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| 8-K - FORM 8-K - HomeStreet, Inc. | form8-k1q2016earningsrelea.htm |
| EX-99.2 - SUMMARY EARNINGS RELEASE ISSUED BY HOMESTREET, INC. DATED APRIL 25, 2016 - HomeStreet, Inc. | a1q16summaryearningsrelease.htm |
HomeStreet, Inc. Reports First Quarter 2016 Results
Net Income of $6.4 Million, or $0.27 per Diluted Share
Core Net Income 1 of $9.8 Million, or $0.41 per Diluted Share
SEATTLE – April 25, 2016 – (BUSINESS WIRE) – HomeStreet, Inc. (NASDAQ:HMST) (including its consolidated subsidiaries, the “Company” or “HomeStreet”), the parent company of HomeStreet Bank, today announced net income of $6.4 million, or $0.27 per diluted share, for the first quarter of 2016, compared to net income of $8.7 million, or $0.39 per diluted share, for the fourth quarter of 2015 and $10.3 million, or $0.59 per diluted share, for the first quarter of 2015. Core net income1 for the quarter was $9.8 million, or $0.41 per diluted share, compared to core net income1 of $8.8 million, or $0.39 per diluted share, for the fourth quarter of 2015 and $11.6 million, or $0.67 per diluted share, for the first quarter of 2015.
Key highlights:
▪ | Completed the acquisition of Orange County Business Bank ("OCBB") located in Irvine, California |
▪ | Total assets of $5.42 billion grew $522.8 million, or 10.7%, from $4.89 billion at December 31, 2015 |
▪ | Loans held for investment, net, grew by $330.8 million, or 10.4%, from December 31, 2015 |
▪ | Deposits grew $591.1 million, or 18.3%, from December 31, 2015 to $3.82 billion |
▪ | In addition to the OCBB location, during the quarter we also opened three retail deposit branches, one home-loan center, one commercial lending center, and one commercial real estate lending center |
Consolidated results:
▪ | Return on average tangible shareholders' equity,1 excluding merger-related items, net of tax, was 8.08% in the first quarter of 2016 compared with 7.80% in the fourth quarter of 2015 and 13.09% in the first quarter of 2015 |
▪ | Net interest income was $40.7 million in the first quarter of 2016 compared with $39.7 million in the fourth quarter of 2015 and $30.7 million in the first quarter of 2015 |
▪ | Net interest margin was 3.55% compared with 3.61% in the fourth quarter of 2015 and 3.60% in the first quarter of 2015 |
▪ | Noninterest income, excluding merger-related items, was $71.7 million in the first quarter of 2016 compared with $65.0 million in the fourth quarter of 2015 and $68.7 million in the first quarter of 2015 |
▪ | Average interest-earning assets of $4.63 billion increased $177.2 million, or 4.0% from $4.45 billion in the fourth quarter of 2015 and increased $1.16 billion or 33.3% from $3.47 billion in the first quarter of 2015 |
(1) For notes on non-GAAP financial measures, please see page 9. For additional information, see page 30.
Segment results:
◦ | Commercial and Consumer Banking |
▪ | Commercial and Consumer Banking segment recorded net income, excluding merger-related items, net of tax, in all periods, of $4.9 million for the current quarter compared with $8.5 million for the fourth quarter of 2015 and $1.2 million for the first quarter of 2015 |
▪ | Loans held for investment, net, of $3.52 billion increased $330.8 million, or 10.4%, from December 31, 2015. Included in the first quarter increase were $125.8 million of loans added from the acquisition of OCBB |
▪ | Deposits of $3.82 billion increased $591.1 million, or 18.3%, from December 31, 2015. Included in the first quarter increase were $126.5 million of deposits added from the acquisition of OCBB |
▪ | Nonperforming assets were $23.3 million, or 0.43% of total assets at March 31, 2016, compared to $24.7 million, or 0.50% of total assets at December 31, 2015 |
▪ | Excluding FHA-insured and VA-guaranteed single family mortgage loans and SBA-guaranteed loans, delinquent loans were $22.1 million, or 0.64% of total non-FHA/VA loans at March 31, 2016, compared to $20.4 million, or 0.65% of total non-FHA/VA loans at December 31, 2015 |
◦Mortgage Banking
▪ | Mortgage Banking segment net income was $4.9 million for the first quarter of 2016 compared with net income of $301 thousand for the fourth quarter of 2015 and net income of $10.3 million for the first quarter of 2015 |
▪ | Mortgage Banking segment net gain on mortgage loan origination and sale activities was $59.5 million in the first quarter of 2016 compared to $43.5 million in the fourth quarter of 2015 and $60.7 million in the first quarter of 2015 |
▪ | Single family mortgage interest rate lock commitments were $1.80 billion, up 34.6%, from $1.34 billion in the fourth quarter of 2015 and down 5.1%, from $1.90 billion in the first quarter of 2015 |
▪ | Single family mortgage closed loan volume was $1.57 billion, down 4.6% from $1.65 billion in the fourth quarter of 2015 and down 2.1% from $1.61 billion in the first quarter of 2015 |
▪ | The portfolio of single family loans serviced for others increased to $15.98 billion at March 31, 2016, up 4.1% from $15.35 billion at December 31, 2015 and up 34.2% from $11.91 billion at March 31, 2015 |
“We are pleased with our results for the first quarter,” said Mark K. Mason, Chairman, President, and Chief Executive Officer. “We completed our acquisition of Orange County Business Bank, which added a retail branch in Orange County, California as well as a talented commercial lending group that we expect will help us accelerate our strategy to grow and diversify our business throughout Southern California. We also invested in organic growth by opening two retail branches in San Diego, California; one retail branch in Kaimuki, Hawaii, a suburb of Honolulu; a single family lending center in Mesa, Arizona; a commercial lending center in Spokane, Washington; and a commercial real estate lending center in Dallas, Texas.”
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“Despite these investments for growth, our net income, excluding merger-related items, net of tax, was $9.8 million, representing a return on tangible shareholders’ equity of 8.1%. The quarter’s results were negatively impacted by seasonally higher payroll taxes, synergies yet to be achieved from the OCBB acquisition, the six de-novo offices that we opened during the quarter, and lower gains on the sale of securities and commercial loans. Total assets grew $522.8 million to $5.42 billion during the quarter, 62.3% of which was organic growth; and asset quality continued to improve with nonperforming assets declining to 0.43% of total assets. Reflecting the progress against our strategy of expanding our Commercial and Consumer Banking segment, we are proud of net interest income after provision for credit losses growing by 11.0% from the fourth quarter.”
“Lastly, the Company was proud to receive an investment grade rating of BBB- on senior unsecured debt by Kroll Bond Rating Agency. This rating confirms the progress we have made in repositioning and diversifying our business and will allow us added flexibility in managing our capital needs. The Company has no such debt outstanding at this time.”
Consolidated Results of Operations
Net Interest Income
Net interest income in the first quarter of 2016 was $40.7 million, up $1.0 million, or 2.4%, from the fourth quarter of 2015 and up $10.0 million, or 32.4%, from the first quarter of 2015 primarily as a result of growth in average interest-earning assets. In the first quarter of 2016, our net interest margin, on a tax equivalent basis, was 3.55% compared to 3.61% in the fourth quarter of 2015 and 3.60% in the first quarter of 2015. The decrease in our net interest margin was primarily due to higher cost of interest-bearing funds.
Total average interest-earning assets in the first quarter of 2016 increased $177.2 million, or 4.0%, from the fourth quarter of 2015 primarily due to an 8.9% increase in average balances of loans held for investment. Total average interest-earning assets increased 33.3% from the first quarter of 2015 primarily due to overall growth in the Company, both organically and through merger activities.
Noninterest Income
Noninterest income in the first quarter of 2016 was $71.7 million, up $6.3 million, or 9.6%, from $65.4 million in the fourth quarter of 2015 and down $3.7 million, or 4.9%, from $75.4 million in the first quarter of 2015. The increase in noninterest income compared to the prior quarter was primarily due to a $14.6 million increase in net gain on mortgage origination and sale activities resulting from a 34.6% increase in single family rate lock volume, partially offset by a $5.4 million decrease in mortgage servicing income. The decrease in noninterest income compared to the first quarter of 2015 was primarily due to a bargain purchase gain of $6.6 million recorded in the first quarter of 2015 in connection with our acquisition of Simplicity Bancorp. No such gain was recorded in the first quarter of 2016.
Noninterest Expense
Noninterest expense for the first quarter of 2016 was $101.4 million compared with $92.7 million for the fourth quarter of 2015 and $89.5 million for the first quarter of 2015. Included in noninterest expense for these periods were merger-related expenses of $5.2 million for the first quarter of 2016, $754 thousand for the fourth quarter of 2015 and $12.2 million for the first quarter of 2015. Excluding merger-related expenses, noninterest expense for the first quarter of 2016 was $96.2 million compared with $92.0 million for the fourth quarter of 2015 and $77.3 million for the first quarter of 2015. The increase of $18.8 million, or 24.4%, from the first quarter of 2015 was primarily due to increased salary and related costs and other expenses related to growth of the Company, both organically and through merger activities.
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As of March 31, 2016, we had 2,264 full-time equivalent employees, a 5.8% increase from 2,139 employees as of December 31, 2015, and a 23.8% increase from 1,829 employees as of March 31, 2015. During the twelve-month period ended March 31, 2016, we added eight home loan centers, four commercial lending centers and eight retail deposit branches to bring our total home loan centers to 65, commercial loan centers to eight and our total retail deposit branches to 48.
Income Taxes
For the first quarter of 2016, income tax provision was $3.2 million with an effective tax rate of 33.6% (inclusive of discrete items), compared to a provision of $1.8 million for the fourth quarter of 2015, and $3.3 million for the first quarter of 2015.
Our effective income tax rate for the first quarter of 2016 differs from the Federal statutory tax rate of 35% primarily due to the impact of state income taxes, tax-exempt interest income, and low-income housing tax credit investments.
Business Segments
Commercial and Consumer Banking Segment
On February 1, 2016, we acquired OCBB, a banking corporation in Irvine, California. Adding OCBB’s branch and our two new San Diego branches brings HomeStreet’s Southern California retail deposit branch network to ten locations. Management believes that the OCBB acquisition complements our expansion of banking activities into California, which in 2015 included the Simplicity acquisition as well as the launch of two specialized lending groups based in Southern California, a commercial real estate lending group and an SBA lending group.
Commercial and Consumer Banking segment net income was $1.5 million in the first quarter of 2016 compared with net income of $8.4 million in the fourth quarter of 2015 and net loss of $14 thousand in the first quarter of 2015. Excluding merger-related items, net of tax, in all periods, net income was $4.9 million in the first quarter of 2016, representing 50.3% of consolidated net income, compared to net income of $8.5 million in the fourth quarter of 2015 and net income of $1.2 million in the first quarter of 2015. The decrease in this segment's net income, excluding merger-related items, net of tax, in the quarter compared to the fourth quarter of 2015 was primarily due to lower noninterest income resulting from lower gains on sale of loans and investment securities available for sale, and higher noninterest expense resulting from the expansion of our commercial and consumer banking activities.
During the first quarter of 2016, Commercial and Consumer Banking segment net income, excluding merger-related items, net of tax, increased $3.7 million, or 296.1%, from $1.2 million in the first quarter of 2015, primarily due to a $10.5 million increase in net interest income resulting from higher average balances of interest-earning assets, partially offset by a $7.9 million increase in noninterest expense. These increases were the combined result of merger activities and organic growth.
We recorded a $1.4 million provision for credit losses in the first quarter of 2016 compared to a provision of $1.9 million in the fourth quarter of 2015 and $3.0 million in the first quarter of 2015.
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Loans Held for Investment
Loans held for investment, net, were $3.52 billion at March 31, 2016, an increase of $330.8 million, or 10.4%, from December 31, 2015 and an increase of $695.4 million, or 24.6%, from March 31, 2015. Included in the increase was $125.8 million of loans from the OCBB acquisition. New loan commitments in the first quarter of 2016 totaled $469.2 million and originations totaled $317.9 million. During the quarter, we added loan commitments that included $129.3 million of consumer loans, $146.6 million of commercial real estate and multifamily permanent loans, $12.6 million of commercial business loans and $180.8 million of construction loans, including $105.9 million in residential construction, $47.5 million in single family custom construction, $24.6 million in multifamily construction and $2.8 million in commercial real estate construction.
