HomeStreet, Inc. (Nasdaq:HMST) (including its consolidated
subsidiaries, the “Company” or “HomeStreet”), the parent company of
HomeStreet Bank, today announced net income of $68.9 million, or
$2.54 per diluted share for the year ended December 31, 2017,
compared with net income of $58.2 million, or $2.34 per diluted
share for the year ended December 31, 2016. Core net income(1) for
the year ended December 31, 2017 was $48.4 million, or $1.79 per
diluted share, compared with core net income(1) of $62.8 million,
or $2.53 per diluted share for the year ended December 31, 2016.
Net income was $34.9 million, or $1.29 per diluted share for the
fourth quarter 2017, compared with net income of $13.8 million, or
$0.51 per diluted share for the third quarter 2017, and $2.3
million, or $0.09 per diluted share for the fourth quarter 2016.
Core net income(1) for the fourth quarter 2017, was $11.5 million,
or $0.42 per diluted share, compared with core net income(1) of
$16.6 million, or $0.61 per diluted share, for the third quarter
2017, and $2.6 million, or $0.10 per diluted share, for the fourth
quarter 2016.
Key developments and 2017 results include:
- Record net income of $42.1 million in
our Commercial and Consumer Banking segment
- Tax Cuts and Jobs Act legislation
enacted in December 2017 resulted in the recognition of a one-time,
non-cash tax benefit of $23.3 million for 2017; 2018 estimated
consolidated effective tax rate between 21% and 22%
- Loans held for investment grew to $4.53
billion, an increase of $680.2 million, or 18%, from $3.85 billion
at year-end 2016
- Four new retail deposit branches -
three de novo branches and one acquired
“In 2017, we continued executing on our strategy of building a
regional bank with representation in major coastal markets in the
Western US, and I’m very proud of the hard work and dedication of
our HomeStreet employees in making this progress,” said Mark K.
Mason, Chairman, President, and Chief Executive Officer. “Our
Commercial and Consumer Banking segment reported record net income
for 2017 driven primarily by an 18% increase in loans held for
investment, all of which was from organic growth. Increased net
gain on the sale of commercial real estate and SBA loans
contributed to 19% growth in noninterest income during the year,
and asset quality continued to be strong with nonperforming assets
decreasing to 0.23% of total assets, representing our lowest
absolute and relative levels of problem assets since 2006.”
“While the results of our Mortgage Banking segment continue to
be adversely impacted by the limited supply of new and resale
housing in many of our primary markets, as well as the seasonal
production slowdown we typically experience at the end of the year,
we have begun to see the benefits of the restructuring we
implemented during 2017. Direct origination expenses are lower and
the successful implementation of our new loan origination system
during 2017 will create opportunities for additional operating
efficiencies going forward. We will continue to focus on optimizing
our mortgage banking capacity within our existing geographic
footprint and remain committed to being a leading mortgage
originator and servicer in our markets.”
“Finally, we believe that the enactment of tax reform in the
fourth quarter of 2017 will help grow jobs, wages, and ultimately
the economy. In the short term, as a result of a reduction in the
Federal corporate income tax rate, HomeStreet recognized a
one-time, non-cash income tax benefit of approximately $23.3
million at year-end 2017. Additionally, we expect that our
effective tax rate, before discrete items, will decline from 31% to
an estimated 21% to 22% in 2018 under this new legislation.”
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 on the full release.
Conference Call
HomeStreet, Inc., the parent company of HomeStreet Bank, will
conduct a quarterly earnings conference call on Tuesday, January
23, 2018 at 1:00 p.m. ET. Mark K. Mason, President and CEO, and
Mark R. Ruh, Executive Vice President and CFO, will discuss fourth
quarter and year-end 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/10115267 or may join the
call by dialing 1-877-508-9589 (1-855-669-9657 in Canada and
1-412-317-1075 internationally) shortly before 1:00 p.m. ET.
A rebroadcast will be available approximately one hour after the
conference call by dialing 1-877-344-7529 and entering passcode
10115267.
The information to be discussed in the conference call will be
posted on the Company's web site after the market closes on Monday,
January 22, 2018.
About HomeStreet
Now in its 98th 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. 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 and our expectations about the future regarding recent and
planned growth. 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 the recent
restructuring of our Mortgage Banking segment and to anticipate and
address similar issues affecting this and our other business
segment, as well as our ability to continue to strategically expand
our banking operations, meet our growth targets, maintain our
competitive position 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, full our ability to recognize the benefits
of the Tax Reform Act, our ability to maintain compliance with
current and evolving laws and regulations, our ability to attract
and retain key personnel, the uncertainty and potentially
destabilizing impact on our employees and customers from the recent
activity of shareholder activists, our ability to make accurate
estimates of the value of our non-cash assets and liabilities, our
ability to operate our business efficiently in a time of lower
revenues, increases in the competition in our industry and across
our markets and the extent of our success in resolving problem
assets. The results of our restructuring activities in the Mortgage
Banking segment may fall short of our financial and operational
expectations. We may not be able to achieve the full benefit of
cost efficiency programs we have previously implemented or those we
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, the
impact of natural disasters on housing availability and the ability
of our customers to meet their debt obligations, 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
September 30, 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 impact of the Tax Reform Act related tax benefit, the
after-tax impact of restructuring charges and the after-tax impact
of acquisition-related expenses, which we recorded in connection
with our merger with Orange County Business Bank on February 1,
2016, with our acquisition of two retail deposit branches in Lake
Oswego, Oregon on August 12, 2016, two retail deposit branches in
Southern California on November 11, 2016 and one retail deposit
branch in Southern California on September 15, 2017. 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 (other than 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 restructuring-related
expenses, as well as 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 this release.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180122006484/en/
HomeStreet, Inc.Gerhard Erdelji,
206-515-4039Gerhard.Erdelji@HomeStreet.comhttp://ir.homestreet.com
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