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| 8-K - FORM 8-K - HomeStreet, Inc. | form8-kfor4q12earningsrele.htm |
HomeStreet, Inc. Reports Record Full Year Net Income
2012 Net Income of $82.1 Million Driven by
Record Mortgage Banking Revenue
SEATTLE – February 4, 2013 – (BUSINESS WIRE) – HomeStreet, Inc. (NASDAQ:HMST) (the “Company” or “HomeStreet”), the parent company of HomeStreet Bank (the “Bank”), today announced net income of $21.5 million, or $1.46 per diluted share, for the fourth quarter of 2012, compared to net income of $7.0 million, or $1.21 per share, for the fourth quarter of 2011. For the full year 2012, net income was $82.1 million, or $5.98 per share, compared to $16.1 million, or $2.80 per share, for 2011.
• | Record financial performance: |
◦ | Full year 2012: |
▪ | Record net income of $82.1 million, up 409% from 2011. |
▪ | Net interest margin of 2.89%, up from 2.36% in 2011. |
▪ | Return on average equity of 39.18% and return on average assets of 3.43%. |
◦ | Fourth quarter 2012: |
▪ | Net income of $21.5 million, up 206% from fourth quarter 2011. |
▪ | Net interest margin of 3.06%, up from 2.48% in 2011. |
▪ | Return on average equity of 32.80% and return on average assets of 3.46%. |
• | Record mortgage banking results: |
◦ | Full year 2012: |
▪ | Record single family mortgage closed loan production of $4.67 billion, up 174% from 2011. |
▪ | Record net gain on mortgage origination and sale activities of $210.2 million, up 334% from 2011. |
◦ | Fourth quarter 2012: |
▪ | Record single family mortgage closed loan production of $1.52 billion, up 143% from fourth quarter 2011. |
▪ | Record net gain on mortgage origination and sale activities of $68.8 million, up 262% from fourth quarter 2011. |
• | Other highlights: |
◦ | Loans held for investment were $1.31 billion at December 31, 2012, an increase of $40.3 million, or 3.2%, from the prior quarter with new loan originations in all of HomeStreet's primary lending lines of business: commercial and industrial, commercial real estate, residential construction and single family mortgage. This marks the second consecutive quarter of net increases in loans held for investment since early 2008. |
◦ | Transaction and savings deposits grew to $1.05 billion, or 52.9% of total deposits, up from $774.6 million, or 38.5% of total deposits, at December 31, 2011. |
◦ | Nonperforming assets declined to $53.8 million, or 2.05% of total assets, down 53.2% from December 31, 2011. |
◦ | During the fourth quarter of 2012, HomeStreet remained the second largest residential lender by volume of single family mortgages in the five-county Puget Sound area of Washington State (King, Snohomish, Pierce, Kitsap, and Thurston counties), as well as in Spokane County, Washington, and the largest residential lender by volume of single family homes in Clark County, Washington.(1) |
◦ | During the quarter, HomeStreet opened two new retail deposit branches. In 2012, a total of 15 new mortgage loan origination offices were opened. |
◦ | In recognition of the significant improvement in the Bank’s financial condition, results of operations and risk profile, in December 2012 the Bank’s regulators terminated their memorandum of understanding with the Bank, outstanding since March 26, 2012. |
"HomeStreet's strong earnings in the fourth quarter concluded what has been a gratifying year for our company and our shareholders,” said President and Chief Executive Officer Mark K. Mason. “Our many accomplishments over the last year included the successful completion of our initial public offering, record earnings and returns on equity and assets, significant growth in mortgage originations and market share, significant improvement in asset quality, the successful restart of portfolio lending in each of our traditional commercial lending lines, and expansion of our deposit and lending branch networks. While we have been, and expect to continue to be successful in growing our mortgage lending business, we are also focused on the long term goal of business diversification. Toward that goal, we have made and we expect to continue to make substantial investments in our commercial and consumer businesses through new branches, increased staffing, new products and services, and related infrastructure improvements, and we are already seeing the return on these investments."
Mortgage Banking
Mortgage Production
Single family mortgage interest rate lock commitments in 2012, net of estimated fall out, totaled $4.79 billion, up from $1.77 billion in 2011. Rate lock commitments were $1.25 billion in the fourth quarter, up $711.8 million, or 131%, from the fourth quarter of 2011 and down $58.2 million, or 4.4%, from the third quarter of 2012. We believe that the decline in rate lock commitments in the fourth quarter of 2012 compared to the third quarter of 2012 was primarily the result of a decline in loan activity typical of the holiday season, which was partially offset by the continued expansion of our mortgage lending personnel and production capacity.
Single family closed loan volume designated for sale totaled $4.67 billion for 2012, up from $1.70 billion in 2011. The fourth quarter closed loan volume was $1.52 billion, increasing $894.9 million, or 143%, from the fourth quarter of 2011, and increasing $150.7 million, or 11.0%, from the third quarter of 2012. At December 31, 2012, the combined pipeline of rate lock commitments, net of estimated fallout, and mortgage loans held for sale was $1.18 billion, compared to a total pipeline of $1.25 billion at September 30, 2012, reflecting a reduction in rate lock commitments in the fourth quarter of 2012 which we believe reflects a seasonal decline in loan activity typical of the holiday season, partially offset by increased mortgage production capacity. The Company continues to grow its mortgage origination and production capacity, and increased its mortgage lending and support personnel by 10.8% in the fourth quarter and 146% during 2012.