Asset Quality
Reflecting improved asset quality, nonperforming assets and nonaccrual loans decreased $1.4 million and $1.2 million, respectively, at March 31, 2016 compared to December 31, 2015. Delinquent loans of $68.8 million, or 1.94% of total loans at March 31, 2016, increased from $66.2 million, or 2.05% of total loans at December 31, 2015. Excluding Federal Housing Administration ("FHA")-insured and Department of Veterans' Affairs ("VA")-guaranteed single family mortgage loans and Small Business Administration ("SBA")-guaranteed loans, delinquent loans were $22.1 million, or 0.64% of total non-FHA/VA loans at March 31, 2016, compared to $20.4 million, or 0.65% of total non-FHA/VA loans at December 31, 2015.
The allowance for loan losses was $31.3 million at March 31, 2016 compared with $29.3 million at December 31, 2015 and $24.9 million at March 31, 2015. The allowance for loan losses as a percentage of loans held for investment was 0.88% at March 31, 2016 compared with 0.91% at December 31, 2015 and 0.87% at March 31, 2015. Excluding acquired loans, which were recorded at a net discount at the time of acquisition, the allowance for loan losses as a percentage of total loans was 1.07% at March 31, 2016, compared with 1.10% at December 31, 2015 and 1.15% at March 31, 2015. Net recoveries in the first quarter of 2016 totaled $364 thousand, compared to net recoveries of $872 thousand in the fourth quarter of 2015 and net recoveries of $104 thousand in the first quarter of 2015.
Deposits
Deposit balances were $3.82 billion at March 31, 2016 compared to $3.23 billion at December 31, 2015 and $3.34 billion at March 31, 2015. Included in this increase was $126.5 million in deposits from the OCBB acquisition. Transaction and savings deposits increased $266.2 million, or 12.0%, from December 31, 2015, while certificates of deposit increased $168.7 million, or 23.0%, during the same period.
Noninterest Expense
Commercial and Consumer Banking segment noninterest expense was $36.6 million for the first quarter of 2016 compared with $29.5 million for the fourth quarter of 2015 and $35.7 million for the first quarter of 2015. Included in noninterest expense for these periods were merger-related expenses of $5.2 million, $754 thousand and $12.2 million, respectively. Excluding the merger-related expenses in all periods, noninterest expense increased primarily due to the continued growth of our commercial real estate and commercial business lending units and the expansion of our branch banking network. During 2015 and 2016, we launched a new division of HomeStreet Bank, HomeStreet Commercial Capital, which is a commercial real estate lending group based in Orange County, California and serving customers in the western U.S., added a team specializing in U.S. Small Business Administration ("SBA") lending also located in Orange County, California, acquired eight retail deposit branches in California and one retail deposit branch in Eastern Washington and opened six de novo retail deposit branches in the Seattle area, California and Hawaii.
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Mortgage Banking Segment
Net income for the Mortgage Banking segment was $4.9 million in the first quarter of 2016, compared with $301 thousand in the fourth quarter of 2015 and $10.3 million in the first quarter of 2015. The $4.6 million increase in net income from the fourth quarter of 2015 was primarily due to higher net gain on single family mortgage loan origination and sale activities resulting from higher interest rate lock commitments. The $5.5 million decrease in net income from the first quarter of 2015 was primarily due to higher noninterest expense resulting from the continued growth and expansion of our mortgage banking segment and increased costs resulting from new regulatory and disclosure requirements for the mortgage industry.
Mortgage Origination for Sale
Single family mortgage interest rate lock commitments, net of estimated fallout, totaled $1.80 billion in the first quarter of 2016, an increase of $463.6 million, or 34.6%, from $1.34 billion in the fourth quarter of 2015 and a decrease of $97.5 million, or 5.1%, from $1.90 billion in the first quarter of 2015. The increase from the fourth quarter of 2015 was primarily the result of increased single family refinance mortgage activity and the continued expansion of our mortgage production staff into new markets.
Single family closed loan volume designated for sale was $1.57 billion in the first quarter of 2016, down $75.6 million, or 4.6%, from $1.65 billion in the fourth quarter of 2015 and down $33.7 million, or 2.1%, from $1.61 billion in the first quarter of 2015. At March 31, 2016, the combined pipeline of interest rate lock commitments, net of estimated fallout, and mortgage loans held for sale was $1.45 billion, compared to $1.06 billion at December 31, 2015 and $1.51 billion at March 31, 2015.
Net gain on single family mortgage loan origination and sale activities in the first quarter of 2016 was $59.5 million compared to $43.5 million in the fourth quarter of 2015 and $60.7 million in the first quarter of 2015.
Due to differences in the timing of revenue recognition between components of the gain on loan origination and sale activities, we analyze 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 first quarter of 2016 was 336 basis points, compared with 319 basis points in the fourth quarter of 2015 and 336 basis points in the first quarter of 2015.
Mortgage Servicing
Single family mortgage servicing income in the first quarter of $7.3 million was comprised of $3.8 million of net servicing income and $3.5 million of risk management results. Mortgage servicing income decreased $5.5 million, or 42.9%, from $12.8 million in the fourth quarter of 2015 and increased $3.5 million, or 89.5%, from $3.9 million in the first quarter of 2015. The decrease from the fourth quarter of 2015 was primarily the result of lower risk management results. The increase from the first quarter of 2015 was primarily the result of increased servicing fees collected primarily due to the growth in loans serviced for others and a decrease in modeled amortization primarily due to lower decay.
Single family mortgage servicing fees collected in the first quarter of 2016 increased $406 thousand, or 3.8%, from the fourth quarter of 2015 and increased $2.9 million, or 35.6%, from the first quarter of 2015. The increases were primarily due to higher average balances of loans serviced for others. Our portfolio of single family loans serviced for others was $15.98 billion at March 31, 2016 compared with $15.35 billion at December 31, 2015 and $11.91 billion at March 31, 2015.
Noninterest Expense
Mortgage Banking segment noninterest expense of $64.7 million increased $1.5 million, or 2.4%, from the fourth quarter of 2015 and increased $10.9 million, or 20.3%, from the first quarter of 2015, primarily due to the continued expansion of offices in new markets and increases of our mortgage production and support staff along with related salary, insurance, and benefit costs as well as increased costs resulting from new regulatory and disclosure requirements for the mortgage industry.
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Conference Call
HomeStreet, Inc., the parent company of HomeStreet Bank, will conduct a quarterly earnings conference call on Tuesday, April 26, 2016 at 1:00 p.m. EDT. Mark K. Mason, President and CEO, and Melba Bartels, Senior Executive Vice President and CFO, will discuss first quarter 2016 results and provide an update on recent activities. A question and answer session will follow the presentation. Shareholders, analysts and other interested parties may register in advance at http://dpregister.com/10082831 or may join the call by dialing 1-877-508-9589 (1-855-669-9657 in Canada) shortly before 1:00 p.m. EDT.
A rebroadcast will be available approximately one hour after the conference call by dialing 1-877-344-7529 and entering passcode 10082831.
The information to be discussed in the conference call will be available on the company's web site after the market closes on Monday, April 25, 2016.
About HomeStreet
Now in its 96th year HomeStreet, Inc. (NASDAQ:HMST) is a diversified financial services company headquartered in Seattle, Washington and is the holding company for HomeStreet Bank, a state-chartered, FDIC-insured commercial bank. HomeStreet offers consumer, commercial and private banking services, investment and insurance products and originates residential and commercial mortgages and construction loans for borrowers located in the Western United States and Hawaii. The bank has consistently received an “outstanding” rating under the federal Community Reinvestment Act (CRA). Certain information about our business can be found on our investor relations web site, located at http://ir.homestreet.com.
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, we face limitations and risks associated with our ability to expand our banking operations geographically and across market sectors, integrate our recent acquisitions, grow our franchise and capitalize on market opportunities, meet the growth targets that management has set for the Company, maintain our position in the industry and generate positive net income and cash flow. These limitations and risks include without limitation 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 increase capital requirements or otherwise constrain our ability to do business, our ability to maintain electronic and physical security of our customer data and our information systems, our ability to maintain compliance with applicable laws and regulations, our ability to attract and retain key personnel, our ability to make accurate estimates of the value of our non-cash assets and liabilities, significant increases in the competition we face in our industry and market and the extent of our success in problem asset resolution efforts. The acquisition of Orange County Business Bank may require significant management attention, and, along with other recent transactions, including the acquisition of the Dayton branch from AmericanWest Bank, may fall short of anticipated size
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and value. We may not realize the benefits expected from our recently completed bank and branch acquisitions in the anticipated time frame (or at all), and integration of acquired operations may take longer or prove more expensive than anticipated. 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 recent and future legislative or regulatory actions or reform that affect our business or the banking or mortgage industries more generally. 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 year ended December 31, 2015. 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.
The information contained herein is unaudited, although certain information related to the year ended December 31, 2015 has been derived from our audited financial statements for the year then ended as included in our 2015 Form 10-K. 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, 2015, as contained in the Company's Annual Report on Form 10-K for such fiscal year.
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About Non-GAAP Financial Measures
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we have disclosed “core net income” to provide comparisons of quarter-to-date fiscal 2016 net income to the corresponding periods of fiscal 2015. We believe this information is useful to investors who are seeking to exclude the after-tax impact of merger-related expenses and a bargain purchase gain, both of which we recorded in connection with our mergers with Simplicity Bancorp on March 1, 2015 and OCBB on February 1, 2016 and with our acquisition of a retail deposit branch in Dayton, Washington on December 11, 2015. We also have presented adjusted expenses, which eliminate costs incurred in connection with the mergers. Similarly, we have provided information about our balance sheet items, including total loans, total deposits and total assets, adjusted in each case to eliminate merger-related impacts. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.
We also have disclosed tangible equity ratios and tangible book value per share of common stock which are non-GAAP financial measures.
Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our results of core operations by excluding certain merger-related revenues and expenses that may not be indicative of our expected recurring results of operations. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management's internal comparisons to our historical performance, as well as comparisons to our competitors' operating results. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are available to institutional investors and analysts to help them assess the strength of our business on a normalized basis.
For more information on these non-GAAP financial measures, please see the tables captioned "Reconciliations of non-GAAP results of operations to the nearest comparable GAAP measures," included at the end of this release.
Source: HomeStreet, Inc.
