||||||||||
Total interest-bearing liabilities | 2,023,409 | 14,531 | 0.72 | % | 1,817,847 | 19,948 | 1.10 | % | ||||||||||||||
Noninterest-bearing liabilities | 445,724 | 374,684 | ||||||||||||||||||||
Total liabilities | 2,469,133 | 2,192,531 | ||||||||||||||||||||
Shareholders’ equity | 249,081 | 211,329 | ||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 2,718,214 | $ | 2,403,860 | ||||||||||||||||||
Net interest income (4) | $ | 76,714 | $ | 62,532 | ||||||||||||||||||
Net interest spread | 3.05 | % | 2.71 | % | ||||||||||||||||||
Impact of noninterest-bearing sources | 0.12 | % | 0.18 | % | ||||||||||||||||||
Net interest margin | 3.17 | % | (3) | 2.89 | % | |||||||||||||||||
(1) | The average balances of nonaccrual assets and related income, if any, are included in their respective categories. |
(2) | Includes loan balances that have been foreclosed and are now reclassified to other real estate owned. |
(3) | Net interest margin for the first quarter of 2013 included $1.4 million in interest expense related to the correction of the cumulative effect of an error in prior years, resulting from the under accrual of interest due on the TruPS for which the Company had deferred the payment of interest. Excluding the impact of the prior period interest expense correction, the net interest margin was 3.23% for the twelve months ended December 31, 2013. |
(4) | Includes taxable-equivalent adjustments primarily related to tax-exempt income on certain loans and securities of $2.3 million and $1.8 million for the twelve months ended December 31, 2013 and December 31, 2012, respectively. The estimated federal statutory tax rate was 35% for the periods presented. |
16
HomeStreet, Inc. and Subsidiaries
Commercial and Consumer Banking Segment
Quarter ended | ||||||||||||||||||||
(in thousands) | Dec. 31, 2013 | Sept. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | |||||||||||||||
Net interest income | $ | 18,160 | $ | 16,095 | $ | 13,790 | $ | 11,127 | $ | 12,131 | ||||||||||
Provision (reversal of reserve) for loan losses | — | (1,500 | ) | 400 | 2,000 | 4,000 | ||||||||||||||
Noninterest income | 2,885 | 1,229 | 1,537 | 2,390 | 2,530 | |||||||||||||||
Noninterest expense | 20,822 | 13,813 | 13,446 | 15,686 | 16,384 | |||||||||||||||
Income (loss) before income taxes | 223 | 5,011 | 1,481 | (4,169 | ) | (5,723 | ) | |||||||||||||
Income tax expense (benefit) | (21 | ) | 1,220 | 65 | (1,355 | ) | (1,373 | ) | ||||||||||||
Net income (loss) | $ | 244 | $ | 3,791 | $ | 1,416 | $ | (2,814 | ) | $ | (4,350 | ) | ||||||||
Pre-tax pre-provision profit (loss) (1) | $ | 223 | $ | 3,511 | $ | 1,881 | $ | (2,169 | ) | $ | (1,723 | ) | ||||||||
Efficiency ratio (2) | 98.94 | % | 79.73 | % | 87.73 | % | 116.05 | % | 111.75 | % | ||||||||||
Full-time equivalent employees (ending) | 577 | 504 | 476 | 440 | 413 | |||||||||||||||
Net gain on mortgage loan origination and sale activity: | ||||||||||||||||||||
Multifamily | $ | 559 | $ | 2,113 | $ | 709 | $ | 1,925 | $ | 1,631 | ||||||||||
Other | 964 | — | — | — | — | |||||||||||||||
$ | 1,523 | $ | 2,113 | $ | 709 | $ | 1,925 | $ | 1,631 | |||||||||||
Production volumes: | ||||||||||||||||||||
Multifamily mortgage originations | 16,325 | 10,734 | 14,790 | 49,119 | 40,244 | |||||||||||||||
Multifamily mortgage loans sold | 15,775 | 21,998 | 15,386 | 50,587 | 33,689 | |||||||||||||||
(1) | Pre-tax pre-provision profit is total net revenue (net interest income and noninterest income) less noninterest expense. The Company believes that this financial measure is useful in assessing the ability of a lending institution to generate income in excess of its provision for loan losses. |
(2) | Noninterest expense divided by total net revenue (net interest income and noninterest income). |
Commercial Mortgage Servicing Income
Quarter ended | ||||||||||||||||||||
(in thousands) | Dec. 31, 2013 | Sept. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | |||||||||||||||
Servicing income, net: | ||||||||||||||||||||
Servicing fees and other | $ | 834 | $ | 789 | $ | 739 | $ | 812 | $ | 827 | ||||||||||
Amortization of multifamily MSRs | (457 | ) | (433 | ) | (423 | ) | (490 | ) | (463 | ) | ||||||||||
Commercial mortgage servicing income | $ | 377 | $ | 356 | $ | 316 | $ | 322 | $ | 364 | ||||||||||
17
HomeStreet, Inc. and Subsidiaries
Commercial and Consumer Banking Segment (continued)
Commercial Loans Serviced for Others
(in thousands) | Dec. 31, 2013 | Sept. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | |||||||||||||||
Commercial | ||||||||||||||||||||
Multifamily | $ | 720,429 | $ | 722,767 | $ | 720,368 | $ | 737,007 | $ | 727,118 | ||||||||||