(1) Combined results for HomeStreet and Windermere Mortgage Services Series LLC.
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Net gain on mortgage loan origination and sale activities in the fourth quarter of 2012 was $68.8 million, an increase of $49.8 million, or 262%, over the fourth quarter of 2011 and $210.2 million for the full year, up from $48.5 million in 2011. Increased mortgage loan origination and sale revenue reflects continued strong demand for both purchase and refinance mortgage loans in our markets, including refinances through the federal government's expanded Home Affordable Refinance Program ("HARP 2.0"), primarily driven by continuing low mortgage interest rates as well as strong secondary market profit margins that persisted the entirety of 2012. Due to differences in the timing of revenue recognition between components of the gain on loan origination and sales activities, the Company analyzes the profitability of these activities using a 'Composite Margin,' which is comprised of the ratios of the components to their respective populations of interest rate lock commitments, loans closed and loans sold. The Composite Margin for the fourth quarter was 494 basis points, up from 493 basis points in the prior quarter (see the Mortgage Banking Activity table for details). HARP 2.0 refinances represented approximately 19% of loans originated in the fourth quarter of 2012. Overall, single family mortgage production was comprised of 32% purchases and 68% refinances in the fourth quarter of 2012.
In the fourth quarter of 2012, we identified an error in the fair value measurement of single family loans held for sale that understated the recorded amount of the loans, thereby delaying the recognition of a portion of the secondary marketing gains until the time that the loans are sold, which generally occurs in the month following loan funding. The correction of this accounting error resulted in an increase to net gain on mortgage loan origination and sale activities and a related increase to loans held for sale in our consolidated statements of operations and consolidated statements of financial condition of $914 thousand, $1.3 million, $1.1 million and $1.3 million in the first, second, third and fourth quarters of this year, respectively. The fourth quarter amount represents a correction of the cumulative effect of the error for prior years, which was immaterial. Accordingly, we have recast the consolidated statements of operations and consolidated statements of financial condition for those periods for these immaterial amounts.
Mortgage Servicing
Mortgage servicing income of $651 thousand in the fourth quarter of 2012 decreased $5.3 million, or 89.1%, from the fourth quarter of 2011. For the full year, mortgage servicing income was $16.1 million, down from $38.1 million in 2011. The decrease from prior year periods for the quarter and year largely reflects a reduction in sensitivity to interest rates for the Company's mortgage servicing rights (MSRs), which has enabled the Company to reduce the notional amount of derivative instruments used to economically hedge MSRs. The lower notional amount of derivative instruments, along with a flatter yield curve, resulted in lower net gains from derivatives economically hedging MSRs, which negatively impacted mortgage servicing income. In addition, MSR risk management results for the quarter and for the full year reflect the impact in the fair value of MSRs due to changes in model inputs and assumptions related to factors other than interest rate changes, which are not within the scope of the Company's MSR hedging strategy. Such factors included changes to the Federal Housing Administration (FHA) streamlined refinance program and higher expected home values, both of which generally lead to higher projected prepayment speeds, and resulted in a net loss from MSR risk management activities in the fourth quarter of 2012. Mortgage servicing fees collected in the fourth quarter of 2012 increased $1.0 million, or 15.4%, over 2011 and increased $355 thousand, or 5.0%, as compared to the third quarter of 2012. The total loans serviced for others portfolio increased to $9.65 billion in 2012 compared to $7.70 billion at December 31, 2011.
Asset Quality
Classified assets of $86.3 million, or 3.28% of total assets at December 31, 2012, declined by $101.9 million, or 54.2%, from $188.2 million, or 8.31% of total assets, at December 31, 2011. Nonperforming assets (NPAs) of $53.8 million, or 2.05% of total assets at December 31, 2012, declined $61.2 million, or 53.2%, from $115.1 million, or 5.08% of total assets at December 31, 2011. Nonaccrual loans of $29.9 million, or 2.23% of total loans at December 31, 2012, declined $46.6 million, or 60.9%, from $76.5 million, or 5.69% of total
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loans at December 31, 2011. Other real estate owned (OREO) balances of $23.9 million at December 31, 2012 declined $14.6 million, or 37.9%, from $38.6 million at December 31, 2011. The improvement in NPAs primarily resulted from the resolution and reduction of nonperforming commercial construction assets which declined $63.7 million, or 81.3%, year-over-year. Loan delinquencies of $88.2 million, or 6.6% of total loans at December 31, 2012, declined $51.6 million, or 36.9%, from $139.9 million, or 10.4% of total loans at December 31, 2011. Excluding single family mortgage loans insured or guaranteed by the FHA or the Department of Veterans' Affairs (VA), loan delinquencies were $37.0 million, or 2.8% of total loans at December 31, 2012, down from $94.6 million, or 7.0% of total loans, at December 31, 2011.