Contact: | Investor Relations: | |
HomeStreet, Inc. | ||
Gerhard Erdelji (206) 515-4039 | ||
Gerhard.Erdelji@HomeStreet.com | ||
http://ir.homestreet.com | ||
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HomeStreet, Inc. and Subsidiaries
Summary Financial Data
Quarter Ended | ||||||||||||||||||||
(dollars in thousands, except share data) | Mar. 31, 2016 | Dec. 31, 2015 | Sept. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | |||||||||||||||
Income statement data (for the period ended): | ||||||||||||||||||||
Net interest income | $ | 40,691 | $ | 39,740 | $ | 39,634 | $ | 38,230 | $ | 30,734 | ||||||||||
Provision for credit losses | 1,400 | 1,900 | 700 | 500 | 3,000 | |||||||||||||||
Noninterest income | 71,708 | 65,409 | 67,468 | 72,987 | 75,373 | |||||||||||||||
Noninterest expense | 101,353 | 92,725 | 92,026 | 92,335 | 89,482 | |||||||||||||||
Merger-related expenses (included in noninterest expense) | 5,198 | 754 | 437 | 3,208 | 12,165 | |||||||||||||||
Income before taxes | 9,646 | 10,524 | 14,376 | 18,382 | 13,625 | |||||||||||||||
Income tax expense | 3,239 | 1,846 | 4,415 | 6,006 | 3,321 | |||||||||||||||
Net income | $ | 6,407 | $ | 8,678 | $ | 9,961 | $ | 12,376 | $ | 10,304 | ||||||||||
Basic earnings per common share | $ | 0.27 | $ | 0.39 | $ | 0.45 | $ | 0.56 | $ | 0.60 | ||||||||||
Diluted earnings per common share | $ | 0.27 | $ | 0.39 | $ | 0.45 | $ | 0.56 | $ | 0.59 | ||||||||||
Common shares outstanding | 24,550,219 | 22,076,534 | 22,061,702 | 22,065,249 | 22,038,748 | |||||||||||||||
Weighted average common shares | ||||||||||||||||||||
Basic | 23,676,506 | 22,050,022 | 22,035,317 | 22,028,539 | 17,158,303 | |||||||||||||||
Diluted | 23,877,376 | 22,297,183 | 22,291,810 | 22,292,734 | 17,355,076 | |||||||||||||||
Shareholders' equity per share | $ | 21.55 | $ | 21.08 | $ | 20.87 | $ | 20.29 | $ | 19.94 | ||||||||||
Tangible book value per share (1) | $ | 20.37 | $ | 20.16 | $ | 19.95 | $ | 19.35 | $ | 18.97 | ||||||||||
Financial position (at period end): | ||||||||||||||||||||
Cash and cash equivalents | $ | 46,356 | $ | 32,684 | $ | 37,303 | $ | 46,197 | $ | 56,864 | ||||||||||
Investment securities | 687,081 | 572,164 | 602,018 | 509,545 | 476,102 | |||||||||||||||
Loans held for sale | 696,692 | 650,163 | 882,319 | 972,183 | 865,322 | |||||||||||||||
Loans held for investment, net | 3,523,551 | 3,192,720 | 3,012,943 | 2,900,675 | 2,828,177 | |||||||||||||||
Mortgage servicing rights | 148,851 | 171,255 | 146,080 | 153,237 | 121,722 | |||||||||||||||
Other real estate owned | 7,273 | 7,531 | 8,273 | 11,428 | 11,589 | |||||||||||||||
Total assets | 5,417,252 | 4,894,495 | 4,975,653 | 4,866,248 | 4,604,403 | |||||||||||||||
Deposits | 3,823,027 | 3,231,953 | 3,307,693 | 3,322,653 | 3,344,223 | |||||||||||||||
FHLB advances | 883,574 | 1,018,159 | 1,025,745 | 922,832 | 669,419 | |||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | — | — | — | — | 9,450 | |||||||||||||||
Shareholders’ equity | $ | 529,132 | $ | 465,275 | $ | 460,458 | $ | 447,726 | $ | 439,395 | ||||||||||
Financial position (averages): | ||||||||||||||||||||
Investment securities | $ | 625,695 | $ | 584,519 | $ | 539,330 | $ | 506,904 | $ | 462,762 | ||||||||||
Loans held for investment | 3,399,479 | 3,120,644 | 2,975,624 | 2,861,223 | 2,370,763 | |||||||||||||||
Total interest-earning assets | 4,629,507 | 4,452,326 | 4,394,557 | 4,266,382 | 3,473,652 | |||||||||||||||
Total interest-bearing deposits | 2,734,975 | 2,587,125 | 2,573,512 | 2,626,925 | 2,205,585 | |||||||||||||||
Federal Home Loan Bank advances | 896,726 | 987,803 | 887,711 | 783,801 | 515,958 | |||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | — | 100 | — | 4,336 | 41,734 | |||||||||||||||
Total interest-bearing liabilities | 3,693,558 | 3,636,885 | 3,523,080 | 3,476,919 | 2,825,134 | |||||||||||||||
Shareholders’ equity | $ | 510,883 | $ | 470,635 | $ | 460,489 | $ | 455,721 | $ | 370,008 | ||||||||||
Other data: | ||||||||||||||||||||
Full-time equivalent employees (ending) | 2,264 | 2,139 | 2,100 | 1,964 | 1,829 | |||||||||||||||
10
HomeStreet, Inc. and Subsidiaries
Summary Financial Data (continued)
Quarter Ended | |||||||||||||||||||||
(dollars in thousands, except share data) | Mar. 31, 2016 | Dec. 31, 2015 | Sept. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | ||||||||||||||||
Financial performance: | |||||||||||||||||||||
Return on average shareholders’ equity (2) | 5.02 | % | 7.38 | % | 8.65 | % | 10.86 | % | 11.14 | % | |||||||||||
Return on average tangible shareholders' equity(1) | 5.29 | % | 7.71 | % | 9.06 | % | 11.39 | % | 11.67 | % | |||||||||||
Return on average assets | 0.51 | % | 0.71 | % | 0.83 | % | 1.06 | % | 1.08 | % | |||||||||||
Net interest margin (3) | 3.55 | % | 3.61 | % | 3.67 | % | 3.63 | % | 3.60 | % | |||||||||||
Efficiency ratio (4) | 90.17 | % | 88.18 | % | 85.92 | % | 83.02 | % | 84.33 | % | |||||||||||
Core efficiency ratio (1)(5) | 85.55 | % | 87.79 | % | 86.16 | % | 80.08 | % | 77.72 | % | |||||||||||
Asset quality: | |||||||||||||||||||||
Allowance for credit losses | $ | 32,423 | $ | 30,659 | $ | 27,887 | $ | 26,448 | $ | 25,628 | |||||||||||
Allowance for loan losses/total loans(6) | 0.88 | % | 0.91 | % | 0.89 | % | 0.88 | % | 0.87 | % | |||||||||||
Allowance for loan losses/nonaccrual loans | 195.51 | % | 170.54 | % | 138.27 | % | 120.97 | % | 117.48 | % | |||||||||||
Total nonaccrual loans(7)(8) | $ | 16,012 | $ | 17,168 | $ | 19,470 | $ | 21,308 | $ | 21,209 | |||||||||||
Nonaccrual loans/total loans | 0.45 | % | 0.53 | % | 0.64 | % | 0.73 | % | 0.74 | % | |||||||||||
Other real estate owned | $ | 7,273 | $ | 7,531 | $ | 8,273 | $ | 11,428 | $ | 11,589 | |||||||||||
Total nonperforming assets(8) | $ | 23,285 | $ | 24,699 | $ | 27,743 | $ | 32,736 | $ | 32,798 | |||||||||||
Nonperforming assets/total assets | 0.43 | % | 0.50 | % | 0.56 | % | 0.67 | % | 0.71 | % | |||||||||||
Net (recoveries) charge-offs | $ | (364 | ) | $ | (872 | ) | $ | (739 | ) | $ | (320 | ) | $ | (104 | ) | ||||||
Regulatory capital ratios for the Bank: | |||||||||||||||||||||
Tier 1 leverage capital (to average assets) | 10.17 | % | (9) | 9.45 | % | 9.69 | % | 9.46 | % | 11.47 | % | (10) | |||||||||
Tier 1 common equity risk-based capital (to risk-weighted assets) | 12.95 | % | (9) | 13.03 | % | 13.35 | % | 13.17 | % | 13.75 | % | ||||||||||
Tier 1 risk-based capital (to risk-weighted assets) | 12.95 | % | (9) | 13.03 | % | 13.35 | % | 13.17 | % | 13.75 | % | ||||||||||
Total risk-based capital (to risk-weighted assets) | 13.78 | % | (9) | 13.91 | % | 14.15 | % | 13.97 | % | 14.57 | % | ||||||||||
Risk-weighted assets | $ | 3,887,337 | $ | 3,490,098 | $ | 3,454,777 | $ | 3,306,325 | $ | 3,127,427 | |||||||||||
Regulatory capital ratios for the Company: | |||||||||||||||||||||
Tier 1 leverage capital (to average assets) | 10.50 | % | (9) | 9.94 | % | 10.00 | % | 9.87 | % | 11.95 | % | (10) | |||||||||
Tier 1 common equity risk-based capital (to risk-weighted assets) | 10.50 | % | (9) | 10.51 | % | 10.65 | % | 10.66 | % | 11.12 | % | ||||||||||
Tier 1 risk-based capital (to risk-weighted assets) | 11.78 | % | (9) | 11.93 | % | 12.09 | % | 12.02 | % | 12.55 | % | ||||||||||
Total risk-based capital (to risk-weighted assets) | 12.51 | % | (9) | 12.69 | % | 12.79 | % | 12.72 | % | 13.26 | % | ||||||||||
Risk-weighted assets | $ | 4,424,404 | $ | 4,021,566 | $ | 3,950,823 | $ | 3,793,345 | $ | 3,586,636 | |||||||||||
(1) | Tangible equity ratios, tangible book value per share of common stock and core efficiency ratios are non-GAAP financial measures. For additional information on these ratios and for corresponding reconciliations to GAAP financial measures, see Non-GAAP Financial Measures in this earnings release. |
(2) | Net earnings available to common shareholders (annualized) divided by average shareholders’ equity. |
(3) | Net interest income divided by total average interest-earning assets on a tax equivalent basis. |
(4) | Noninterest expense divided by total net revenue (net interest income and noninterest income). |
(5) | Noninterest expense divided by total net revenue (net interest income and noninterest income), adjusted for merger-related items. |
(6) | Includes loans acquired with bank acquisitions. Excluding acquired loans, allowance for loan losses /total loans was 1.07%, 1.10%, 1.11%, 1.12% and 1.15% at March 31, 2016, December 31, 2015, September 30, 2015, June 30, 2015 and March 31, 2015, respectively. |
(7) | Generally, loans are placed on nonaccrual status when they are 90 or more days past due, unless payment is insured by the FHA or guaranteed by the VA. |
(8) | Includes $2.6 million, $1.2 million, $1.5 million, $1.2 million and $1.4 million of nonperforming loans guaranteed by the SBA at March 31, 2016, December 31, 2015, September 30, 2015, June 30, 2015 and March 31, 2015, respectively. |
(9) | Regulatory capital ratios at March 31, 2016 are preliminary. |
(10) | March 31, 2015 Tier 1 leverage capital (to average assets) includes average assets from the Simplicity merger for one month. If the Simplicity merger had occurred on January 1, 2015, the Bank's Tier 1 leverage capital would have been 9.95% and the Company's Tier 1 leverage capital would have been 10.38% at March 31, 2015. |
11
HomeStreet, Inc. and Subsidiaries
Consolidated Statements of Operations
Three Months Ended March 31, | % | ||||||||||
(in thousands, except share data) | 2016 | 2015 | Change | ||||||||
Interest income: | |||||||||||
Loans | $ | 42,734 | $ | 31,647 | 35 | % | |||||
Investment securities | 3,053 | 2,394 | 28 | ||||||||
Other | 267 | 205 | 30 | ||||||||
46,054 | 34,246 | 34 | |||||||||
Interest expense: | |||||||||||
Deposits | 3,569 | 2,582 | 38 | ||||||||
Federal Home Loan Bank advances | 1,419 | 612 | 132 | ||||||||
Federal funds purchased and securities sold under agreements to repurchase | — | 5 | (100 | ) | |||||||
Long-term debt | 311 | 265 | 17 | ||||||||
Other | 64 | 48 | 33 | ||||||||
5,363 | 3,512 | 53 | |||||||||
Net interest income | 40,691 | 30,734 | 32 | ||||||||
Provision for credit losses | 1,400 | 3,000 | (53 | ) | |||||||
Net interest income after provision for credit losses | 39,291 | 27,734 | 42 | ||||||||
Noninterest income: | |||||||||||
Net gain on mortgage loan origination and sale activities | 61,263 | 61,887 | (1 | ) | |||||||
Mortgage servicing income | 8,129 | 4,297 | 89 | ||||||||
Income from WMS Series LLC | 136 | 564 | (76 | ) | |||||||
Depositor and other retail banking fees | 1,595 | 1,139 | 40 | ||||||||
