Net Income of $11.2 million, or $0.41 per
Diluted Share
HomeStreet, Inc. (Nasdaq:HMST) (including its consolidated
subsidiaries, the “Company” or “HomeStreet”), the parent company of
HomeStreet Bank, today announced net income of $11.2 million, or
$0.41 per diluted share for the quarter ended June 30, 2017,
compared with net income of $9.0 million, or $0.33 per diluted
share for the quarter ended March 31, 2017 and $21.7 million,
or $0.87 per diluted share for the quarter ended June 30, 2016.
Core net income(1) for the quarter ended June 30, 2017 was $11.3
million, or $0.42 per diluted share, compared with core net
income(1) of $9.0 million, or $0.33 per diluted share, for the
quarter ended March 31, 2017 and $22.4 million, or $0.90 per
diluted share, for the quarter ended June 30, 2016.
Key developments and results of Q2 2017 include:
- Strong performance continued in our
Commercial and Consumer Banking segment, with net income for the
second quarter of 2017 of $9.4 million compared with $9.3 million
for the first quarter of 2017 and $7.1 million in the second
quarter of 2016
- Total assets of $6.59 billion grew
$185.4 million, or 3%, from $6.40 billion at March 31,
2017
- Loans held for investment of $4.18
billion, grew by $196.9 million, or 5%, from $3.99 billion at
March 31, 2017
- Total commercial business related
deposits increased $69.1 million, or 6%, in the second quarter of
2017 compared to the first quarter of 2017
- Two de novo retail deposit branches
were opened in Baldwin Park, California and Redmond, Washington and
an agreement was announced in June 2017 to purchase one retail
deposit branch and related deposits in El Cajon (San Diego County),
CA
- Lower levels of mortgage loan
origination volume and profit margins drove seasonally lower than
expected earnings in the mortgage banking segment
“Second quarter 2017 results demonstrated the benefit of our
investment in growth and diversification of our business lines,”
said Mark K. Mason, Chairman, President and Chief Executive
Officer. “While the Mortgage Banking segment continues to suffer
from a limited supply of available housing in our markets, this
effect was partially offset by strong growth in our Commercial
& Consumer Banking segment. Loans held for investment increased
by 5% from the first quarter of 2017, and total deposits increased
by 3%, with business deposit balances increasing by 6% during the
quarter. During the quarter we opened retail deposit branches in
Baldwin Park, California, and Redmond, Washington. We’re proud to
report that as a result of this growth, the net interest margin
increased by six basis points from the first quarter of 2017. Asset
quality also remains strong with nonperforming assets declining to
0.30% of total assets, representing the lowest absolute and
relative levels of problem assets since 2006.
“We find ourselves in a more challenging mortgage market than we
anticipated at the start of this year. Historically, the second
quarter is the strongest quarter of the year for mortgage volume
and mortgage banking profitability. Lower than expected single
family mortgage origination volume and profit margins this quarter
were driven by extremely low levels of new and resale homes
available for sale in our markets. Competitively, our market share
actually improved this quarter. As a result of the significantly
lower mortgage origination volume than anticipated, we are
implementing cost reduction strategies that included reducing
mortgage origination personnel by 73 employees during the quarter.
If lending volumes do not support our current capacity or profit
margins overall, or in specific markets, we will continue to
downsize our origination capacity and streamline operations.
“We are committed to being a leading mortgage originator in our
markets and our retail focus, broad product mix, and competitive
pricing continue to attract the best retail originators in our
markets. These strengths will allow us to successfully manage
through today’s market challenges and maintain our status as a
market leading mortgage originator and servicer.”
For details on the complete earnings release, please refer to
the Company's investor relations website at
http://ir.homestreet.com as well as the Company's Form 8-K filing
at www.sec.gov.
(1) For notes on non-GAAP financial measures, see pages 11 and
33 in the full earnings release.