NPAs declined $1.4 million, or 2.6%, from $55.3 million at September 30, 2012, primarily as a result of a $5.1 million, or 13.1%, reduction in nonperforming commercial assets, partially offset by a $3.6 million, or 21.7%, increase in nonperforming consumer assets.
The allowance for credit losses of $27.8 million, or 2.07% of total loans at December 31, 2012, decreased by $15.0 million from $42.8 million, or 3.18% of total loans, at December 31, 2011. The decrease in the allowance for credit losses is the result of the successful resolution of problem assets during the year as demonstrated in the significant improvements in classified asset balances, which declined 54.2%, and nonaccrual loan balances, which declined 60.9% during 2012. A provision for credit losses of $4.0 million was recorded for the fourth quarter of 2012, compared to $5.5 million recorded in the third quarter of 2012. Net charge-offs in the fourth quarter of 2012 were $3.9 million, down from $5.0 million in the third quarter of 2012.
Branch Banking
Deposit balances were $1.98 billion at December 31, 2012, down from $2.01 billion at December 31, 2011. Certificates of deposit decreased $378.3 million, or 36.6%, from a year ago as a result of the managed reduction of these higher-cost deposits and replacement with transaction and savings deposits, which increased $271.5 million, or 35.1%, from a year ago. The improvement in the composition of deposits reflects our successful efforts to attract transaction and savings deposit balances through our branch network and convert customers with maturing certificates of deposit to transaction and savings deposits.
Toward our goal of growing our consumer and commercial customer base, we opened two new deposit branches in the Seattle metropolitan area during the fourth quarter of 2012.
Results of Operations
Net Interest Income
Net interest income in the fourth quarter of 2012 was $16.6 million, up $3.8 million, or 29.8%, from the fourth quarter of 2011. Full year net interest income was $60.7 million in 2012, up from $48.5 million in 2011. The fourth quarter net interest margin increased to 3.06% from 2.48% in the fourth quarter of 2011, and decreased from 3.12% in the third quarter 2012. Total average interest earning assets increased from the prior year periods as higher mortgage production volumes in 2012 resulted in a higher average balance of loans held for sale, partially offset by a decrease in cash and cash equivalents which was used to fund loans held for sale production. Total average interest bearing deposit balances declined from the prior year periods mostly as a result of declines in higher-cost certificates of deposit, partially offset by an increase in transaction and savings deposits. The decline in the net interest margin from the prior quarter is primarily due to the recognition in the third quarter of accumulated interest collected on nonaccrual loans.
Noninterest Income
Noninterest income in the fourth quarter of 2012 was $71.7 million, up $44.2 million, or 160%, from $27.5 million in the fourth quarter of 2011. Full year noninterest income was $237.5 million in 2012, up from $97.2 million in 2011, primarily driven by increased mortgage loan origination and sale revenue. The increase in net
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gain on mortgage loan origination and sale activities in 2012 from prior year periods reflects increased single family loan production volume and continued strength in secondary market profit margins. Partially offsetting this increase to noninterest income is a decrease in mortgage servicing income, reflecting a reduction in income recognized from MSR risk management activities.
Noninterest Expense
Noninterest expense in the fourth quarter of 2012 was $55.8 million, up $21.9 million, or 64.5%, from $33.9 million in the fourth quarter of 2011. Full year noninterest expense was $183.1 million in 2012, up 44.8% from $126.5 million in 2011. The increase in noninterest expense during 2012 was primarily due to an increase in incentive compensation, including commissions to lending personnel, driven by growth in closed mortgage loan volume.
Income Taxes
The Company's income tax expense was $7.1 million for the quarter. The Company's 2012 year-to-date income tax expense of $21.5 million is based on the Company's annual effective income tax rate plus discrete benefits recognized during the year. The Company's effective tax rate for the year of 21% differs from the Federal statutory tax rate of 35% primarily due to a $14.4 million tax benefit related to the reversal of the Company's beginning of year valuation allowance against deferred tax assets, tax exempt income and state income taxes in Oregon, Hawaii and Idaho.
Capital
Regulatory capital ratios for the Bank are as follows:
Dec. 31, 2012 | Sept. 30, 2012 | Dec. 31, 2011 | Well-capitalized ratios | |||||||||
Tier 1 leverage capital (to average assets) | 11.8 | % | 10.9 | % | 6.0 | % | 5.0 | % | ||||
Tier 1 risk-based capital (to risk-weighted assets) | 18.1 | % | 16.8 | % | 9.9 | % | 6.0 | % | ||||
Total risk-based capital (to risk-weighted assets) | 19.3 | % | 18.0 | % | 11.2 | % | 10.0 | % | ||||
The Bank continues to meet the capital requirements of a "well-capitalized" institution.
Stock Split
On October 24, 2012, the Board of Directors approved a two-for-one forward split of the Company's common stock that was effective on November 5, 2012. Shares outstanding and per share information have been adjusted to reflect the stock split.