Other | 95,673 | 50,629 | 51,058 | 52,825 | 53,235 | |||||||||||||||
Total commercial loans serviced for others | $ | 816,102 | $ | 773,396 | $ | 771,426 | $ | 789,832 | $ | 780,353 | ||||||||||
Commercial Multifamily Capitalized Mortgage Servicing Rights
Quarter ended | ||||||||||||||||||||
(in thousands) | Dec. 31, 2013 | Sept. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | |||||||||||||||
Beginning balance | $ | 9,403 | $ | 9,239 | $ | 9,150 | $ | 8,097 | $ | 7,725 | ||||||||||
Originations | 375 | 597 | 512 | 1,543 | 835 | |||||||||||||||
Amortization | (443 | ) | (433 | ) | (423 | ) | (490 | ) | (463 | ) | ||||||||||
Ending balance | $ | 9,335 | $ | 9,403 | $ | 9,239 | $ | 9,150 | $ | 8,097 | ||||||||||
Ratio of MSR carrying value to related loans serviced for others | 1.21 | % | 1.22 | % | 1.20 | % | 1.16 | % | 1.04 | % | ||||||||||
MSR servicing fee multiple (1) | 2.91 | 2.94 | 2.93 | 2.89 | 2.70 | |||||||||||||||
Weighted-average note rate (loans serviced for others) | 5.12 | % | 5.22 | % | 5.25 | % | 5.25 | % | 5.38 | % | ||||||||||
Weighted-average servicing fee (loans serviced for others) | 0.42 | % | 0.41 | % | 0.41 | % | 0.40 | % | 0.38 | % | ||||||||||
(1) | Represents the ratio of MSR carrying value to related loans serviced for others divided by the weighted-average servicing fee for loans serviced for others. |
18
HomeStreet, Inc. and Subsidiaries
Commercial and Consumer Banking Segment (continued)
Five Quarter Investment Securities
(in thousands, except for duration data) | Dec. 31, 2013 | Sept. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | |||||||||||||||
Available for sale: | ||||||||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||
Residential | $ | 133,910 | $ | 144,263 | $ | 120,939 | $ | 69,448 | $ | 62,853 | ||||||||||
Commercial | 13,433 | 13,720 | 13,892 | 14,407 | 14,380 | |||||||||||||||
Municipal bonds | 130,850 | 147,441 | 147,675 | 131,047 | 129,175 | |||||||||||||||
Collateralized mortgage obligations: | ||||||||||||||||||||
Residential | 90,327 | 153,466 | 137,543 | 150,113 | 170,199 | |||||||||||||||
Commercial | 16,845 | 16,991 | 17,533 | 19,795 | 9,043 | |||||||||||||||
Corporate debt securities | 68,866 | 69,963 | 70,973 | — | — | |||||||||||||||
U.S. Treasury | 27,452 | 27,747 | 29,609 | 30,428 | 30,679 | |||||||||||||||
Total available for sale | 481,683 | 573,591 | 538,164 | 415,238 | 416,329 | |||||||||||||||
Held to maturity | 17,133 | 1,303 | 1,316 | 1,323 | 188 | |||||||||||||||
$ | 498,816 | $ | 574,894 | $ | 539,480 | $ | 416,561 | $ | 416,517 | |||||||||||
Weighted average duration in years: | ||||||||||||||||||||
Available for sale | 5.4 | 5.3 | 5.5 | 5.0 | 4.9 | |||||||||||||||
Five Quarter Loans Held for Investment
(in thousands) | Dec. 31, 2013 | Sept. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | |||||||||||||||
Consumer loans | ||||||||||||||||||||
Single family | $ | 904,913 | $ | 818,992 | $ | 772,450 | $ | 730,553 | $ | 673,865 | ||||||||||
Home equity | 135,650 | 129,785 | 132,218 | 132,537 | 136,746 | |||||||||||||||
1,040,563 | 948,777 | 904,668 | 863,090 | 810,611 | ||||||||||||||||
Commercial loans | ||||||||||||||||||||
Commercial real estate | 477,954 | 400,150 | 382,345 | 387,819 | 361,879 | |||||||||||||||
Multifamily | 79,216 | 42,187 | 26,120 | 21,859 | 17,012 | |||||||||||||||
Construction/land development | 130,465 | 79,435 | 61,125 | 43,600 | 71,033 | |||||||||||||||
Commercial business | 171,646 | 67,547 | 73,202 | 73,851 | 79,576 | |||||||||||||||
859,281 | 589,319 | 542,792 | 527,129 | 529,500 | ||||||||||||||||
1,899,844 | 1,538,096 | 1,447,460 | 1,390,219 | 1,340,111 | ||||||||||||||||
Net deferred loan fees and discounts | (3,219 | ) | (3,233 | ) | (3,366 | ) | (2,832 | ) | (3,576 | ) | ||||||||||
1,896,625 | 1,534,863 | 1,444,094 | 1,387,387 | 1,336,535 | ||||||||||||||||
Allowance for loan losses | (23,908 | ) | (24,694 | ) | (27,655 | ) | (28,405 | ) | (27,561 | ) | ||||||||||
$ | 1,872,717 | $ | 1,510,169 | $ | 1,416,439 | $ | 1,358,982 | $ | 1,308,974 | |||||||||||
19
HomeStreet, Inc. and Subsidiaries
Commercial and Consumer Banking Segment (continued)
Five Quarter Credit Quality Activity
Allowance for Credit Losses (roll-forward)
Quarter ended | ||||||||||||||||||||
(in thousands) | Dec. 31, 2013 | Sept. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | |||||||||||||||
Beginning balance | $ | 24,894 | $ | 27,858 | $ | 28,594 | $ | 27,751 | $ | 27,627 | ||||||||||
Provision (reversal of provision) for credit losses | — | (1,500 | ) | 400 | 2,000 | 4,000 | ||||||||||||||
(Charge-offs), net of recoveries | (805 | ) | (1,464 | ) | (1,136 | ) | (1,157 | ) | (3,876 | ) | ||||||||||
Ending balance | $ | 24,089 | $ | 24,894 | $ | 27,858 | $ | 28,594 | $ | 27,751 | ||||||||||