Conference Call
HomeStreet, Inc., the parent company of HomeStreet Bank, will
conduct a quarterly earnings conference call on Tuesday, July 25,
2017 at 1:00 p.m. EDT. Mark K. Mason, President and CEO, and Mark
R. Ruh, Senior Vice President and Interim CFO, will discuss second
quarter 2017 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/10109694 or may join the
call by dialing 1-877-508-9589 (1-855-669-9657 in Canada) shortly
before 1:00 p.m. EST.
A rebroadcast will be available approximately one hour after the
conference call by dialing 1-877-344-7529 and entering passcode
10109694.
The information to be discussed in the conference call will be
available on the Company's web site after the market closes on
Monday, July 24, 2017.
About HomeStreet
Now in its 97th 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, as well as plans and expectations for future actions and
events. 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 management's control. 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, or 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 acquisitions, grow our franchise and capitalize on market
opportunities, meet our growth targets, maintain our position in
the industry and generate positive net income and cash flow. These
limitations and risks include without limitation changes in general
political and economic conditions that impact our markets and our
business, actions by the Federal Reserve Board and financial market
conditions that affect monetary and fiscal policy, regulatory and
legislative actions that may increase capital requirements or
otherwise constrain our ability to do business, including new or
changing interpretations of existing statutes or regulations and
restrictions that could be imposed by our regulators on certain
aspects of our operations or on our growth initiatives and
acquisition activities, our ability to maintain electronic and
physical security of our customer data and our information systems,
our ability to maintain compliance with current and evolving 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, increases in the competition in our
industry and across our markets and the extent of our success in
problem asset resolution efforts. The results of our acquisitions
may fall short of our financial and operational expectations. We
may not realize the benefits expected from completed bank and
branch acquisitions in the anticipated time frame (or at all), and
completing our acquisitions and integrating acquired operations may
take longer or prove more expensive than anticipated. We may not be
able to achieve the full benefit of cost efficiency programs we
have previously implemented or those management may develop in the
future. 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
Company directly, 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
Quarterly Report on Form 10-Q for the fiscal quarter ended March
31, 2017 and updated from time to time in our filings with the
Securities and Exchange Commission. We strongly recommend readers
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, 2016 has been
derived from our audited financial statements for the year then
ended as included in our 2016 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, 2016, as contained in the Company's
Annual Report on Form 10-K for such fiscal year.
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
2017 net income to the corresponding periods of fiscal 2016. We
believe this information is useful to investors who are seeking to
exclude the after-tax impact of acquisition-related expenses, of
which we recorded in connection with our merger with OCBB on
February 1, 2016, with our acquisition of two retail deposit
branches in Lake Oswego, Oregon on August 12, 2016 and two retail
deposit branches in Southern California on November 11, 2016. We
also have presented adjusted expenses, which eliminate costs
incurred in connection with these acquisitions. Similarly, we have
provided information about our balance sheet items, including total
loans, total deposits and total assets, adjusted in each case to
eliminate acquisition-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, return on average
tangible shareholders’ equity and tangible book value per share of
common stock which are non-GAAP financial measures. Tangible common
shareholders' equity is calculated by deducting goodwill and
intangible assets (excluding loan servicing rights) from
shareholders' equity. 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.
Our management believes that these non-GAAP financial measures
provide meaningful supplemental information regarding our results
of core operations by excluding certain acquisition-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, see
the tables captioned "Reconciliations of non-GAAP results of
operations to the nearest comparable GAAP measures," included at
the end of the full release.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170724006265/en/
HomeStreet, Inc.Gerhard Erdelji,
206-515-4039Gerhard.Erdelji@HomeStreet.comhttp://ir.homestreet.com
HomeStreet (NASDAQ:HMST)
Historical Stock Chart
From Mar 2024 to Apr 2024
HomeStreet (NASDAQ:HMST)
Historical Stock Chart
From Apr 2023 to Apr 2024