Conference Call
HomeStreet, Inc. will conduct a quarterly earnings conference call on Monday, February 4, 2013 at 10:00 a.m. PST (1:00 p.m. EST). The Company will discuss fourth quarter and year-end 2012 results and provide an update on recent activities. A question and answer session will follow the presentation. Shareholders, analysts and other interested parties may join the call by dialing 1-888-317-6016 shortly before 10:00 a.m. PST. A rebroadcast will be available approximately one hour after the conference call by dialing 1-877-344-7529 and entering passcode 10023354.
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About HomeStreet, Inc.
HomeStreet, Inc. (NASDAQ:HMST) is a diversified financial services company headquartered in Seattle, Washington, and the bank holding company for HomeStreet Bank, a state-chartered, FDIC-insured savings bank. HomeStreet Bank offers consumer and commercial banking, investment and insurance products and services in Washington, Oregon and Hawaii. HomeStreet Bank conducts lending activities in Washington, Oregon, Hawaii, Idaho, California, Arizona and Alaska. For more information, visit http://ir.homestreet.com.
Forward-Looking Statements
This report to shareholders contains forward-looking statements concerning HomeStreet, Inc. and the 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 important factors could cause actual results to differ materially from those expressed in, implied or projected by, such forward-looking statements. For instance, our ability to expand our banking operations geographically and across market sectors, grow our franchise and capitalize on market opportunities may be limited due to future risks and uncertainties including, but not limited to, changes in general economic conditions that impact our markets and our business, regulatory and legislative actions that may constrain our ability to do business, significant increases in the competition we face in our industry and market and the extent of our success in problem asset resolution efforts. In addition, we may not recognize all or a substantial portion of the value of our rate-lock loan activity due to challenges our customers may face in meeting current underwriting standards, a decrease in interest rates, an increase in competition for such loans, unfavorable changes in general economic conditions, including housing prices, the job market, consumer confidence and spending habits either nationally or in the regional and local market areas in which the Company does business and legislative or regulatory actions or reform (including, without limitation, the Dodd-Frank Wall Street Reform and Consumer Protection Act). A discussion of the factors that we know to pose risk to the achievement of our business goals and our operational and financial objectives is contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011 and Quarterly Report on Form 10-Q for the quarter ended September 30, 2012. These factors are updated from time to time in our filings with the Securities and Exchange Commission, and readers of this release are cautioned to review those disclosures in conjunction with the discussions herein.
Information contained herein, other than information at December 31, 2011, and for the twelve months then ended, is unaudited. All financial data should be read in conjunction with the notes to the consolidated financial statements of HomeStreet, Inc., and subsidiaries as of and for the fiscal year ended December 31, 2011, as contained in the Company's Annual Report on Form 10-K for such fiscal year.
Source: HomeStreet, Inc.
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Contact: | Investor Relations & Media: | |
HomeStreet, Inc. | ||
Terri Silver, 206-389-6303 | ||
terri.silver@homestreet.com | ||
http://ir.homestreet.com | ||
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HomeStreet, Inc. and Subsidiaries
Summary Financial Data
Quarter ended | Year ended | |||||||||||||||||||||||||||
(in thousands, except share data) | Dec. 31, 2012 | Sept. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2012 | Dec. 31, 2011 | |||||||||||||||||||||
Operations Data (for the period ended): | ||||||||||||||||||||||||||||