Components: | ||||||||||||||||||||
Allowance for loan losses | $ | 23,908 | $ | 24,694 | $ | 27,655 | $ | 28,405 | $ | 27,561 | ||||||||||
Allowance for unfunded commitments | 181 | 200 | 203 | 189 | 190 | |||||||||||||||
Allowance for credit losses | $ | 24,089 | $ | 24,894 | $ | 27,858 | $ | 28,594 | $ | 27,751 | ||||||||||
Allowance as a % of loans held for investment | 1.26 | % | (1) | 1.61 | % | 1.92 | % | 2.05 | % | 2.06 | % | |||||||||
Allowance as a % of nonaccrual loans | 93.00 | % | 92.30 | % | 93.11 | % | 88.40 | % | 92.20 | % | ||||||||||
(1) | Includes acquired loans. Excluding acquired loans, allowance for loan losses/total loans was 1.40% at December 31, 2013. |
Nonperforming Assets (NPAs) roll-forward
Quarter ended | ||||||||||||||||||||
(in thousands) | Dec. 31, 2013 | Sept. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | |||||||||||||||
Beginning balance | $ | 39,019 | $ | 41,650 | $ | 53,797 | $ | 53,833 | $ | 55,250 | ||||||||||
Additions | 9,959 | (1) | 5,517 | 4,340 | 6,511 | 9,973 | ||||||||||||||
Reductions: | ||||||||||||||||||||
Charge-offs | (805 | ) | (1,464 | ) | (1,136 | ) | (1,157 | ) | (3,876 | ) | ||||||||||
OREO sales | (1,442 | ) | (2,573 | ) | (6,746 | ) | (2,117 | ) | (2,028 | ) | ||||||||||
OREO writedowns and other adjustments | (108 | ) | (208 | ) | 300 | (638 | ) | (1,216 | ) | |||||||||||
Principal paydown, payoff advances and other adjustments | (4,131 | ) | (3,079 | ) | (7,423 | ) | (2,529 | ) | (1,807 | ) | ||||||||||
Transferred back to accrual status | (3,874 | ) | (824 | ) | (1,482 | ) | (106 | ) | (2,463 | ) | ||||||||||
Total reductions | (10,360 | ) | (8,148 | ) | (16,487 | ) | (6,547 | ) | (11,390 | ) | ||||||||||
Net reductions | (401 | ) | (2,631 | ) | (12,147 | ) | (36 | ) | (1,417 | ) | ||||||||||
Ending balance | $ | 38,618 | (2) | $ | 39,019 | $ | 41,650 | $ | 53,797 | $ | 53,833 | |||||||||
(1) | Additions to NPAs include $7.9 million of acquired nonperforming assets during the quarter ended December 31, 2013. |
(2) | Includes $6.5 million of nonperforming loans at December 31, 2013 that are guaranteed by the SBA. |
20
HomeStreet, Inc. and Subsidiaries
Commercial and Consumer Banking Segment (continued)
Five Quarter Nonperforming Assets by Loan Class
(in thousands) | Dec. 31, 2013 | Sept. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | |||||||||||||||
Loans accounted for on a nonaccrual basis: | ||||||||||||||||||||
Consumer | ||||||||||||||||||||
Single family | $ | 8,861 | $ | 12,648 | $ | 14,494 | $ | 15,282 | $ | 13,304 | ||||||||||
Home equity | 1,846 | 2,295 | 3,367 | 2,917 | 2,970 | |||||||||||||||
10,707 | 14,943 | 17,861 | 18,199 | 16,274 | ||||||||||||||||
Commercial | ||||||||||||||||||||
Commercial real estate | 12,257 | 6,861 | 6,051 | 6,122 | 6,403 | |||||||||||||||
Construction/land development | — | 3,544 | 4,051 | 5,974 | 5,042 | |||||||||||||||
Commercial business | 2,743 | 1,405 | 1,738 | 1,838 | 2,173 | |||||||||||||||
15,000 | 11,810 | 11,840 | 13,934 | 13,618 | ||||||||||||||||
Total loans on nonaccrual | $ | 25,707 | $ | 26,753 | $ | 29,701 | $ | 32,133 | $ | 29,892 | ||||||||||
Nonaccrual loans as a % of total loans | 1.36 | % | 1.74 | % | 2.06 | % | 2.32 | % | 2.24 | % | ||||||||||
Other real estate owned: | ||||||||||||||||||||
Consumer | ||||||||||||||||||||
Single family | $ | 5,246 | $ | 5,494 | $ | 4,468 | $ | 4,069 | $ | 4,071 | ||||||||||
Commercial | ||||||||||||||||||||
Commercial real estate | 1,688 | — | 1,184 | 8,440 | 10,283 | |||||||||||||||
Construction/land development | 5,977 | 5,815 | 6,297 | 9,155 | 9,587 | |||||||||||||||
Commercial business | — | 957 | — | — | — | |||||||||||||||
7,665 | 6,772 | 7,481 | 17,595 | 19,870 | ||||||||||||||||
Total other real estate owned | $ | 12,911 | $ | 12,266 | $ | 11,949 | $ | 21,664 | $ | 23,941 | ||||||||||
Nonperforming assets: | ||||||||||||||||||||
Consumer | ||||||||||||||||||||
Single family | $ | 14,107 | $ | 18,142 | $ | 18,962 | $ | 19,351 | $ | 17,375 | ||||||||||
Home equity | 1,846 | 2,295 | 3,367 | 2,917 | 2,970 | |||||||||||||||
15,953 | 20,437 | 22,329 | 22,268 | 20,345 | ||||||||||||||||
Commercial | ||||||||||||||||||||
Commercial real estate | 13,945 | 6,861 | 7,235 | 14,562 | 16,686 | |||||||||||||||
Construction/land development | 5,977 | 9,359 | 10,348 | 15,129 | 14,629 | |||||||||||||||
Commercial business | 2,743 | 2,362 | 1,738 | 1,838 | 2,173 | |||||||||||||||
22,665 | 18,582 | 19,321 | 31,529 | 33,488 | ||||||||||||||||
Total nonperforming assets | $ | 38,618 | (1) | $ | 39,019 | $ | 41,650 | $ | 53,797 | $ | 53,833 | |||||||||
Nonperforming assets as a % of total assets | 1.26 | % | 1.37 | % | 1.50 | % | 2.14 | % | 2.05 | % | ||||||||||