Insurance agency commissions | 394 | 415 | (5 | ) | |||||||
Gain on sale of investment securities available for sale | 35 | — | NM | ||||||||
Bargain purchase gain | — | 6,628 | (100 | ) | |||||||
Other | 156 | 443 | (65 | ) | |||||||
71,708 | 75,373 | (5 | ) | ||||||||
Noninterest expense: | |||||||||||
Salaries and related costs | 67,284 | 57,593 | 17 | ||||||||
General and administrative | 15,522 | 12,825 | 21 | ||||||||
Amortization of core deposit intangibles | 532 | 336 | 58 | ||||||||
Legal | 443 | 467 | (5 | ) | |||||||
Consulting | 1,672 | 5,565 | (70 | ) | |||||||
Federal Deposit Insurance Corporation assessments | 716 | 525 | 36 | ||||||||
Occupancy | 7,155 | 5,840 | 23 | ||||||||
Information services | 7,534 | 6,120 | 23 | ||||||||
Net cost from operation and sale of other real estate owned | 495 | 211 | 135 | ||||||||
101,353 | 89,482 | 13 | |||||||||
Income before income taxes | 9,646 | 13,625 | (29 | ) | |||||||
Income tax expense | 3,239 | 3,321 | (2 | ) | |||||||
NET INCOME | $ | 6,407 | $ | 10,304 | (38 | ) | |||||
Basic income per share | $ | 0.27 | $ | 0.60 | (55 | ) | |||||
Diluted income per share | $ | 0.27 | $ | 0.59 | (54 | ) | |||||
Basic weighted average number of shares outstanding | 23,676,506 | 17,158,303 | 38 | ||||||||
Diluted weighted average number of shares outstanding | 23,877,376 | 17,355,076 | 38 | ||||||||
NM = not meaningful
12
HomeStreet, Inc. and Subsidiaries
Five Quarter Consolidated Statements of Operation
Quarter Ended | ||||||||||||||||||||
(in thousands, except share data) | Mar. 31, 2016 | Dec. 31, 2015 | Sept. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | |||||||||||||||
Interest income: | ||||||||||||||||||||
Loans | $ | 42,734 | $ | 41,018 | $ | 41,012 | $ | 38,944 | $ | 31,647 | ||||||||||
Investment securities | 3,053 | 3,164 | 2,754 | 3,278 | 2,394 | |||||||||||||||
Other | 267 | 256 | 224 | 218 | 205 | |||||||||||||||
46,054 | 44,438 | 43,990 | 42,440 | 34,246 | ||||||||||||||||
Interest expense: | ||||||||||||||||||||
Deposits | 3,569 | 3,145 | 3,069 | 3,005 | 2,582 | |||||||||||||||
Federal Home Loan Bank advances | 1,419 | 1,192 | 958 | 906 | 612 | |||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | — | — | — | 3 | 5 | |||||||||||||||
Long-term debt | 311 | 289 | 278 | 272 | 265 | |||||||||||||||
Other | 64 | 72 | 51 | 24 | 48 | |||||||||||||||
5,363 | 4,698 | 4,356 | 4,210 | 3,512 | ||||||||||||||||
Net interest income | 40,691 | 39,740 | 39,634 | 38,230 | 30,734 | |||||||||||||||
Provision for credit losses | 1,400 | 1,900 | 700 | 500 | 3,000 | |||||||||||||||
Net interest income after provision for credit losses | 39,291 | 37,840 | 38,934 | 37,730 | 27,734 | |||||||||||||||
Noninterest income: | ||||||||||||||||||||
Net gain on mortgage loan origination and sale activities | 61,263 | 46,642 | 57,885 | 69,974 | 61,887 | |||||||||||||||
Mortgage servicing income | 8,129 | 13,535 | 4,768 | 1,831 | 4,297 | |||||||||||||||
Income from WMS Series LLC | 136 | 196 | 380 | 484 | 564 | |||||||||||||||
Depositor and other retail banking fees | 1,595 | 1,642 | 1,701 | 1,399 | 1,139 | |||||||||||||||
Insurance agency commissions | 394 | 499 | 477 | 291 | 415 | |||||||||||||||
Gain on sale of investment securities available for sale | 35 | 1,404 | 1,002 | — | — | |||||||||||||||
Bargain purchase gain (adjustment) | — | 381 | 796 | (79 | ) | 6,628 | ||||||||||||||
Other | 156 | 1,110 | 459 | (913 | ) | 443 | ||||||||||||||
71,708 | 65,409 | 67,468 | 72,987 | 75,373 | ||||||||||||||||
Noninterest expense: | ||||||||||||||||||||
Salaries and related costs | 67,284 | 60,349 | 60,991 | 61,654 | 57,593 | |||||||||||||||
General and administrative | 15,522 | 15,699 | 14,342 | 13,955 | 12,825 | |||||||||||||||
Amortization of core deposit intangibles | 532 | 514 | 527 | 547 | 336 | |||||||||||||||
Legal | 443 | 895 | 868 | 577 | 467 | |||||||||||||||
Consulting | 1,672 | 671 | 166 | 813 | 5,565 | |||||||||||||||
Federal Deposit Insurance Corporation assessments | 716 | 683 | 504 | 861 | 525 | |||||||||||||||
Occupancy | 7,155 | 6,903 | 6,077 | 6,107 | 5,840 | |||||||||||||||
Information services | 7,534 | 7,061 | 8,159 | 7,714 | 6,120 | |||||||||||||||
Net (income) cost from operation and sale of other real estate owned | 495 | (50 | ) | 392 | 107 | 211 | ||||||||||||||
101,353 | 92,725 | 92,026 | 92,335 | 89,482 | ||||||||||||||||
Income before income tax expense | 9,646 | 10,524 | 14,376 | 18,382 | 13,625 | |||||||||||||||
Income tax expense | 3,239 | 1,846 | 4,415 | 6,006 | 3,321 | |||||||||||||||
NET INCOME | $ | 6,407 | $ | 8,678 | $ | 9,961 | $ | 12,376 | $ | 10,304 | ||||||||||
Basic income per share | $ | 0.27 | $ | 0.39 | $ | 0.45 | $ | 0.56 | $ | 0.60 | ||||||||||
Diluted income per share | $ | 0.27 | $ | 0.39 | $ | 0.45 | $ | 0.56 | $ | 0.59 | ||||||||||
Basic weighted average number of shares outstanding | 23,676,506 | 22,050,022 | 22,035,317 | 22,028,539 | 17,158,303 | |||||||||||||||
Diluted weighted average number of shares outstanding | 23,877,376 | 22,297,183 | 22,291,810 | 22,292,734 | 17,355,076 | |||||||||||||||
13
HomeStreet, Inc. and Subsidiaries
Consolidated Statements of Financial Condition
(in thousands, except share data) | Mar. 31, 2016 | Dec. 31, 2015 | % Change | ||||||||
Assets: | |||||||||||
Cash and cash equivalents (including interest-earning instruments of $19,072 and $2,079) | $ | 46,356 | $ | 32,684 | 42 | % | |||||
Investment securities (includes $653,825 and $541,151 carried at fair value) | 687,081 | 572,164 | 20 | ||||||||
Loans held for sale (includes $687,683 and $632,273 carried at fair value) | 696,692 | 650,163 | 7 | ||||||||
Loans held for investment (net of allowance for loan losses of $31,305 and $29,278; includes $18,327 and $21,544 carried at fair value) | 3,523,551 | 3,192,720 | 10 | ||||||||
Mortgage servicing rights (includes $133,449 and $156,604 carried at fair value) | 148,851 | 171,255 | (13 | ) | |||||||
Other real estate owned | 7,273 | 7,531 | (3 | ) | |||||||
Federal Home Loan Bank stock, at cost | 40,548 | 44,342 | (9 | ) | |||||||
Premises and equipment, net | 67,323 | 63,738 | 6 | ||||||||
Goodwill | 20,366 | 11,521 | 77 | ||||||||
Other assets | 179,211 | 148,377 | 21 | ||||||||
Total assets | $ | 5,417,252 | $ | 4,894,495 | 11 | ||||||
Liabilities and shareholders’ equity: | |||||||||||
Liabilities: | |||||||||||
Deposits | $ | 3,823,027 | $ | 3,231,953 | 18 | ||||||
Federal Home Loan Bank advances | 883,574 | 1,018,159 | (13 | ) | |||||||
Accounts payable and other liabilities | 119,662 | 117,251 | 2 | ||||||||
Long-term debt | 61,857 | 61,857 | — | ||||||||
Total liabilities | 4,888,120 | 4,429,220 | 10 | ||||||||
Commitments and contingencies | |||||||||||
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 shares | |||||||||||
Issued and outstanding, 24,550,219 shares and 22,076,534 shares | 511 | 511 | — | ||||||||
Additional paid-in capital | 273,168 | 222,328 | 23 | ||||||||
Retained earnings | 251,292 | 244,885 | 3 | ||||||||
Accumulated other comprehensive income (loss) | 4,161 | (2,449 | ) | (270 | ) | ||||||
Total shareholders’ equity | 529,132 | 465,275 | 14 | ||||||||
Total liabilities and shareholders’ equity | $ | 5,417,252 | $ | 4,894,495 | 11 | % | |||||
14
HomeStreet, Inc. and Subsidiaries
Five Quarter Consolidated Statements of Financial Condition
(in thousands, except share data) | Mar. 31, 2016 | Dec. 31, 2015 | Sept. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | |||||||||||||||
Assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 46,356 | $ | 32,684 | $ | 37,303 | $ | 46,197 | $ | 56,864 | ||||||||||
Investment securities | 687,081 | 572,164 | 602,018 | 509,545 | 476,102 | |||||||||||||||
Loans held for sale | 696,692 | 650,163 | 882,319 | 972,183 | 865,322 | |||||||||||||||
Loans held for investment, net | 3,523,551 | 3,192,720 | 3,012,943 | 2,900,675 | 2,828,177 | |||||||||||||||
Mortgage servicing rights | 148,851 | 171,255 | 146,080 | 153,237 | 121,722 | |||||||||||||||
Other real estate owned | 7,273 | 7,531 | 8,273 | 11,428 | 11,589 | |||||||||||||||
Federal Home Loan Bank stock, at cost | 40,548 | 44,342 | 44,652 | 40,742 | 34,996 | |||||||||||||||
Premises and equipment, net | 67,323 | 63,738 | 60,544 | 58,111 | 49,808 | |||||||||||||||
Goodwill | 20,366 | 11,945 | 11,945 | 11,945 | 11,945 | |||||||||||||||
Other assets | 179,211 | 147,953 | 169,576 | 162,185 | 147,878 | |||||||||||||||
Total assets | $ | 5,417,252 | $ | 4,894,495 | $ | 4,975,653 | $ | 4,866,248 | $ | 4,604,403 | ||||||||||
Liabilities and shareholders’ equity: | ||||||||||||||||||||
Liabilities: | ||||||||||||||||||||
Deposits | $ | 3,823,027 | $ | 3,231,953 | $ | 3,307,693 | $ | 3,322,653 | $ | 3,344,223 | ||||||||||
Federal Home Loan Bank advances | 883,574 | 1,018,159 | 1,025,745 | 922,832 | 669,419 | |||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | — | — | — | — | 9,450 | |||||||||||||||
Accounts payable and other liabilities | 119,662 | 117,251 | 119,900 | 111,180 | 80,059 | |||||||||||||||
Long-term debt | 61,857 | 61,857 | 61,857 | 61,857 | 61,857 | |||||||||||||||
Total liabilities | 4,888,120 | 4,429,220 | 4,515,195 | 4,418,522 | 4,165,008 | |||||||||||||||
Shareholders’ equity: | ||||||||||||||||||||
Preferred stock, no par value | ||||||||||||||||||||
Authorized 10,000 shares | — | — | — | — | — | |||||||||||||||
Common stock, no par value | ||||||||||||||||||||
Authorized 160,000,000 shares | 511 | 511 | 511 | 511 | 511 | |||||||||||||||
Additional paid-in capital | 273,168 | 222,328 | 222,047 | 221,551 | 221,301 | |||||||||||||||
Retained earnings | 251,292 | 244,885 | 236,207 | 226,246 | 213,870 | |||||||||||||||
Accumulated other comprehensive income (loss) | 4,161 | (2,449 | ) | 1,693 | (582 | ) | 3,713 | |||||||||||||
Total shareholders’ equity | 529,132 | 465,275 | 460,458 | 447,726 | 439,395 | |||||||||||||||
Total liabilities and shareholders’ equity | $ | 5,417,252 | $ | 4,894,495 | $ | 4,975,653 | $ | 4,866,248 | $ | 4,604,403 | ||||||||||
15
HomeStreet, Inc. and Subsidiaries
Average Balances, Yields and Rates Paid (Taxable-equivalent basis)
Quarter Ended March 31, | ||||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||
(in thousands) | Average Balance | Interest | Average Yield/Cost | Average Balance | Interest | Average Yield/Cost | ||||||||||||||||
Assets: | ||||||||||||||||||||||
Interest-earning assets: (1) | ||||||||||||||||||||||
Cash and cash equivalents | $ | 40,038 | $ | 44 | 0.44 | % | $ | 49,376 | $ | 24 | 0.20 | % | ||||||||||
Investment securities | 625,695 | 3,766 | 2.41 | % | 462,762 | 2,980 | 2.58 | % | ||||||||||||||