Net interest income(1) | $ | 16,591 | $ | 16,520 | $ | 14,799 | $ | 12,833 | $ | 12,784 | $ | 60,743 | $ | 48,494 | ||||||||||||||
Provision for loan losses | 4,000 | 5,500 | 2,000 | — | — | 11,500 | 3,300 | |||||||||||||||||||||
Noninterest income(1) | 71,720 | 68,976 | 56,743 | 40,097 | 27,543 | 237,534 | 97,205 | |||||||||||||||||||||
Noninterest expense | 55,754 | 45,819 | 46,847 | 34,687 | 33,903 | 183,105 | 126,494 | |||||||||||||||||||||
Net income before taxes | 28,557 | 34,177 | 22,695 | 18,243 | 6,424 | 103,672 | 15,905 | |||||||||||||||||||||
Income taxes | 7,060 | 12,186 | 4,017 | (1,716 | ) | (602 | ) | 21,546 | (214 | ) | ||||||||||||||||||
Net income | $ | 21,497 | $ | 21,991 | $ | 18,678 | $ | 19,959 | $ | 7,026 | $ | 82,126 | $ | 16,119 | ||||||||||||||
Basic earnings per common share (2) | $ | 1.50 | $ | 1.53 | $ | 1.31 | $ | 1.94 | $ | 1.30 | $ | 6.17 | $ | 2.98 | ||||||||||||||
Diluted earnings per common share (2) | $ | 1.46 | $ | 1.50 | $ | 1.26 | $ | 1.86 | $ | 1.21 | $ | 5.98 | $ | 2.80 | ||||||||||||||
Weighted average common shares | ||||||||||||||||||||||||||||
Basic | 14,371,120 | 14,335,950 | 14,252,120 | 10,292,566 | 5,403,498 | 13,312,939 | 5,403,498 | |||||||||||||||||||||
Diluted | 14,714,166 | 14,699,032 | 14,824,064 | 10,720,330 | 5,797,170 | 13,739,398 | 5,748,342 | |||||||||||||||||||||
Shareholders’ equity per share | $ | 18.34 | $ | 16.82 | $ | 15.05 | $ | 13.41 | $ | 15.99 | $ | 18.34 | $ | 15.99 | ||||||||||||||
Common shares outstanding (2) | 14,382,638 | 14,354,972 | 14,325,214 | 14,325,214 | 5,403,498 | 14,382,638 | 5,403,498 | |||||||||||||||||||||
Financial position (at period end): | ||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 25,285 | $ | 22,051 | $ | 75,063 | $ | 92,953 | $ | 263,302 | $ | 25,285 | $ | 263,302 | ||||||||||||||
Investment securities available for sale | 416,329 | 414,050 | 415,610 | 446,198 | 329,047 | 416,329 | 329,047 | |||||||||||||||||||||
Loans held for sale | 620,799 | 535,908 | 415,189 | 291,868 | 150,409 | 620,799 | 150,409 | |||||||||||||||||||||
Loans held for investment, net | 1,308,974 | 1,268,703 | 1,235,253 | 1,295,471 | 1,300,873 | 1,308,974 | 1,300,873 | |||||||||||||||||||||
Mortgage servicing rights | 95,493 | 81,512 | 78,240 | 86,801 | 77,281 | 95,493 | 77,281 | |||||||||||||||||||||
Other real estate owned | 23,941 | 17,003 | 40,618 | 31,640 | 38,572 | 23,941 | 38,572 | |||||||||||||||||||||
Total assets | 2,631,230 | 2,511,269 | 2,427,203 | 2,368,729 | 2,264,957 | 2,631,230 | 2,264,957 | |||||||||||||||||||||
Deposits | 1,976,835 | 1,981,814 | 1,904,749 | 2,000,633 | 2,009,755 | 1,976,835 | 2,009,755 | |||||||||||||||||||||
FHLB advances | 259,090 | 131,597 | 65,590 | 57,919 | 57,919 | 259,090 | 57,919 | |||||||||||||||||||||
Repurchase agreements | — | — | 100,000 | — | — | — | — | |||||||||||||||||||||
Shareholders’ equity | 263,762 | 241,499 | 215,614 | 192,139 | 86,407 | 263,762 | 86,407 | |||||||||||||||||||||
Financial position (averages): | ||||||||||||||||||||||||||||
Investment securities available for sale | $ | 418,261 | $ | 411,916 | $ | 431,875 | $ | 381,129 | $ | 338,933 | $ | 410,819 | $ | 306,813 | ||||||||||||||
Loans held for investment | 1,297,615 | 1,270,652 | 1,304,740 | 1,338,552 | 1,385,037 | 1,303,010 | 1,477,976 | |||||||||||||||||||||
Total interest earning assets | 2,244,727 | 2,187,059 | 2,143,380 | 2,090,190 | 2,078,506 | 2,166,827 | 2,069,858 | |||||||||||||||||||||
Total interest bearing deposits | 1,609,075 | 1,625,437 | 1,640,159 | 1,705,371 | 1,745,493 | 1,644,859 | 1,814,464 | |||||||||||||||||||||
FHLB advances | 122,516 | 112,839 | 79,490 | 57,919 | 59,169 | 93,325 | 93,755 | |||||||||||||||||||||
Repurchase agreements | 558 | 18,478 | 52,369 | — | — | 17,806 | — | |||||||||||||||||||||
Total interest bearing liabilities | 1,794,006 | 1,818,611 | 1,833,875 | 1,825,147 | 1,866,519 | 1,817,847 | 1,970,725 | |||||||||||||||||||||
Shareholders’ equity | 262,163 | 231,361 | 207,344 | 140,794 | 84,038 | 209,629 | 68,537 | |||||||||||||||||||||
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HomeStreet, Inc. and Subsidiaries
Summary Financial Data (continued)
Quarter ended | Year ended | |||||||||||||||||||||||||||