(1) | Includes $6.5 million of nonperforming loans at December 31, 2013 that are guaranteed by the SBA. |
21
HomeStreet, Inc. and Subsidiaries
Commercial and Consumer Banking Segment (continued)
Delinquencies by Loan Class
(in thousands) | 30-59 days past due | 60-89 days past due | 90 days or more past due | Total past due | Current | Total loans | ||||||||||||||||||
At December 31, 2013 | ||||||||||||||||||||||||
Total loans held for investment | $ | 6,841 | $ | 4,976 | $ | 72,518 | $ | 84,335 | $ | 1,815,509 | $ | 1,899,844 | ||||||||||||
Less: FHA/VA loans(1) | 4,286 | 3,730 | 46,811 | 54,827 | 37,177 | 92,004 | ||||||||||||||||||
Total loans, excluding FHA/VA loans | $ | 2,555 | $ | 1,246 | $ | 25,707 | $ | 29,508 | $ | 1,778,332 | $ | 1,807,840 | ||||||||||||
Loans by segment and class, excluding FHA/VA loans: | ||||||||||||||||||||||||
Consumer loans | ||||||||||||||||||||||||
Single family residential | $ | 2,180 | $ | 1,171 | $ | 8,861 | $ | 12,212 | $ | 800,697 | $ | 812,909 | ||||||||||||
Home equity | 375 | 75 | 1,846 | 2,296 | 133,354 | 135,650 | ||||||||||||||||||
2,555 | 1,246 | 10,707 | 14,508 | 934,051 | 948,559 | |||||||||||||||||||
Commercial loans | ||||||||||||||||||||||||
Commercial real estate | — | — | 12,257 | 12,257 | 465,697 | 477,954 | ||||||||||||||||||
Multifamily residential | — | — | — | — | 79,216 | 79,216 | ||||||||||||||||||
Construction/land development | — | — | — | — | 130,465 | 130,465 | ||||||||||||||||||
Commercial business | — | — | 2,743 | 2,743 | 168,903 | 171,646 | ||||||||||||||||||
— | — | 15,000 | 15,000 | 844,281 | 859,281 | |||||||||||||||||||
$ | 2,555 | $ | 1,246 | $ | 25,707 | (2) | $ | 29,508 | (2) | $ | 1,778,332 | $ | 1,807,840 | |||||||||||
As a percentage of total loans, excluding FHA/VA loans | 0.14 | % | 0.07 | % | 1.42 | % | 1.63 | % | 98.37 | % | 100.00 | % | ||||||||||||
At December 31, 2012 | ||||||||||||||||||||||||
Total loans held for investment | $ | 12,703 | $ | 4,974 | $ | 70,550 | $ | 88,227 | $ | 1,251,884 | $ | 1,340,111 | ||||||||||||
Less: FHA/VA loans(1) | 6,839 | 3,700 | 40,658 | 51,197 | 24,257 | 75,454 | ||||||||||||||||||
Total loans, excluding FHA/VA loans | $ | 5,864 | $ | 1,274 | $ | 29,892 | $ | 37,030 | $ | 1,227,627 | $ | 1,264,657 | ||||||||||||
Loans by segment and class, excluding FHA/VA loans: | ||||||||||||||||||||||||
Consumer loans | ||||||||||||||||||||||||
Single family (1) | $ | 5,077 | $ | 1,032 | $ | 13,304 | $ | 19,413 | $ | 578,998 | $ | 598,411 | ||||||||||||
Home equity | 787 | 242 | 2,970 | 3,999 | 132,747 | 136,746 | ||||||||||||||||||
5,864 | 1,274 | 16,274 | 23,412 | 711,745 | 735,157 | |||||||||||||||||||
Commercial loans | ||||||||||||||||||||||||
Commercial real estate | — | — | 6,403 | 6,403 | 355,476 | 361,879 | ||||||||||||||||||
Multifamily | — | — | — | — | 17,012 | 17,012 | ||||||||||||||||||
Construction/land development | — | — | 5,042 | 5,042 | 65,991 | 71,033 | ||||||||||||||||||
Commercial business | — | — | 2,173 | 2,173 | 77,403 | 79,576 | ||||||||||||||||||
— | — | 13,618 | 13,618 | 515,882 | 529,500 | |||||||||||||||||||
$ | 5,864 | $ | 1,274 | $ | 29,892 | $ | 37,030 | $ | 1,227,627 | $ | 1,264,657 | |||||||||||||
As a % of total loans, excluding FHA/VA loans | 0.46 | % | 0.10 | % | 2.36 | % | 2.93 | % | 97.07 | % | 100.00 | % | ||||||||||||
(1) | Represents loans whose repayments are insured by the FHA or guaranteed by the VA. |
(2) | Includes $6.5 million of nonperforming loans at December 31, 2013 that are guaranteed by the SBA. |
22
HomeStreet, Inc. and Subsidiaries
Commercial and Consumer Banking Segment (continued)
Troubled Debt Restructurings (TDRs) by Accrual and Nonaccrual Status
(in thousands) | Dec. 31, 2013 | Sept. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | |||||||||||||||
Accrual | ||||||||||||||||||||
Consumer loans | ||||||||||||||||||||
Single family(1) | $ | 70,304 | $ | 71,686 | $ | 71,438 | $ | 69,792 | $ | 67,483 | ||||||||||
Home equity | 2,558 | 2,426 | 2,326 | 2,338 | 2,288 | |||||||||||||||
72,862 | 74,112 | 73,764 | 72,130 | 69,771 | ||||||||||||||||
Commercial loans | ||||||||||||||||||||
Commercial real estate | 19,620 | 20,385 | 21,617 | 21,046 | 21,071 | |||||||||||||||
Multifamily | 3,163 | 3,190 | 3,198 | 3,211 | 3,221 | |||||||||||||||
Construction/land development | 6,148 | 3,122 | 3,718 | 4,487 | 6,365 | |||||||||||||||
Commercial business | 112 | 120 | 129 | 137 | 147 | |||||||||||||||
29,043 | 26,817 | 28,662 | 28,881 | 30,804 | ||||||||||||||||
$ | 101,905 | $ | 100,929 | $ | 102,426 | $ | 101,011 | $ | 100,575 | |||||||||||
Nonaccrual | ||||||||||||||||||||
Consumer loans | ||||||||||||||||||||