Loans held for sale | 564,295 | 5,487 | 3.90 | % | 590,751 | 5,664 | 3.84 | % | ||||||||||||||
Loans held for investment | 3,399,479 | 37,278 | 4.38 | % | 2,370,763 | 26,023 | 4.41 | % | ||||||||||||||
Total interest-earning assets | 4,629,507 | 46,575 | 4.02 | % | 3,473,652 | 34,691 | 4.01 | % | ||||||||||||||
Noninterest-earning assets (2) | 402,697 | 341,539 | ||||||||||||||||||||
Total assets | $ | 5,032,204 | $ | 3,815,191 | ||||||||||||||||||
Liabilities and shareholders’ equity: | ||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||
Interest-bearing demand accounts | $ | 415,725 | 492 | 0.48 | % | $ | 176,247 | 180 | 0.41 | % | ||||||||||||
Savings accounts | 296,539 | 254 | 0.34 | % | 232,582 | 265 | 0.46 | % | ||||||||||||||
Money market accounts | 1,187,476 | 1,364 | 0.46 | % | 1,064,567 | 1,135 | 0.43 | % | ||||||||||||||
Certificate accounts | 835,235 | 1,525 | 0.73 | % | 732,189 | 1,029 | 0.57 | % | ||||||||||||||
Total interest-bearing deposits | 2,734,975 | 3,635 | 0.53 | % | 2,205,585 | 2,609 | 0.48 | % | ||||||||||||||
FHLB advances | 896,726 | 1,419 | 0.63 | % | 515,958 | 612 | 0.48 | % | ||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | — | — | — | % | 41,734 | 26 | 0.25 | % | ||||||||||||||
Long-term debt | 61,857 | 311 | 1.99 | % | 61,857 | 265 | 1.74 | % | ||||||||||||||
Total interest-bearing liabilities | 3,693,558 | 5,365 | 0.59 | % | 2,825,134 | 3,512 | 0.50 | % | ||||||||||||||
Noninterest-bearing liabilities | 827,763 | 620,049 | ||||||||||||||||||||
Total liabilities | 4,521,321 | 3,445,183 | ||||||||||||||||||||
Shareholders’ equity | 510,883 | 370,008 | ||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 5,032,204 | $ | 3,815,191 | ||||||||||||||||||
Net interest income (3) | $ | 41,210 | $ | 31,179 | ||||||||||||||||||
Net interest spread | 3.43 | % | 3.51 | % | ||||||||||||||||||
Impact of noninterest-bearing sources | 0.12 | % | 0.09 | % | ||||||||||||||||||
Net interest margin | 3.55 | % | 3.60 | % | ||||||||||||||||||
(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 $519 thousand and $445 thousand for the quarters ended March 31, 2016 and March 31, 2015, 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) | Mar. 31, 2016 | Dec. 31, 2015 | Sept. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | |||||||||||||||
Net interest income | $ | 35,645 | $ | 32,759 | $ | 31,509 | $ | 30,645 | $ | 25,107 | ||||||||||
Provision for credit losses | 1,400 | 1,900 | 700 | 500 | 3,000 | |||||||||||||||
Noninterest income | 4,643 | 8,778 | 6,884 | 3,624 | 10,081 | |||||||||||||||
Noninterest expense | 36,629 | 29,542 | 28,110 | 29,280 | 35,666 | |||||||||||||||
Income (loss) before income taxes | 2,259 | 10,095 | 9,583 | 4,489 | (3,478 | ) | ||||||||||||||
Income tax expense (benefit) | 717 | 1,718 | 2,783 | 1,635 | (3,464 | ) | ||||||||||||||
Net income (loss) | $ | 1,542 | $ | 8,377 | $ | 6,800 | $ | 2,854 | $ | (14 | ) | |||||||||
Net income, excluding merger-related expenses (net of tax) and bargain purchase gain (1) | $ | 4,920 | $ | 8,486 | $ | 6,288 | $ | 5,019 | $ | 1,242 | ||||||||||
Efficiency ratio (2) | 90.92 | % | 71.12 | % | 73.22 | % | 85.44 | % | 101.36 | % | ||||||||||
Core efficiency ratio (1)(3) | 78.02 | % | 69.95 | % | 73.60 | % | 75.91 | % | 82.29 | % | ||||||||||
Full-time equivalent employees (ending) | 903 | 828 | 807 | 757 | 768 | |||||||||||||||
Net gain on mortgage loan origination and sale activities: | ||||||||||||||||||||
Multifamily | $ | 1,529 | $ | 2,384 | $ | 1,488 | $ | 2,314 | $ | 939 | ||||||||||
Other | 279 | 762 | 422 | 141 | 204 | |||||||||||||||
$ | 1,808 | $ | 3,146 | $ | 1,910 | $ | 2,455 | $ | 1,143 | |||||||||||
Production volumes for sale to the secondary market: | ||||||||||||||||||||
Multifamily mortgage originations | $ | 39,094 | $ | 53,279 | $ | 47,342 | $ | 79,789 | $ | 24,428 | ||||||||||
Multifamily mortgage loans sold | 47,970 | 63,779 | 42,333 | 72,459 | 26,173 | |||||||||||||||
(1) | Commercial and Consumer Banking segment net income and core efficiency ratios, excluding merger-related items, is a non-GAAP financial disclosure. The Company uses this non-GAAP financial measure 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. |
(2) | Noninterest expense divided by total net revenue (net interest income and noninterest income). |
(3) | Noninterest expense divided by total net revenue (net interest income and noninterest income), excluding merger-related items. |
Commercial Mortgage Servicing Income
Quarter ended | ||||||||||||||||||||
(in thousands) | Mar. 31, 2016 | Dec. 31, 2015 | Sept. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | |||||||||||||||
Servicing income, net: | ||||||||||||||||||||
Servicing fees and other | $ | 1,441 | $ | 1,258 | $ | 1,181 | $ | 1,135 | $ | 886 | ||||||||||
Amortization of multifamily MSRs | (637 | ) | (551 | ) | (511 | ) | (476 | ) | (454 | ) | ||||||||||
Commercial mortgage servicing income | $ | 804 | $ | 707 | $ | 670 | $ | 659 | $ | 432 | ||||||||||
17
HomeStreet, Inc. and Subsidiaries
Commercial and Consumer Banking Segment (continued)
Commercial Loans Serviced for Others
(in thousands) | Mar. 31, 2016 | Dec. 31, 2015 | Sept. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | |||||||||||||||
Commercial | ||||||||||||||||||||
Multifamily | $ | 946,191 | $ | 924,367 | $ | 866,880 | $ | 840,051 | $ | 773,092 | ||||||||||
Other | 62,566 | 79,513 | 86,567 | 83,982 | 83,574 | |||||||||||||||
Total commercial loans serviced for others | $ | 1,008,757 | $ | 1,003,880 | $ | 953,447 | $ | 924,033 | $ | 856,666 | ||||||||||
Commercial Multifamily Capitalized Mortgage Servicing Rights
Quarter ended | ||||||||||||||||||||
(in thousands) | Mar. 31, 2016 | Dec. 31, 2015 | Sept. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | |||||||||||||||
Beginning balance | $ | 14,651 | $ | 13,379 | $ | 12,649 | $ | 11,013 | $ | 10,885 | ||||||||||
Originations | 1,388 | 1,823 | 1,241 | 2,112 | 582 | |||||||||||||||
Amortization | (637 | ) | (551 | ) | (511 | ) | (476 | ) | (454 | ) | ||||||||||
Ending balance | $ | 15,402 | $ | 14,651 | $ | 13,379 | $ | 12,649 | $ | 11,013 | ||||||||||
Ratio of MSR carrying value to related loans serviced for others | 1.61 | % | 1.54 | % | 1.48 | % | 1.45 | % | 1.36 | % | ||||||||||
MSR servicing fee multiple (1) | 3.54 | 3.42 | 3.34 | 3.29 | 3.16 | |||||||||||||||
Weighted-average note rate (loans serviced for others) | 4.78 | % | 4.77 | % | 4.82 | % | 4.89 | % | 5.14 | % | ||||||||||
Weighted-average servicing fee (loans serviced for others) | 0.45 | % | 0.45 | % | 0.44 | % | 0.44 | % | 0.43 | % | ||||||||||
(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) | Mar. 31, 2016 | Dec. 31, 2015 | Sept. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | |||||||||||||||
Available for sale: | ||||||||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||
Residential | $ | 82,395 | $ | 68,101 | $ | 91,005 | $ | 108,626 | $ | 114,175 | ||||||||||
Commercial | 24,630 | 17,851 | 24,064 | 13,352 | 13,667 | |||||||||||||||
Municipal bonds | 228,924 | 171,869 | 187,083 | 137,250 | 122,434 | |||||||||||||||
Collateralized mortgage obligations: | ||||||||||||||||||||
Residential | 112,176 | 84,497 | 100,228 | 80,612 | 58,476 | |||||||||||||||
Commercial | 83,822 | 79,133 | 43,807 | 19,271 | 19,794 | |||||||||||||||
Corporate debt securities | 80,852 | 78,736 | 82,882 | 82,698 | 79,769 | |||||||||||||||
U.S. Treasury | 41,026 | 40,964 | 41,013 | 41,023 | 41,015 | |||||||||||||||
Total available for sale | $ | 653,825 | $ | 541,151 | $ | 570,082 | $ | 482,832 | $ | 449,330 | ||||||||||
Held to maturity | 33,256 | 31,013 | 31,936 | 26,713 | 26,772 | |||||||||||||||
$ | 687,081 | $ | 572,164 | $ | 602,018 | $ | 509,545 | $ | 476,102 | |||||||||||
Weighted average duration in years | ||||||||||||||||||||
Available for sale | 3.9 | 4.2 | 3.9 | 3.9 | 4.4 | |||||||||||||||
19
Five Quarter Loans Held for Investment
(in thousands) | Mar. 31, 2016 | Dec 31, 2015 | Sept. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | |||||||||||||||
Consumer loans | ||||||||||||||||||||
Single family (1) | $ | 1,231,707 | $ | 1,203,180 | $ | 1,171,967 | $ | 1,182,542 | $ | 1,198,605 | ||||||||||
Home equity and other | 275,405 | 256,373 | 237,491 | 216,635 | 205,200 | |||||||||||||||
1,507,112 | 1,459,553 | 1,409,458 | 1,399,177 | 1,403,805 | ||||||||||||||||
Commercial loans | ||||||||||||||||||||
Commercial real estate | 661,932 | 600,703 | 563,241 | 547,571 | 535,546 | |||||||||||||||
Multifamily | 543,887 | 426,557 | 382,392 | 366,187 | 352,193 | |||||||||||||||
Construction/land development | 629,820 | 583,160 | 529,871 | 454,817 | 402,393 | |||||||||||||||
Commercial business | 213,084 | 154,262 | 158,135 | 166,216 | 164,259 | |||||||||||||||
2,048,723 | 1,764,682 | 1,633,639 | 1,534,791 | 1,454,391 | ||||||||||||||||
3,555,835 | 3,224,235 | 3,043,097 | 2,933,968 | 2,858,196 | ||||||||||||||||
Net deferred loan fees and costs | (979 | ) | (2,237 | ) | (3,232 | ) | (7,516 | ) | (5,103 | ) | ||||||||||
3,554,856 | 3,221,998 | 3,039,865 | 2,926,452 | 2,853,093 | ||||||||||||||||
Allowance for loan losses | (31,305 | ) | (29,278 | ) | (26,922 | ) | (25,777 | ) | (24,916 | ) | ||||||||||
$ | 3,523,551 | $ | 3,192,720 | $ | 3,012,943 | $ | 2,900,675 | $ | 2,828,177 | |||||||||||
(1) | Includes $18.3 million, $21.5 million, $23.8 million, $38.2 million and $52.6 million of single family loans that are carried at fair value at March 31, 2016, December 31, 2015, September 30, 2015, June 30, 2015 and March 31, 2015, respectively. |
20
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) | Mar. 31, 2016 | Dec. 31, 2015 | Sept. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | |||||||||||||||
Beginning balance | $ | 30,659 | $ | 27,887 | $ | 26,448 | $ | 25,628 | $ | 22,524 | ||||||||||
Provision (reversal of provision) for credit losses | 1,400 | 1,900 | 700 | 500 | 3,000 | |||||||||||||||
(Charge-offs), net of recoveries | 364 | 872 | 739 | 320 | 104 | |||||||||||||||
Ending balance | $ | 32,423 | $ | 30,659 | $ | 27,887 | $ | 26,448 | $ | 25,628 | ||||||||||
Components: | ||||||||||||||||||||
Allowance for loan losses | $ | 31,305 | $ | 29,278 | $ | 26,922 | $ | 25,777 | $ | 24,916 | ||||||||||
Allowance for unfunded commitments | 1,118 | 1,381 | 965 | 671 | 712 | |||||||||||||||
Allowance for credit losses | $ | 32,423 | $ | 30,659 | $ | 27,887 | $ | 26,448 | $ | 25,628 | ||||||||||
Allowance as a % of loans held for investment(1) (2) | 0.88 | % | 0.91 | % | 0.89 | % | 0.88 | % | 0.87 | % | ||||||||||