(in thousands, except share data) | Dec. 31, 2012 | Sept. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2012 | Dec. 31, 2011 | |||||||||||||||||||||
Financial performance: | ||||||||||||||||||||||||||||
Return on average common shareholders’ equity (3) | 32.80 | % | 38.02 | % | 36.03 | % | 56.70 | % | 33.44 | % | 39.18 | % | 23.52 | % | ||||||||||||||
Return on average assets | 3.46 | % | 3.60 | % | 3.15 | % | 3.45 | % | 1.23 | % | 3.43 | % | 0.70 | % | ||||||||||||||
Net interest margin (1)(4) | 3.06 | % | 3.12 | % | 2.85 | % | 2.51 | % | 2.48 | % | 2.89 | % | 2.36 | % | ||||||||||||||
Efficiency ratio (5) | 63.13 | % | 53.59 | % | 65.48 | % | 65.53 | % | 84.07 | % | 61.39 | % | 86.82 | % | ||||||||||||||
Operating efficiency ratio (7) | 61.81 | % | 53.18 | % | 57.03 | % | 60.77 | % | 74.78 | % | 58.01 | % | 66.04 | % | ||||||||||||||
Asset quality: | ||||||||||||||||||||||||||||
Allowance for credit losses | $ | 27,751 | $ | 27,627 | $ | 27,125 | $ | 35,402 | $ | 42,800 | $ | 27,751 | $ | 42,800 | ||||||||||||||
Allowance for credit losses/total loans | 2.07 | % | 2.12 | % | 2.13 | % | 2.64 | % | 3.18 | % | 2.07 | % | 3.18 | % | ||||||||||||||
Allowance for loan losses/nonaccrual loans | 92.20 | % | 71.80 | % | 81.28 | % | 46.58 | % | 55.81 | % | 92.20 | % | 55.81 | % | ||||||||||||||
Total classified assets | $ | 86,270 | $ | 102,385 | $ | 137,165 | $ | 208,792 | $ | 188,167 | $ | 86,270 | $ | 188,167 | ||||||||||||||
Classified assets/total assets | 3.28 | % | 4.08 | % | 5.66 | % | 8.82 | % | 8.31 | % | 3.28 | % | 8.31 | % | ||||||||||||||
Total nonaccrual loans (6) | $ | 29,892 | $ | 38,247 | $ | 33,107 | $ | 75,575 | $ | 76,484 | $ | 29,892 | $ | 76,484 | ||||||||||||||
Nonaccrual loans/total loans | 2.23 | % | 2.94 | % | 2.62 | % | 5.66 | % | 5.69 | % | 2.23 | % | 5.69 | % | ||||||||||||||
Other real estate owned | $ | 23,941 | $ | 17,003 | $ | 40,618 | $ | 31,640 | $ | 38,572 | $ | 23,941 | $ | 38,572 | ||||||||||||||
Total nonperforming assets | $ | 53,833 | $ | 55,250 | $ | 73,725 | $ | 107,215 | $ | 115,056 | $ | 53,833 | $ | 115,056 | ||||||||||||||
Nonperforming assets/total assets | 2.05 | % | 2.20 | % | 3.04 | % | 4.53 | % | 5.08 | % | 2.05 | % | 5.08 | % | ||||||||||||||
Net charge-offs | $ | 3,876 | $ | 4,998 | $ | 10,277 | $ | 7,398 | $ | 10,586 | $ | 26,549 | $ | 25,066 | ||||||||||||||
Regulatory capital ratios for the Bank: | ||||||||||||||||||||||||||||
Tier 1 capital to total assets (leverage) | 11.78 | % | 10.86 | % | 10.20 | % | 9.33 | % | 6.04 | % | 11.78 | % | 6.04 | % | ||||||||||||||
Tier 1 risk-based capital | 18.05 | % | 16.76 | % | 15.83 | % | 14.23 | % | 9.88 | % | 18.05 | % | 9.88 | % | ||||||||||||||
Total risk-based capital | 19.31 | % | 18.01 | % | 17.09 | % | 15.50 | % | 11.15 | % | 19.31 | % | 11.15 | % | ||||||||||||||
Other data: | ||||||||||||||||||||||||||||
Full-time equivalent employees (ending) | 1,099 | 998 | 913 | 821 | 613 | 1,099 | 613 | |||||||||||||||||||||
(1) | Certain prior period amounts have been reclassified between net interest income and noninterest income to conform to the current period presentation in all tables provided. |
(2) | Per share data shown after giving effect to the 2-for-1 forward stock splits effective November 5, 2012 and March 6, 2012. |
(3) | Net earnings available to common shareholders divided by average common shareholders’ equity. |
(4) | Net interest income divided by total interest earning assets on a tax equivalent basis. |
(5) | The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income). |
(6) | Generally, loans are placed on nonaccrual status when they are 90 or more days past due. |
(7) | We include an operating efficiency ratio which is not calculated based on generally accepted accounting principles in the United States (“GAAP”), but which we believe provides important information regarding our results of operations. Our calculation of the operating efficiency ratio is computed by dividing noninterest expense less costs related to OREO (gains (losses) on sales, valuation allowance adjustments, and maintenance and taxes) by total revenue (net interest income and noninterest income). Management uses this non-GAAP measurement as part of its assessment of performance in managing noninterest expense. We believe that costs related to OREO are more appropriately considered as credit-related costs rather than as an indication of our operating efficiency. The following table provides a reconciliation of non-GAAP to GAAP measurement. |