Single family | $ | 4,017 | $ | 4,819 | $ | 4,536 | $ | 4,593 | $ | 3,931 | ||||||||||
Home equity | 86 | 132 | 121 | 134 | 465 | |||||||||||||||
4,103 | 4,951 | 4,657 | 4,727 | 4,396 | ||||||||||||||||
Commercial loans | ||||||||||||||||||||
Commercial real estate | 628 | — | — | 770 | 770 | |||||||||||||||
Construction/land development | — | 3,544 | 4,051 | 4,625 | 5,042 | |||||||||||||||
Commercial business | — | — | — | — | — | |||||||||||||||
628 | 3,544 | 4,051 | 5,395 | 5,812 | ||||||||||||||||
$ | 4,731 | $ | 8,495 | $ | 8,708 | $ | 10,122 | $ | 10,208 | |||||||||||
Total | ||||||||||||||||||||
Consumer loans | ||||||||||||||||||||
Single family(1) | $ | 74,321 | $ | 76,505 | $ | 75,974 | $ | 74,385 | $ | 71,414 | ||||||||||
Home equity | 2,644 | 2,558 | 2,447 | 2,472 | 2,753 | |||||||||||||||
76,965 | 79,063 | 78,421 | 76,857 | 74,167 | ||||||||||||||||
Commercial loans | ||||||||||||||||||||
Commercial real estate | 20,248 | 20,385 | 21,617 | 21,816 | 21,841 | |||||||||||||||
Multifamily | 3,163 | 3,190 | 3,198 | 3,211 | 3,221 | |||||||||||||||
Construction/land development | 6,148 | 6,666 | 7,769 | 9,112 | 11,407 | |||||||||||||||
Commercial business | 112 | 120 | 129 | 137 | 147 | |||||||||||||||
29,671 | 30,361 | 32,713 | 34,276 | 36,616 | ||||||||||||||||
$ | 106,636 | $ | 109,424 | $ | 111,134 | $ | 111,133 | $ | 110,783 | |||||||||||
(1) | Includes loan balances insured by the FHA or guaranteed by the VA of $17.8 million, $17.6 million, $15.9 million, $15.2 million and $13.1 million at December 31, 2013, September 30, 2013, June 30, 2013, March 31, 2013 and December 31, 2012, respectively. |
23
HomeStreet, Inc. and Subsidiaries
Commercial and Consumer Banking Segment (continued)
Troubled Debt Restructurings (TDRs) - Re-Defaults
Quarter ended | ||||||||||||||||||||
(in thousands) | Dec. 31, 2013 | Sept. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | |||||||||||||||
Recorded investment of re-defaults(1) | ||||||||||||||||||||
Consumer loans | ||||||||||||||||||||
Single family | $ | 267 | $ | 1,017 | $ | 133 | $ | 1,423 | $ | 1,386 | ||||||||||
Home equity | — | — | — | 22 | — | |||||||||||||||
267 | 1,017 | 133 | 1,445 | 1,386 | ||||||||||||||||
Commercial loans | ||||||||||||||||||||
Commercial real estate | — | — | — | 770 | — | |||||||||||||||
$ | 267 | $ | 1,017 | $ | 133 | $ | 2,215 | $ | 1,386 | |||||||||||
(1) | Represents TDRs that have defaulted in the current period within 12 months of their modification date. Defaulted TDRs are reported in the table above based on a payment default definition of 60 days past due for the consumer loans portfolio segment and 90 days past due for the commercial loans portfolio segment. |
24
HomeStreet, Inc. and Subsidiaries
Commercial and Consumer Banking Segment (continued)
Five Quarter Deposits
(in thousands) | Dec. 31, 2013 | Sept. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | |||||||||||||||
Deposits by product: | ||||||||||||||||||||
Noninterest-bearing accounts - checking and savings | $ | 164,437 | $ | 134,725 | $ | 121,281 | $ | 83,202 | $ | 83,563 | ||||||||||
Interest-bearing transaction and savings deposits: | ||||||||||||||||||||
NOW accounts | 290,382 | 272,029 | 279,670 | 236,744 | 174,699 | |||||||||||||||
Statement savings accounts due on demand | 156,181 | 135,428 | 115,817 | 108,627 | 103,932 | |||||||||||||||
Money market accounts due on demand | 919,322 | 879,122 | 813,608 | 734,647 | 683,906 | |||||||||||||||
Total interest-bearing transaction and savings deposits | 1,365,885 | 1,286,579 | 1,209,095 | 1,080,018 | 962,537 | |||||||||||||||
Total transaction and savings deposits | 1,530,322 | 1,421,304 | 1,330,376 | 1,163,220 | 1,046,100 | |||||||||||||||
Certificates of deposit | 514,400 | 460,223 | 403,636 | 523,208 | 655,467 | |||||||||||||||
Noninterest-bearing accounts - other | 158,516 | 216,549 | 229,111 | 248,276 | 275,268 | |||||||||||||||
Total deposits | $ | 2,203,238 | $ | 2,098,076 | $ | 1,963,123 | $ | 1,934,704 | $ | 1,976,835 | ||||||||||
Percent of total deposits: | ||||||||||||||||||||
Noninterest-bearing accounts - checking and savings | 7.5 | % | 6.4 | % | 6.2 | % | 4.3 | % | 4.2 | % | ||||||||||
Interest-bearing transaction and savings deposits: | ||||||||||||||||||||
NOW accounts | 13.2 | 13.0 | 14.2 | 12.2 | 8.8 | |||||||||||||||
Statement savings accounts due on demand | 7.1 | 6.5 | 5.9 | 5.6 | 5.3 | |||||||||||||||
Money market accounts due on demand | 41.7 | 41.9 | 41.4 | 38.0 | 34.6 | |||||||||||||||
Total interest-bearing transaction and savings deposits | 62.0 | 61.4 | 61.5 | 55.8 | 48.7 | |||||||||||||||
Total transaction and savings deposits | 69.5 | 67.8 | 67.7 | 60.1 | 52.9 | |||||||||||||||