Allowance as a % of nonaccrual loans | 195.51 | % | 170.54 | % | 138.27 | % | 120.97 | % | 117.48 | % | ||||||||||
(1) | Includes loans acquired with bank acquisitions. Excluding acquired loans, allowance for loan losses/total loans was 1.07%, 1.10%, 1.11%, 1.12% and 1.15% at March 31, 2016, December 31, 2015, September 30, 2015, June 30, 2015 and March 31, 2015, respectively. |
(2) | In this calculation, loans held for investment includes loans that are carried at fair value. |
Nonperforming Assets (NPAs) roll-forward
Quarter ended | ||||||||||||||||||||||
(in thousands) | Mar. 31, 2016 | Dec. 31, 2015 | Sept. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | |||||||||||||||||
Beginning balance | $ | 24,699 | $ | 27,743 | $ | 32,736 | $ | 32,798 | $ | 25,462 | ||||||||||||
Additions | 2,401 | 4,484 | 2,118 | 5,919 | 10,793 | (1 | ) | |||||||||||||||
Reductions: | ||||||||||||||||||||||
Recoveries (charge-offs) | 364 | 872 | 739 | 320 | 104 | |||||||||||||||||
OREO sales | (159 | ) | (916 | ) | (2,756 | ) | (623 | ) | (1,375 | ) | ||||||||||||
OREO writedowns and other adjustments | (393 | ) | (127 | ) | (399 | ) | — | (90 | ) | |||||||||||||
Principal paydown, payoff advances and other adjustments | (918 | ) | (5,925 | ) | (2,587 | ) | (4,904 | ) | (864 | ) | ||||||||||||
Transferred back to accrual status | (2,709 | ) | (1,432 | ) | (2,108 | ) | (774 | ) | (1,232 | ) | ||||||||||||
Total reductions | (3,815 | ) | (7,528 | ) | (7,111 | ) | (5,981 | ) | (3,457 | ) | ||||||||||||
Net additions (reductions) | (1,414 | ) | (3,044 | ) | (4,993 | ) | (62 | ) | 7,336 | |||||||||||||
Ending balance(2) | $ | 23,285 | $ | 24,699 | $ | 27,743 | $ | 32,736 | $ | 32,798 | ||||||||||||
(1) | Additions to NPAs included $7.4 million of acquired nonperforming assets during the quarter ended March 31, 2015. |
(2) | Includes $2.6 million, $1.2 million, $1.5 million, $1.2 million and $1.4 million of nonperforming loans guaranteed by the SBA at March 31, 2016, December 31, 2015, September 30, 2015, June 30, 2015 and March 31, 2015, respectively. |
21
HomeStreet, Inc. and Subsidiaries
Commercial and Consumer Banking Segment (continued)
Five Quarter Nonperforming Assets by Loan Class
(in thousands) | Mar. 31, 2016 | Dec 31, 2015 | Sept. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | ||||||||||||||||
Loans accounted for on a nonaccrual basis: | |||||||||||||||||||||
Consumer | |||||||||||||||||||||
Single family | $ | 8,923 | $ | 12,119 | $ | 10,439 | $ | 10,259 | $ | 14,047 | |||||||||||
Home equity and other | 1,503 | 1,576 | 1,608 | 1,533 | 1,306 | ||||||||||||||||
10,426 | 13,695 | 12,047 | 11,792 | 15,353 | |||||||||||||||||
Commercial | |||||||||||||||||||||
Commercial real estate | 3,120 | 2,341 | 2,540 | 3,850 | 3,070 | ||||||||||||||||
Multifamily | 113 | 119 | 1,449 | 1,671 | 1,005 | ||||||||||||||||
Construction/land development | 1,004 | 339 | — | — | 172 | ||||||||||||||||
Commercial business | 1,349 | 674 | 3,434 | 3,995 | 1,609 | ||||||||||||||||
5,586 | 3,473 | 7,423 | 9,516 | 5,856 | |||||||||||||||||
Total loans on nonaccrual | $ | 16,012 | $ | 17,168 | $ | 19,470 | $ | 21,308 | $ | 21,209 | (2) | ||||||||||
Nonaccrual loans as a % of total loans | 0.45 | % | 0.53 | % | 0.64 | % | 0.73 | % | 0.74 | % | |||||||||||
Other real estate owned: | |||||||||||||||||||||
Consumer | |||||||||||||||||||||
Single family | $ | 435 | $ | 301 | $ | 916 | $ | 1,257 | $ | 1,223 | |||||||||||
Commercial | |||||||||||||||||||||
Commercial real estate | 4,070 | 4,071 | 4,113 | 4,332 | 4,527 | ||||||||||||||||
Construction/land development | 2,768 | 3,159 | 3,244 | 5,839 | 5,839 | ||||||||||||||||
6,838 | 7,230 | 7,357 | 10,171 | 10,366 | |||||||||||||||||
Total other real estate owned | $ | 7,273 | $ | 7,531 | $ | 8,273 | $ | 11,428 | $ | 11,589 | |||||||||||
Nonperforming assets: | |||||||||||||||||||||
Consumer | |||||||||||||||||||||
Single family | $ | 9,358 | $ | 12,421 | $ | 11,355 | $ | 11,516 | $ | 15,270 | |||||||||||
Home equity and other | 1,503 | 1,575 | 1,608 | 1,533 | 1,306 | ||||||||||||||||
10,861 | 13,996 | 12,963 | 13,049 | 16,576 | |||||||||||||||||
Commercial | |||||||||||||||||||||
Commercial real estate | 7,190 | 6,412 | 6,653 | 8,182 | 7,597 | ||||||||||||||||
Multifamily | 113 | 119 | 1,449 | 1,671 | 1,005 | ||||||||||||||||
Construction/land development | 3,772 | 3,498 | 3,244 | 5,839 | 6,011 | ||||||||||||||||
Commercial business | 1,349 | 674 | 3,434 | 3,995 | 1,609 | ||||||||||||||||
12,424 | 10,703 | 14,780 | 19,687 | 16,222 | |||||||||||||||||
Total nonperforming assets(1) | $ | 23,285 | $ | 24,699 | $ | 27,743 | $ | 32,736 | $ | 32,798 | |||||||||||
Nonperforming assets as a % of total assets | 0.43 | % | 0.50 | % | 0.56 | % | 0.67 | % | 0.71 | % | |||||||||||
(1) | Includes $2.6 million, $1.2 million, $1.5 million, $1.2 million and $1.4 million of nonperforming loans guaranteed by the SBA at March 31, 2016, December 31, 2015, September 30, 2015, June 30, 2015 and March 31, 2015, respectively. |
(2) | Included in these balances are $7.4 million of acquired nonperforming loans at March 31, 2015. |
22
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 | ||||||||||||||||||
March 31, 2016 | ||||||||||||||||||||||||
Total loans held for investment | $ | 16,075 | $ | 4,244 | $ | 48,518 | $ | 68,837 | $ | 3,486,998 | $ | 3,555,835 | ||||||||||||
Less: FHA/VA loans(1) | 8,329 | 3,354 | 32,487 | 44,170 | 58,714 | 102,884 | ||||||||||||||||||
Less: guaranteed portion of SBA loans(2) | — | — | 2,615 | 2,615 | 9,886 | 12,501 | ||||||||||||||||||
Total loans, excluding FHA/VA and guaranteed portion of SBA loans | $ | 7,746 | $ | 890 | $ | 13,416 | $ | 22,052 | $ | 3,418,398 | $ | 3,440,450 | ||||||||||||
Loans by segment and class, excluding FHA/VA and guaranteed portion of SBA loans: | ||||||||||||||||||||||||
Consumer loans | ||||||||||||||||||||||||
Single family | $ | 2,295 | $ | 819 | $ | 8,923 | $ | 12,037 | $ | 1,116,786 | $ | 1,128,823 | ||||||||||||
Home equity and other | 1,017 | 71 | 1,505 | 2,593 | 272,812 | 275,405 | ||||||||||||||||||
3,312 | 890 | 10,428 | 14,630 | 1,389,598 | 1,404,228 | |||||||||||||||||||
Commercial loans | ||||||||||||||||||||||||
Commercial real estate | 2,433 | — | 1,449 | 3,882 | 651,942 | 655,824 | ||||||||||||||||||
Multifamily | — | — | 113 | 113 | 543,774 | 543,887 | ||||||||||||||||||
Construction/land development | — | — | 1,003 | 1,003 | 628,540 | 629,543 | ||||||||||||||||||
Commercial business | 2,001 | — | 423 | 2,424 | 204,544 | 206,968 | ||||||||||||||||||
4,434 | — | 2,988 | 7,422 | 2,028,800 | 2,036,222 | |||||||||||||||||||
$ | 7,746 | $ | 890 | $ | 13,416 | $ | 22,052 | $ | 3,418,398 | $ | 3,440,450 | |||||||||||||
As a % of total loans, excluding FHA/VA and guaranteed portion of SBA loans | 0.23 | % | 0.03 | % | 0.39 | % | 0.64 | % | 99.36 | % | 100.00 | % | ||||||||||||
December 31, 2015 | ||||||||||||||||||||||||
Total loans held for investment | $ | 8,503 | $ | 3,935 | $ | 53,781 | $ | 66,219 | $ | 3,158,016 | $ | 3,224,235 | ||||||||||||
Less: FHA/VA loans(1) | 5,762 | 2,293 | 36,595 | 44,650 | 55,210 | 99,860 | ||||||||||||||||||
Less: guaranteed portion of SBA loans(2) | — | — | 1,177 | $ | 1,177 | $ | 8,384 | $ | 9,561 | |||||||||||||||
Total loans, excluding FHA/VA and guaranteed portion of SBA loans | $ | 2,741 | $ | 1,642 | $ | 17,186 | $ | 21,569 | $ | 3,102,806 | $ | 3,124,375 | ||||||||||||
Loans by segment and class, excluding FHA/VA and guaranteed portion of SBA loans: | ||||||||||||||||||||||||
Consumer loans | ||||||||||||||||||||||||
Single family | $ | 1,336 | $ | 1,244 | $ | 12,119 | $ | 14,699 | $ | 1,088,621 | $ | 1,103,320 | ||||||||||||
Home equity and other | 1,095 | 398 | 1,576 | 3,069 | 253,304 | 256,373 | ||||||||||||||||||
2,431 | 1,642 | 13,695 | 17,768 | 1,341,925 | 1,359,693 | |||||||||||||||||||
Commercial loans | ||||||||||||||||||||||||
Commercial real estate | 233 | — | 1,420 | 1,653 | 595,331 | 596,984 | ||||||||||||||||||
Multifamily | — | — | 119 | 119 | 426,438 | 426,557 | ||||||||||||||||||
Construction/land development | 77 | — | 339 | 416 | 580,501 | 580,917 | ||||||||||||||||||
Commercial business | — | — | 436 | 436 | 150,227 | 150,663 | ||||||||||||||||||
310 | — | 2,314 | 2,624 | 1,752,497 | 1,755,121 | |||||||||||||||||||
$ | 2,741 | $ | 1,642 | $ | 16,009 | $ | 20,392 | $ | 3,094,422 | $ | 3,114,814 | |||||||||||||
As a % of total loans, excluding FHA/VA and guaranteed portion of SBA loans | 0.09 | % | 0.05 | % | 0.51 | % | 0.65 | % | 99.35 | % | 100.00 | % | ||||||||||||
(1) | Represents loans whose repayments are insured by the FHA or guaranteed by the VA. |
(2) | Represents that portion of loans whose repayments are guaranteed by the SBA. |
23
HomeStreet, Inc. and Subsidiaries
Commercial and Consumer Banking Segment (continued)
Troubled Debt Restructurings (TDRs) by Accrual and Nonaccrual Status
(in thousands) | Mar. 31, 2016 | Dec 31, 2015 | Sept. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | |||||||||||||||
Accrual | ||||||||||||||||||||
Consumer loans | ||||||||||||||||||||
Single family(1) | $ | 76,892 | $ | 74,685 | $ | 74,408 | $ | 75,655 | $ | 74,126 | ||||||||||
Home equity and other | 1,252 | 1,340 | 1,395 | 1,937 | 2,102 | |||||||||||||||
78,144 | 76,025 | 75,803 | 77,592 | 76,228 | ||||||||||||||||
Commercial loans | ||||||||||||||||||||
Commercial real estate | — | — | 4,431 | 19,287 | 19,516 | |||||||||||||||
Multifamily | 2,995 | 3,014 | 3,019 | 3,041 | 3,059 | |||||||||||||||
Construction/land development | 1,876 | 3,714 | 4,332 | 4,601 | 5,321 | |||||||||||||||
Commercial business | 1,580 | 1,658 | 1,784 | 1,869 | 1,492 | |||||||||||||||
6,451 | 8,386 | 13,566 | 28,798 | 29,388 | ||||||||||||||||
$ | 84,595 | $ | 84,411 | $ | 89,369 | $ | 106,390 | $ | 105,616 | |||||||||||
Nonaccrual | ||||||||||||||||||||
Consumer loans | ||||||||||||||||||||
Single family | $ | 1,642 | $ | 2,452 | $ | 2,158 | $ | 1,419 | $ | 1,443 | ||||||||||
Home equity and other | 177 | 271 | 181 | 230 | 230 | |||||||||||||||
1,819 | 2,723 | 2,339 | 1,649 | 1,673 | ||||||||||||||||
Commercial loans | ||||||||||||||||||||
Commercial real estate | 995 | 1,023 | 1,060 | 1,087 | 1,121 | |||||||||||||||
Construction/land development | 707 | — | — | — | — | |||||||||||||||
Commercial business | 165 | 185 | 195 | 205 | 228 | |||||||||||||||
1,867 | 1,208 | 1,255 | 1,292 | 1,349 | ||||||||||||||||
$ | 3,686 | $ | 3,931 | $ | 3,594 | $ | 2,941 | $ | 3,022 | |||||||||||
Total | ||||||||||||||||||||
Consumer loans | ||||||||||||||||||||