Quarter ended | Year ended | ||||||||||||||||||||
Dec. 31, 2012 | Sept. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2012 | Dec. 31, 2011 | |||||||||||||||
Efficiency ratio | 63.13 | % | 53.59 | % | 65.48 | % | 65.53 | % | 84.07 | % | 61.39 | % | 86.82 | % | |||||||
Less impact of OREO expenses | 1.32 | % | 0.41 | % | 8.45 | % | 4.76 | % | 9.29 | % | 3.38 | % | 20.78 | % | |||||||
Operating efficiency ratio | 61.81 | % | 53.18 | % | 57.03 | % | 60.77 | % | 74.78 | % | 58.01 | % | 66.04 | % | |||||||
9
HomeStreet, Inc. and Subsidiaries
Consolidated Statements of Operations
Quarter ended Dec. 31, | % | Year Ended Dec. 31, | % | |||||||||||||||||||
(in thousands, except share data) | 2012 | 2011 | Change | 2012 | 2011 | Change | ||||||||||||||||
Interest income: | ||||||||||||||||||||||
Loans | $ | 18,713 | $ | 17,351 | 8 | $ | 71,057 | $ | 71,795 | (1 | ) | |||||||||||
Investment securities available for sale | 2,186 | 1,792 | 22 | 9,391 | 6,920 | 36 | ||||||||||||||||
Other | 27 | 203 | (87 | ) | 243 | 477 | (49 | ) | ||||||||||||||
20,926 | 19,346 | 8 | 80,691 | 79,192 | 2 | |||||||||||||||||
Interest expense: | ||||||||||||||||||||||
Deposits | 3,756 | 5,388 | (30 | ) | 16,741 | 24,815 | (33 | ) | ||||||||||||||
Federal Home Loan Bank advances | 282 | 699 | (60 | ) | 1,788 | 3,821 | (53 | ) | ||||||||||||||
Securities sold under agreements to repurchase | 1 | — | NM | 70 | — | NM | ||||||||||||||||
Long-term debt | 292 | 459 | (36 | ) | 1,333 | 2,046 | (35 | ) | ||||||||||||||
Other | 4 | 16 | (75 | ) | 16 | 16 | NM | |||||||||||||||
4,335 | 6,562 | (34 | ) | 19,948 | 30,698 | (35 | ) | |||||||||||||||
Net interest income | 16,591 | 12,784 | 30 | 60,743 | 48,494 | 25 | ||||||||||||||||
Provision for credit losses | 4,000 | — | NM | 11,500 | 3,300 | 248 | ||||||||||||||||
Net interest income after provision for credit losses | 12,591 | 12,784 | (2 | ) | 49,243 | 45,194 | 9 | |||||||||||||||
Noninterest income: | ||||||||||||||||||||||
Net gain on mortgage loan origination and sale activities | 68,753 | 19,001 | 262 | 210,209 | 48,467 | 334 | ||||||||||||||||
Mortgage servicing income | 651 | 5,963 | (89 | ) | 16,121 | 38,056 | (58 | ) | ||||||||||||||
Income from Windermere Mortgage Services, Inc. | 516 | 739 | (30 | ) | 4,264 | 2,119 | 101 | |||||||||||||||
Gain (loss) on debt extinguishment | — | — | — | (939 | ) | 2,000 | NM | |||||||||||||||
Depositor and other retail banking fees | 800 | 748 | 7 | 3,062 | 3,061 | — | ||||||||||||||||
Insurance commissions | 193 | 186 | 4 | 743 | 910 | (18 | ) | |||||||||||||||
Gain on securities available for sale | 141 | 459 | (69 | ) | 1,490 | 1,102 | 35 | |||||||||||||||
Other | 666 | 447 | 49 | 2,584 | 1,490 | 73 | ||||||||||||||||
71,720 | 27,543 | 160 | 237,534 | 97,205 | 144 | |||||||||||||||||
Noninterest expense: | ||||||||||||||||||||||
Salaries and related costs | 38,680 | 16,462 | 135 | 119,829 | 53,519 | 124 | ||||||||||||||||
General and administrative | 8,322 | 6,182 | 35 | 27,352 | 18,490 | 48 | ||||||||||||||||
Legal | 325 | 1,075 | (70 | ) | 1,796 | 3,360 | (47 | ) | ||||||||||||||
Consulting | 1,291 | 2,011 | (36 | ) | 3,037 | 2,644 | 15 | |||||||||||||||
Federal Deposit Insurance Corporation assessments | 803 | 1,256 | (36 | ) | 3,554 | 5,534 | (36 | ) | ||||||||||||||
Occupancy | 2,425 | 1,733 | 40 | 8,585 | 6,764 | 27 | ||||||||||||||||
Information services | 2,739 | 1,436 | 91 | 8,867 | 5,902 | 50 | ||||||||||||||||
Other real estate owned expense | 1,169 | 3,748 | (69 | ) | 10,085 | 30,281 | (67 | ) | ||||||||||||||
55,754 | 33,903 | 64 | 183,105 | 126,494 | 45 | |||||||||||||||||
Income before income tax expense | 28,557 | 6,424 | 345 | 103,672 | 15,905 | 552 | ||||||||||||||||
Income tax expense (benefit) | 7,060 | (602 | ) | NM | 21,546 | (214 | ) | NM | ||||||||||||||
NET INCOME | $ | 21,497 | $ | 7,026 | 206 | $ | 82,126 | $ | 16,119 | 409 | ||||||||||||