Certificates of deposit | 23.3 | 21.9 | 20.6 | 27.0 | 33.2 | |||||||||||||||
Noninterest-bearing accounts - other | 7.2 | 10.3 | 11.7 | 12.9 | 13.9 | |||||||||||||||
Total deposits | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||
25
HomeStreet, Inc. and Subsidiaries
Mortgage Banking Segment
Quarter ended | ||||||||||||||||||||
(in thousands) | Dec. 31, 2013 | Sept. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | |||||||||||||||
Net interest income | $ | 3,222 | $ | 4,317 | $ | 3,625 | $ | 4,108 | $ | 4,460 | ||||||||||
Noninterest income | 33,187 | 36,945 | 56,019 | 56,553 | 69,402 | |||||||||||||||
Noninterest expense | 38,046 | 44,303 | 43,266 | 40,113 | 39,582 | |||||||||||||||
Income before income taxes | (1,637 | ) | (3,041 | ) | 16,378 | 20,548 | 34,280 | |||||||||||||
Income tax expense | (532 | ) | (912 | ) | 5,726 | 6,794 | 8,433 | |||||||||||||
Net income | $ | (1,105 | ) | $ | (2,129 | ) | $ | 10,652 | $ | 13,754 | $ | 25,847 | ||||||||
Efficiency ratio (1) | 104.50 | % | 107.37 | % | 72.54 | % | 66.13 | % | 53.59 | % | ||||||||||
Full-time equivalent employees (ending) | 925 | 922 | 833 | 779 | 686 | |||||||||||||||
Production volumes for sale to the secondary market: | ||||||||||||||||||||
Single family mortgage closed loan volume (2)(3) | $ | 773,146 | $ | 1,187,061 | $ | 1,307,286 | $ | 1,192,156 | $ | 1,518,971 | ||||||||||
Single family mortgage interest rate lock commitments(2) | 662,015 | 786,147 | 1,423,290 | 1,035,822 | 1,254,954 | |||||||||||||||
Single family mortgage loans sold(2) | 816,555 | 1,326,888 | 1,229,686 | 1,360,344 | 1,434,947 | |||||||||||||||
(1) | Noninterest expense divided by total net revenue (net interest income and noninterest income). |
(2) | Includes loans originated by WMS Series LLC and purchased by HomeStreet, Inc. |
(3) | Represents single family mortgage production volume designated for sale to the secondary market during each respective period. |
26
HomeStreet, Inc. and Subsidiaries
Mortgage Banking Segment (continued)
Mortgage Banking Net Gain on Sale to the Secondary Market
Quarter ended | |||||||||||||||||||||
(in thousands) | Dec. 31, 2013 | Sept. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | ||||||||||||||||
Net gain on mortgage loan origination and sale activities:(1) | |||||||||||||||||||||
Single family: | |||||||||||||||||||||
Servicing value and secondary market gains(2) | $ | 17,632 | $ | 23,076 | $ | 43,448 | $ | 44,235 | $ | 58,031 | |||||||||||
Loan origination and funding fees | 5,687 | 8,302 | 8,267 | 7,795 | 9,219 | ||||||||||||||||
Total mortgage banking net gain on mortgage loan origination and sale activities(1) | $ | 23,319 | $ | 31,378 | $ | 51,715 | $ | 52,030 | $ | 67,250 | |||||||||||
Composite Margin (in basis points): | |||||||||||||||||||||
Servicing value and secondary market gains / interest rate lock commitments(4) | 266 | 294 | 305 | 385 | (6) | 452 | (7) | ||||||||||||||
Loan origination and funding fees / retail mortgage originations(5) | 84 | 81 | 75 | 76 | 71 | ||||||||||||||||
Composite Margin | 350 | 375 | 380 | 461 | (6) | 523 | (7) | ||||||||||||||
(1) | Excludes inter-segment activities. |
(2) | Comprised of gains and losses on interest rate lock commitments (which considers the value of servicing), single family loans held for sale, forward sale commitments used to economically hedge secondary market activities, and the estimated fair value of the repurchase or indemnity obligation recognized on new loan sales. |
(3) | Represents changes in estimated probable future repurchase losses on previously sold loans. |
(4) | Servicing value and secondary market gains have been aggregated and are stated as a percentage of interest rate lock commitments. In previous quarters, the value of originated mortgage servicing rights was presented as a separate component of the composite margin and stated as a percentage of mortgage loans sold. Prior periods have been revised to conform to the current presentation. |
(5) | Loan origination and funding fees is stated as a percentage of mortgage originations from the retail channel and excludes mortgage loans purchased from WMS Series LLC. |
(6) | Excludes the impact of a $4.3 million upward adjustment related to a change in accounting estimate that resulted from a change in the application of the valuation methodology used to value the Company's interest rate lock commitments. Including the impact of this cumulative effect adjustment, the secondary market gain margin and Composite Margin were 427 and 503 basis points, respectively, in the first quarter of 2013. |