Single family(1) | $ | 78,534 | $ | 77,137 | $ | 76,566 | $ | 77,074 | $ | 75,569 | ||||||||||
Home equity and other | 1,429 | 1,611 | 1,576 | 2,167 | 2,332 | |||||||||||||||
79,963 | 78,748 | 78,142 | 79,241 | 77,901 | ||||||||||||||||
Commercial loans | ||||||||||||||||||||
Commercial real estate | 995 | 1,023 | 5,491 | 20,374 | 20,637 | |||||||||||||||
Multifamily | 2,995 | 3,014 | 3,019 | 3,041 | 3,059 | |||||||||||||||
Construction/land development | 2,583 | 3,714 | 4,332 | 4,601 | 5,321 | |||||||||||||||
Commercial business | 1,745 | 1,843 | 1,979 | 2,074 | 1,720 | |||||||||||||||
8,318 | 9,594 | 14,821 | 30,090 | 30,737 | ||||||||||||||||
$ | 88,281 | $ | 88,342 | $ | 92,963 | $ | 109,331 | $ | 108,638 | |||||||||||
(1) | Includes loan balances insured by the FHA or guaranteed by the VA of $32.9 million, $29.6 million, $29.1 million, $28.4 million and $25.4 million at March 31, 2016, December 31, 2015, September 30, 2015, June 30, 2015 and March 31, 2015, respectively. |
24
HomeStreet, Inc. and Subsidiaries
Commercial and Consumer Banking Segment (continued)
Troubled Debt Restructurings (TDRs) - Re-Defaults
Quarter ended | ||||||||||||||||||||
(in thousands) | Mar. 31, 2016 | Dec 31, 2015 | Sept. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | |||||||||||||||
Recorded investment of re-defaults(1) | ||||||||||||||||||||
Consumer loans | ||||||||||||||||||||
Single family | $ | 271 | $ | — | $ | 552 | $ | 220 | $ | 1,498 | ||||||||||
Home equity and other | — | — | 68 | — | — | |||||||||||||||
$ | 271 | $ | — | $ | 620 | $ | 220 | $ | 1,498 | |||||||||||
(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. |
25
HomeStreet, Inc. and Subsidiaries
Commercial and Consumer Banking Segment (continued)
Five Quarter Deposits
(in thousands) | Mar. 31, 2016 | Dec 31, 2015 | Sept. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | |||||||||||||||
Deposits by Product: | ||||||||||||||||||||
Noninterest-bearing accounts - checking and savings | $ | 452,267 | $ | 370,523 | $ | 372,070 | $ | 387,899 | $ | 305,738 | ||||||||||
Interest-bearing transaction and savings deposits: | ||||||||||||||||||||
NOW accounts | 495,467 | 408,477 | 452,482 | 453,366 | 435,178 | |||||||||||||||
Statement savings accounts due on demand | 300,952 | 292,092 | 296,983 | 300,214 | 307,731 | |||||||||||||||
Money market accounts due on demand | 1,244,064 | 1,155,464 | 1,140,660 | 1,134,687 | 1,163,656 | |||||||||||||||
Total interest-bearing transaction and savings deposits | 2,040,483 | 1,856,033 | 1,890,125 | 1,888,267 | 1,906,565 | |||||||||||||||
Total transaction and savings deposits | 2,492,750 | 2,226,556 | 2,262,195 | 2,276,166 | 2,212,303 | |||||||||||||||
Certificates of deposit | 901,559 | 732,892 | 719,208 | 753,327 | 751,333 | |||||||||||||||
Noninterest-bearing accounts - other | 428,718 | 272,505 | 326,290 | 293,160 | 380,587 | |||||||||||||||
Total deposits | $ | 3,823,027 | $ | 3,231,953 | $ | 3,307,693 | $ | 3,322,653 | $ | 3,344,223 | ||||||||||
Percent of total deposits: | ||||||||||||||||||||
Noninterest-bearing accounts - checking and savings | 11.8 | % | 11.5 | % | 11.2 | % | 11.7 | % | 9.1 | % | ||||||||||
Interest-bearing transaction and savings deposits: | ||||||||||||||||||||
NOW accounts | 13.0 | 12.6 | 13.7 | 13.6 | 13.0 | |||||||||||||||
Statement savings accounts due on demand | 7.9 | 9.0 | 9.0 | 9.0 | 9.2 | |||||||||||||||
Money market accounts due on demand | 32.5 | 35.8 | 34.5 | 34.2 | 34.8 | |||||||||||||||
Total interest-bearing transaction and savings deposits | 53.4 | 57.4 | 57.2 | 56.8 | 57.0 | |||||||||||||||
Total transaction and savings deposits | 65.2 | 68.9 | 68.4 | 68.5 | 66.1 | |||||||||||||||
Certificates of deposit | 23.6 | 22.7 | 21.7 | 22.7 | 22.5 | |||||||||||||||
Noninterest-bearing accounts - other | 11.2 | 8.4 | 9.9 | 8.8 | 11.4 | |||||||||||||||
Total deposits | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||
26
HomeStreet, Inc. and Subsidiaries
Mortgage Banking Segment
Quarter ended | ||||||||||||||||||||
(in thousands) | Mar. 31, 2016 | Dec 31, 2015 | Sept. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | |||||||||||||||
Net interest income | $ | 5,044 | $ | 6,981 | $ | 8,125 | $ | 7,585 | $ | 5,627 | ||||||||||
Noninterest income | 67,065 | 56,631 | 60,584 | 69,363 | 65,292 | |||||||||||||||
Noninterest expense | 64,722 | 63,183 | 63,916 | 63,055 | 53,816 | |||||||||||||||
Income before income taxes | 7,387 | 429 | 4,793 | 13,893 | 17,103 | |||||||||||||||
Income tax expense | 2,522 | 128 | 1,632 | 4,371 | 6,785 | |||||||||||||||
Net income | $ | 4,865 | $ | 301 | $ | 3,161 | $ | 9,522 | $ | 10,318 | ||||||||||
Efficiency ratio (1) | 89.76 | % | 99.33 | % | 93.02 | % | 81.94 | % | 75.88 | % | ||||||||||
Full-time equivalent employees (ending) | 1,361 | 1,311 | 1,293 | 1,207 | 1,061 | |||||||||||||||
Production volumes for sale to the secondary market: | ||||||||||||||||||||
Single family mortgage closed loan volume (2)(3) | $ | 1,573,148 | $ | 1,648,735 | $ | 1,934,151 | $ | 2,022,656 | $ | 1,606,893 | ||||||||||
Single family mortgage interest rate lock commitments(2) | $ | 1,803,703 | $ | 1,340,148 | $ | 1,806,767 | $ | 1,882,955 | $ | 1,901,238 | ||||||||||
Single family mortgage loans sold(2) | $ | 1,471,583 | $ | 1,830,768 | $ | 1,965,223 | $ | 1,894,387 | $ | 1,316,959 | ||||||||||
(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. |
(3) | Represents single family mortgage production volume designated for sale to the secondary market during each respective period. |
Mortgage Banking Net Gain on Sale to the Secondary Market
Quarter ended | ||||||||||||||||||||
(in thousands) | Mar. 31, 2016 | Dec 31, 2015 | Sept. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | |||||||||||||||
Net gain on mortgage loan origination and sale activities:(1) | ||||||||||||||||||||
Single family: | ||||||||||||||||||||
Servicing value and secondary market gains(2) | $ | 54,127 | $ | 37,727 | $ | 49,613 | $ | 61,884 | $ | 56,289 | ||||||||||
Loan origination and funding fees | 5,328 | 5,769 | 6,362 | 5,635 | 4,455 | |||||||||||||||
Total mortgage banking net gain on mortgage loan origination and sale activities(1) | $ | 59,455 | $ | 43,496 | $ | 55,975 | $ | 67,519 | $ | 60,744 | ||||||||||
Composite Margin (in basis points): | ||||||||||||||||||||
Servicing value and secondary market gains / interest rate lock commitments(3) | 300 | 281 | 275 | 316 | 306 | |||||||||||||||
Loan origination and funding fees / retail mortgage originations(4) | 36 | 38 | 36 | 31 | 30 | |||||||||||||||
Composite Margin | 336 | 319 | 311 | 347 | (5) | 336 | ||||||||||||||
(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) | Servicing value and secondary marketing gains have been aggregated and are stated as a percentage of interest rate lock commitments. |
(4) | 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. In the first quarter of 2015, the Company implemented a new pricing structure where origination fees are no longer charged at funding and instead included in the rate/price of the loan. |
(5) | In the second quarter of 2015, we recognized an additional $2.4 million of gain on mortgage loan origination and sale revenue related to the correction of an error in the mortgage loan pipeline valuation. The Composite Margin in the table above has been adjusted to eliminate the impact of this correction. |
27
HomeStreet, Inc. and Subsidiaries
Mortgage Banking Segment (continued)
Mortgage Banking Servicing Income
Quarter ended | ||||||||||||||||||||
(in thousands) | Mar. 31, 2016 | Dec 31, 2015 | Sept. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | |||||||||||||||
Servicing income, net: | ||||||||||||||||||||
Servicing fees and other | $ | 11,089 | $ | 10,683 | $ | 9,955 | $ | 8,922 | $ | 8,177 | ||||||||||
Changes in fair value of single family MSRs due to modeled amortization (1) | (7,257 | ) | (7,313 | ) | (8,478 | ) | (9,012 | ) | (9,235 | ) | ||||||||||
3,832 | 3,370 | 1,477 | (90 | ) | (1,058 | ) | ||||||||||||||
Risk management, single family MSRs: | ||||||||||||||||||||
Changes in fair value of MSR due to changes in model inputs and/or assumptions (2) | (28,214 | ) | 14,779 | (19,396 | ) | 18,483 | (7,311 | ) | ||||||||||||
Net gain (loss) from derivatives economically hedging MSR | 31,707 | (5,321 | ) | 22,017 | (17,221 | ) | 12,234 | |||||||||||||
3,493 | 9,458 | 2,621 | 1,262 | 4,923 | ||||||||||||||||
Mortgage Banking servicing income | $ | 7,325 | $ | 12,828 | $ | 4,098 | $ | 1,172 | $ | 3,865 | ||||||||||
(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) | Mar. 31, 2016 | Dec 31, 2015 | Sept. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | |||||||||||||||
Single family | ||||||||||||||||||||
U.S. government and agency | $ | 15,302,363 | $ | 14,628,596 | $ | 13,590,706 | $ | 12,361,841 | $ | 11,275,491 | ||||||||||
Other | 678,569 | 719,215 | 680,481 | 618,204 | 634,763 | |||||||||||||||
Total single family loans serviced for others | $ | 15,980,932 | $ | 15,347,811 | $ | 14,271,187 | $ | 12,980,045 | $ | 11,910,254 | ||||||||||
28
HomeStreet, Inc. and Subsidiaries
Mortgage Banking Segment (continued)
Single Family Capitalized Mortgage Servicing Rights
Quarter ended | ||||||||||||||||||||
(in thousands) | Mar. 31, 2016 | Dec 31, 2015 | Sept. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | |||||||||||||||
Beginning balance | $ | 156,604 | $ | 132,701 | $ | 140,588 | $ | 110,709 | $ | 112,439 | ||||||||||
Additions and amortization: | ||||||||||||||||||||
Originations | 12,316 | 16,437 | 19,984 | 20,405 | 14,813 | |||||||||||||||
Purchases | — | — | 3 | 3 | 3 | |||||||||||||||
Changes due to modeled amortization (1) | (7,257 | ) | (7,313 | ) | (8,478 | ) | (9,012 | ) | (9,235 | ) | ||||||||||
Net additions and amortization | 5,059 | 9,124 | 11,509 | 11,396 | 5,581 | |||||||||||||||
Changes in fair value due to changes in model inputs and/or assumptions (2) | (28,214 | ) | 14,779 | (19,396 | ) | 18,483 | (7,311 | ) | ||||||||||||
Ending balance | $ | 133,449 | $ | 156,604 | $ | 132,701 | $ | 140,588 | $ | 110,709 | ||||||||||
Ratio of MSR carrying value to related loans serviced for others | 0.84 | % | 1.03 | % | 0.93 | % | 1.08 | % | 0.93 | % | ||||||||||
MSR servicing fee multiple (3) | 2.91 | 3.59 | 3.21 | 3.72 | 3.17 | |||||||||||||||
Weighted-average note rate (loans serviced for others) | 4.07 | % | 4.08 | % | 4.09 | % | 4.10 | % | 4.14 | % | ||||||||||
Weighted-average servicing fee (loans serviced for others) | 0.29 | % | 0.29 | % | 0.29 | % | 0.29 | % | 0.29 | % | ||||||||||
(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.
Reconciliations of non-GAAP results of operations to the nearest comparable GAAP measures:
Quarter Ended | ||||||||||||||||||||
(dollars in thousands, except share data) | Mar. 31, 2016 | Dec. 31, 2015 | Sept. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | |||||||||||||||
Shareholders' equity | $ | 529,132 | $ | 465,275 | $ | 460,458 | $ | 447,726 | $ | 439,395 | ||||||||||
Less: Goodwill and other intangibles | (29,126 | ) | (20,266 | ) | (20,250 | ) | (20,778 | ) | (21,324 | ) | ||||||||||
Tangible shareholders' equity | $ | 500,006 | $ | 445,009 | $ | 440,208 | $ | 426,948 | $ | 418,071 | ||||||||||
Common shares outstanding | 24,550,219 | 22,076,534 | 22,061,702 | 22,065,249 | 22,038,748 | |||||||||||||||
Book value per share | $ | 21.55 | $ | 21.08 | $ | 20.87 | $ | 20.29 | $ | 19.94 | ||||||||||
Impact of goodwill and other intangibles | (1.18 | ) | (0.92 | ) | (0.92 | ) | (0.94 | ) | (0.97 | ) | ||||||||||
Tangible book value per share | $ | 20.37 | $ | 20.16 | $ | 19.95 | $ | 19.35 | $ | 18.97 | ||||||||||
Average shareholders' equity | $ | 510,883 | $ | 470,635 | $ | 460,489 | $ | 455,721 | $ | 370,008 | ||||||||||
Less: Average goodwill and other intangibles | (26,645 | ) | (20,195 | ) | (20,596 | ) | (21,135 | ) | (16,698 | ) | ||||||||||
Average tangible shareholders' equity | $ | 484,238 | $ | 450,440 | $ | 439,893 | $ | 434,586 | $ | 353,310 | ||||||||||
Return on average shareholders’ equity | 5.02 | % | 7.38 | % | 8.65 | % | 10.86 | % | 11.14 | % | ||||||||||
Impact of goodwill and other intangibles | 0.27 | % | 0.33 | % | 0.41 | % | 0.53 | % | 0.53 | % | ||||||||||
Return on average tangible shareholders' equity | 5.29 | % | 7.71 | % | 9.06 | % | 11.39 | % | 11.67 | % | ||||||||||
Return on average shareholders' equity | 5.02 | % | 7.38 | % | 8.65 | % | 10.86 | % | 11.14 | % | ||||||||||
Impact of merger-related expenses (net of tax) and bargain purchase gain | 2.64 | % | 0.09 | % | (0.44 | )% | 1.90 | % | 1.36 | % | ||||||||||
Return on average shareholders' equity, excluding merger-related expenses (net of tax) and bargain purchase gain | 7.66 | % | 7.47 | % | 8.21 | % | 12.76 | % | 12.50 | % | ||||||||||
Return on average assets | 0.51 | % | 0.71 | % | 0.83 | % | 1.06 | % | 1.08 | % | ||||||||||
Impact of merger-related expenses (net of tax) and bargain purchase gain | 0.27 | % | 0.01 | % | (0.05 | )% | 0.19 | % | 0.13 | % | ||||||||||
Return on average assets, excluding merger-related expenses (net of tax) and bargain purchase gain | 0.78 | % | 0.72 | % | 0.78 | % | 1.25 | % | 1.21 | % | ||||||||||
30
The press release contains certain non-GAAP financial disclosures for consolidated net income, excluding merger-related items, net of tax, noninterest income and noninterest expense, excluding merger-related items, diluted earnings per share, excluding merger-related items, net of tax, and Commercial and Consumer Banking segment net income, excluding merger-related items, net of tax. 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 | ||||||||||||||||||||
(in thousands) | Mar. 31, 2016 | Dec 31, 2015 | Sept. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | |||||||||||||||
Consolidated results: | ||||||||||||||||||||
Net income | $ | 6,407 | $ | 8,678 | $ | 9,961 | $ | 12,376 | $ | 10,304 | ||||||||||
Impact of merger-related expenses (net of tax) and bargain purchase gain | 3,378 | 109 | (512 | ) | 2,165 | 1,256 | ||||||||||||||
Net income, excluding merger-related expenses (net of tax) and bargain purchase gain | $ | 9,785 | $ | 8,787 | $ | 9,449 | $ | 14,541 | $ | 11,560 | ||||||||||
Net interest income | $ | 40,691 | $ | 39,740 | $ | 39,634 | $ | 38,230 | $ | 30,734 | ||||||||||
Noninterest income | $ | 71,708 | $ | 65,409 | $ | 67,468 | $ | 72,987 | $ | 75,373 | ||||||||||
Deduct: impact of bargain purchase gain | — | (381 | ) | (796 | ) | 79 | (6,628 | ) | ||||||||||||
Noninterest income, excluding bargain purchase gain | $ | 71,708 | $ | 65,028 | $ | 66,672 | $ | 73,066 | $ | 68,745 | ||||||||||
Noninterest expense | $ | 101,353 | $ | 92,725 | $ | 92,026 | $ | 92,335 | $ | 89,482 | ||||||||||
Deduct: merger-related expenses | (5,198 | ) | (754 | ) | (437 | ) | (3,208 | ) | (12,165 | ) | ||||||||||
Noninterest expense, excluding merger-related expenses | $ | 96,155 | $ | 91,971 | $ | 91,589 | $ | 89,127 | $ | 77,317 | ||||||||||
Efficiency ratio | 90.17 | % | 88.18 | % | 85.92 | % | 83.02 | % | 84.33 | % | ||||||||||
Impact of merger-related expenses and bargain purchase gain | 4.62 | % | 0.39 | % | (0.24 | )% | 2.94 | % | 6.61 | % | ||||||||||
Core efficiency ratio, excluding merger-related expenses and bargain purchase gain | 85.55 | % | 87.79 | % | 86.16 | % | 80.08 | % | 77.72 | % | ||||||||||
Diluted earnings per common share | $ | 0.27 | $ | 0.39 | $ | 0.45 | $ | 0.56 | $ | 0.59 | ||||||||||
Impact of merger-related expenses (net of tax) and bargain purchase gain | 0.14 | — | (0.03 | ) | 0.09 | 0.08 | ||||||||||||||
Diluted earnings per common share, excluding merger-related expenses (net of tax) and bargain purchase gain | $ | 0.41 | $ | 0.39 | $ | 0.42 | $ | 0.65 | $ | 0.67 | ||||||||||
Return on average tangible shareholders' equity | 5.29 | % | 7.71 | % | 9.06 | % | 11.39 | % | 11.67 | % | ||||||||||
Impact of merger-related expenses (net of tax) and bargain purchase gain | 2.79 | % | 0.09 | % | (0.47 | )% | 1.99 | % | 1.42 | % | ||||||||||
Return on average tangible shareholders' equity, excluding merger-related expenses (net of tax) and bargain purchase gain | 8.08 | % | 7.80 | % | 8.59 | % | 13.38 | % | 13.09 | % | ||||||||||
Commercial and Consumer Banking Segment results: | ||||||||||||||||||||
Net income (loss) | $ | 1,542 | $ | 8,377 | $ | 6,800 | $ | 2,854 | $ | (14 | ) | |||||||||
Impact of merger-related expenses (net of tax) and bargain purchase gain | 3,378 | 109 | (512 | ) | 2,165 | 1,256 | ||||||||||||||
Net income, excluding merger-related expenses (net of tax) and bargain purchase gain | $ | 4,920 | $ | 8,486 | $ | 6,288 | $ | 5,019 | $ | 1,242 | ||||||||||
Net interest income | $ | 35,645 | $ | 32,759 | $ | 31,509 | $ | 30,645 | $ | 25,107 | ||||||||||
Noninterest income | $ | 4,643 | $ | 8,778 | $ | 6,884 | $ | 3,624 | $ | 10,081 | ||||||||||
Deduct: impact of bargain purchase gain | — | (381 | ) | (796 | ) | 79 | (6,628 | ) | ||||||||||||
Noninterest income, excluding bargain purchase gain | $ | 4,643 | $ | 8,397 | $ | 6,088 | $ | 3,703 | $ | 3,453 | ||||||||||
Noninterest expense | $ | 36,629 | $ | 29,542 | $ | 28,110 | $ | 29,280 | $ | 35,666 | ||||||||||
Deduct: merger-related expenses | (5,198 | ) | (754 | ) | (437 | ) | (3,208 | ) | (12,165 | ) | ||||||||||
Noninterest expense, excluding merger-related expenses | $ | 31,431 | $ | 28,788 | $ | 27,673 | $ | 26,072 | $ | 23,501 | ||||||||||
Efficiency ratio | 90.92 | % | 71.12 | % | 73.22 | % | 85.44 | % | 101.36 | % | ||||||||||
Impact of merger-related expenses and bargain purchase gain | 12.90 | % | 1.17 | % | (0.38 | )% | 9.53 | % | 19.07 | % | ||||||||||
Core efficiency ratio, excluding merger-related expenses and bargain purchase gain | 78.02 | % | 69.95 | % | 73.60 | % | 75.91 | % | 82.29 | % | ||||||||||
31