(7) | Excludes the impact of a $1.3 million correction that was recorded in secondary market gains in the fourth quarter of 2012 for the cumulative effect of an error in prior years related to the fair value measurement of loans held for sale. Including the impact of this correction, the secondary market gain margin and Composite Margin were 462 and 533 basis points, respectively, in the fourth quarter of 2012. |
27
HomeStreet, Inc. and Subsidiaries
Mortgage Banking Segment (continued)
Single Family Mortgage Servicing Income
Quarter ended | ||||||||||||||||||||
(in thousands) | Dec. 31, 2013 | Sept. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | |||||||||||||||
Servicing income, net: | ||||||||||||||||||||
Servicing fees and other | $ | 8,843 | $ | 8,145 | $ | 7,216 | $ | 6,795 | $ | 6,696 | ||||||||||
Changes in fair value of single family MSRs due to modeled amortization (1) | (3,637 | ) | (5,221 | ) | (6,569 | ) | (5,106 | ) | (6,280 | ) | ||||||||||
5,206 | 2,924 | 647 | 1,689 | 416 | ||||||||||||||||
Risk management, single family MSRs: | ||||||||||||||||||||
Changes in fair value of MSR due to changes in model inputs and/or assumptions (2) | 10,264 | (2,900 | ) | 14,725 | 3,579 | 2,489 | ||||||||||||||
Net gain (loss) from derivatives economically hedging MSR | (8,040 | ) | 3,631 | (13,505 | ) | (2,518 | ) | (2,618 | ) | |||||||||||
2,224 | 731 | 1,220 | 1,061 | (129 | ) | |||||||||||||||
Mortgage servicing income | $ | 7,430 | $ | 3,655 | $ | 1,867 | $ | 2,750 | $ | 287 | ||||||||||
(1) | Represents changes due to collection/realization of expected cash flows and curtailments. |
(2) | Principally reflects changes in model assumptions, including prepayment speed assumptions, which are primarily affected by changes in mortgage interest rates. |
Single Family Loans Serviced for Others
(in thousands) | Dec. 31, 2013 | Sept. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | |||||||||||||||
Single family | ||||||||||||||||||||
U.S. government agency | $ | 11,467,853 | $ | 10,950,086 | $ | 10,063,558 | $ | 9,352,404 | $ | 8,508,458 | ||||||||||
Other | 327,768 | 336,158 | 341,055 | 348,992 | 362,230 | |||||||||||||||
Total single family loans serviced for others | $ | 11,795,621 | $ | 11,286,244 | $ | 10,404,613 | $ | 9,701,396 | $ | 8,870,688 | ||||||||||
28
HomeStreet, Inc. and Subsidiaries
Mortgage Banking Segment (continued)
Single Family Capitalized Mortgage Servicing Rights
Quarter ended | ||||||||||||||||||||
(in thousands) | Dec. 31, 2013 | Sept. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | |||||||||||||||
Beginning balance | $ | 136,897 | $ | 128,146 | $ | 102,678 | $ | 87,396 | $ | 73,787 | ||||||||||
Additions and amortization: | ||||||||||||||||||||
Originations | 9,602 | 16,862 | 17,306 | 16,806 | 17,397 | |||||||||||||||
Purchases | 2 | 10 | 6 | 3 | 3 | |||||||||||||||
Changes due to modeled amortization (1) | (3,637 | ) | (5,221 | ) | (6,569 | ) | (5,106 | ) | (6,280 | ) | ||||||||||
Net additions and amortization | 5,967 | 11,651 | 10,743 | 11,703 | 11,120 | |||||||||||||||
Changes in fair value due to changes in model inputs and/or assumptions (2) | 10,264 | (2,900 | ) | 14,725 | 3,579 | 2,489 | ||||||||||||||
Ending balance | $ | 153,128 | $ | 136,897 | $ | 128,146 | $ | 102,678 | $ | 87,396 | ||||||||||
Ratio of MSR carrying value to related loans serviced for others | 1.30 | % | 1.21 | % | 1.23 | % | 1.03 | % | 0.99 | % | ||||||||||
MSR servicing fee multiple (3) | 4.39 | 4.08 | 4.05 | 3.36 | 3.13 | |||||||||||||||
Weighted-average note rate (loans serviced for others) | 4.08 | % | 4.13 | % | 4.14 | % | 4.24 | % | 4.34 | % | ||||||||||
Weighted-average servicing fee (loans serviced for others) | 0.30 | % | 0.30 | % | 0.30 | % | 0.31 | % | 0.31 | % | ||||||||||
(1) | Represents changes due to collection/realization of expected cash flows and curtailments. |
(2) | Principally reflects changes in model assumptions, including prepayment speed assumptions, which are primarily affected by changes in mortgage interest rates. |
(3) | Represents the ratio of MSR carrying value to related loans serviced for others divided by the weighted-average servicing fee for loans serviced for others. |
29
HomeStreet, Inc. and Subsidiaries
Non-GAAP Financial Measures
Tangible common shareholders' equity is calculated by deducting goodwill and intangible assets (excluding mortgage servicing rights) from shareholders' equity. Tangible common shareholders' equity is considered a non-GAAP financial measure and should be viewed in conjunction with shareholders' equity. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although we believe these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools, and should not be considered in isolation or as a substitute for analyses of results as reported under GAAP.
Tangible book value is calculated by dividing tangible common shareholders' equity by the number of common shares outstanding. The return on average tangible common shareholders' equity is calculated by dividing net earnings available to common shareholders (annualized) by average tangible common shareholders' equity.
Quarter Ended | Year Ended | |||||||||||||||||||||||||||
(dollars in thousands, except share data) | Dec. 31, 2013 | Sept. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | |||||||||||||||||||||
Shareholders' equity | $ | 265,926 | $ | 268,208 | $ | 268,321 | $ | 270,405 | $ | 263,762 | $ | 265,926 | $ | 263,762 | ||||||||||||||
Less: Goodwill and other intangibles | (13,073 | ) | (424 | ) | (424 | ) | (424 | ) | (424 | ) | (13,073 | ) | (424 | ) | ||||||||||||||
Tangible common shareholders' equity | $ | 252,853 | $ | 267,784 | $ | 267,897 | $ | 269,981 | $ | 263,338 | $ | 252,853 | $ | 263,338 | ||||||||||||||
Book value per share | $ | 17.97 | $ | 18.60 | $ | 18.62 | $ | 18.78 | $ | 18.34 | $ | 17.97 | $ | 18.34 | ||||||||||||||
Impact of goodwill and other intangibles | (0.89 | ) | (0.03 | ) | (0.02 | ) | (0.03 | ) | (0.03 | ) | (0.89 | ) | (0.03 | ) | ||||||||||||||
Tangible book value per share | $ | 17.08 | $ | 18.57 | $ | 18.60 | $ | 18.75 | $ | 18.31 | $ | 17.08 | $ | 18.31 | ||||||||||||||
Average shareholders' equity | $ | 268,328 | $ | 271,286 | $ | 280,783 | $ | 274,355 | $ | 262,163 | $ | 249,081 | $ | 211,329 | ||||||||||||||
Less: Average goodwill and other intangibles | (9,136 | ) | (424 | ) | (424 | ) | (424 | ) | (424 | ) | (2,602 | ) | (424 | ) | ||||||||||||||
Average tangible shareholders' equity | $ | 259,192 | $ | 270,862 | $ | 280,359 | $ | 273,931 | $ | 261,739 | $ | 246,479 | $ | 210,905 | ||||||||||||||
Return on average common shareholders’ equity | (1.28 | )% | 2.45 | % | 17.19 | % | 15.95 | % | 32.80 | % | 9.56 | % | 38.86 | % | ||||||||||||||
Impact of goodwill and other intangibles | (0.05 | )% | — | 0.03 | % | 0.02 | % | 0.05 | % | 0.10 | % | 0.08 | % | |||||||||||||||
Return on average tangible common shareholders' equity | (1.33 | )% | 2.45 | % | 17.22 | % | 15.97 | % | 32.85 | % | 9.66 | % | 38.94 | % | ||||||||||||||
30
The press release contains certain non-GAAP financial disclosures for consolidated net income, excluding acquisition-related expenses, diluted earnings per share, excluding acquisition-related expenses, and Commercial and Consumer Banking segment net income, excluding acquisition-related expenses. The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company's operational performance and to enhance investors' overall understanding of such financial performance.
Quarter Ended | Year Ended | |||||||||||||||||||||||||||
(in thousands) | Dec. 31, 2013 | Sept. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | |||||||||||||||||||||
Net (loss) income | $ | (861 | ) | $ | 1,662 | $ | 12,068 | $ | 10,940 | $ | 21,497 | $ | 23,809 | $ | 82,126 | |||||||||||||
Add back: Acquisition-related expenses, net of tax | 2,652 | 301 | 4 | — | — | 2,957 | — | |||||||||||||||||||||
Net income, excluding acquisition-related expenses | $ | 1,791 | $ | 1,963 | $ | 12,072 | $ | 10,940 | $ | 21,497 | $ | 26,766 | $ | 82,126 | ||||||||||||||
Noninterest expense | $ | 58,868 | $ | 58,116 | $ | 56,712 | $ | 55,799 | $ | 55,966 | $ | 229,495 | $ | 183,591 | ||||||||||||||
Deduct: acquisition-related expenses | (4,080 | ) | (463 | ) | (6 | ) | — | — | (4,549 | ) | — | |||||||||||||||||
Noninterest expense, excluding acquisition-related expenses | $ | 54,788 | $ | 57,653 | $ | 56,706 | $ | 55,799 | $ | 55,966 | $ | 224,946 | $ | 183,591 | ||||||||||||||
Diluted earnings per common share | $ | (0.06 | ) | $ | 0.11 | $ | 0.82 | $ | 0.74 | $ | 1.46 | $ | 1.61 | $ | 5.98 | |||||||||||||
Impact of acquisition-related expenses | 0.18 | 0.02 | — | — | — | 0.20 | — | |||||||||||||||||||||
Diluted earnings per common share, excluding acquisition-related expenses | $ | 0.12 | $ | 0.13 | $ | 0.82 | $ | 0.74 | $ | 1.46 | $ | 1.81 | $ | 5.98 | ||||||||||||||
Commercial and Consumer Banking Segment: | ||||||||||||||||||||||||||||
Net income | $ | 244 | $ | 3,791 | $ | 1,416 | $ | (2,814 | ) | $ | (4,350 | ) | $ | 2,637 | $ | (14,494 | ) | |||||||||||
Impact of acquisition-related expenses, net of tax | 2,652 | 301 | 4 | — | — | 2,957 | — | |||||||||||||||||||||
Net income, excluding acquisition-related expenses | $ | 2,896 | $ | 4,092 | $ | 1,420 | $ | (2,814 | ) | $ | (4,350 | ) | $ | 5,594 | $ | (14,494 | ) | |||||||||||
31