Basic income per share | $ | 1.50 | $ | 1.30 | 15 | $ | 6.17 | $ | 2.98 | 107 | ||||||||||||
Diluted income per share | 1.46 | 1.21 | 21 | 5.98 | 2.80 | 114 | ||||||||||||||||
Basic weighted average number of shares outstanding | 14,371,120 | 5,403,498 | 166 | 13,312,939 | 5,403,498 | 146 | ||||||||||||||||
Diluted weighted average number of shares outstanding | 14,714,166 | 5,797,170 | 154 | 13,739,398 | 5,748,342 | 139 | ||||||||||||||||
10
HomeStreet, Inc. and Subsidiaries
Five Quarter Consolidated Statements of Operation
Quarter ended | ||||||||||||||||||||
(in thousands, except share data) | Dec. 31, 2012 | Sept. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2011 | |||||||||||||||
Interest income: | ||||||||||||||||||||
Loans | $ | 18,713 | $ | 18,512 | $ | 17,351 | $ | 16,481 | $ | 17,351 | ||||||||||
Investment securities available for sale | 2,186 | 2,517 | 2,449 | 2,238 | 1,792 | |||||||||||||||
Other | 27 | 24 | 56 | 137 | 203 | |||||||||||||||
20,926 | 21,053 | 19,856 | 18,856 | 19,346 | ||||||||||||||||
Interest expense: | ||||||||||||||||||||
Deposits | 3,756 | 3,908 | 4,198 | 4,879 | 5,388 | |||||||||||||||
Federal Home Loan Bank advances | 282 | 297 | 535 | 675 | 699 | |||||||||||||||
Securities sold under agreements to repurchase | 1 | 19 | 50 | — | — | |||||||||||||||
Long-term debt | 292 | 305 | 271 | 465 | 459 | |||||||||||||||
Other | 4 | 4 | 3 | 4 | 16 | |||||||||||||||
4,335 | 4,533 | 5,057 | 6,023 | 6,562 | ||||||||||||||||
Net interest income | 16,591 | 16,520 | 14,799 | 12,833 | 12,784 | |||||||||||||||
Provision for credit losses | 4,000 | 5,500 | 2,000 | — | — | |||||||||||||||
Net interest income after provision for credit losses | 12,591 | 11,020 | 12,799 | 12,833 | 12,784 | |||||||||||||||
Noninterest income: | ||||||||||||||||||||
Net gain on mortgage loan origination and sale activities | 68,753 | 65,233 | 46,727 | 29,496 | 19,001 | |||||||||||||||
Mortgage servicing income | 651 | 506 | 7,091 | 7,873 | 5,963 | |||||||||||||||
Income from Windermere Mortgage Services, Inc. | 516 | 1,188 | 1,394 | 1,166 | 739 | |||||||||||||||
Loss on debt extinguishment | — | — | (939 | ) | — | — | ||||||||||||||
Depositor and other retail banking fees | 800 | 756 | 771 | 735 | 748 | |||||||||||||||
Insurance commissions | 193 | 192 | 177 | 182 | 186 | |||||||||||||||
Gain on securities available for sale | 141 | 397 | 911 | 41 | 459 | |||||||||||||||
Other | 666 | 704 | 611 | 604 | 447 | |||||||||||||||
71,720 | 68,976 | 56,743 | 40,097 | 27,543 | ||||||||||||||||
Noninterest expense: | ||||||||||||||||||||
Salaries and related costs | 38,680 | 31,573 | 28,224 | 21,351 | 16,462 | |||||||||||||||
General and administrative | 8,322 | 7,033 | 6,725 | 5,273 | 6,182 | |||||||||||||||
Legal | 325 | 312 | 724 | 435 | 1,075 | |||||||||||||||
Consulting | 1,291 | 1,069 | 322 | 355 | 2,011 | |||||||||||||||
Federal Deposit Insurance Corporation assessments | 803 | 794 | 717 | 1,240 | 1,256 | |||||||||||||||
Occupancy | 2,425 | 2,279 | 2,092 | 1,790 | 1,733 | |||||||||||||||
Information services | 2,739 | 2,411 | 1,994 | 1,723 | 1,436 | |||||||||||||||
Other real estate owned expense | 1,169 | 348 | 6,049 | 2,520 | 3,748 | |||||||||||||||
55,754 | 45,819 | 46,847 | 34,687 | 33,903 | ||||||||||||||||
Income before income tax expense | 28,557 | 34,177 | 22,695 | 18,243 | 6,424 | |||||||||||||||
Income tax expense (benefit) | 7,060 | 12,186 | 4,017 | (1,716 | ) | (602 | ) | |||||||||||||
NET INCOME | $ | 21,497 | $ | 21,991 | $ | 18,678 | $ | 19,959 | $ | 7,026 | ||||||||||
Basic income per share | $ | 1.50 | $ | 1.53 | $ | 1.31 | $ | 1.94 | $ | 1.30 | ||||||||||
Diluted income per share | 1.46 | 1.50 | 1.26 | 1.86 | 1.21 | |||||||||||||||
Basic weighted average number of shares outstanding | 14,371,120 | 14,335,950 | 14,252,120 | 10,292,566 | 5,403,498 | |||||||||||||||
Diluted weighted average number of shares outstanding | 14,714,166 | 14,699,032 | 14,824,064 | 10,720,330 | 5,797,170 | |||||||||||||||
11
HomeStreet, Inc. and Subsidiaries
Consolidated Statements of Financial Condition
(in thousands, except share data) | Dec. 31, 2012 | Dec. 31, 2011 | % Change | ||||||||
Assets: | |||||||||||
Cash and cash equivalents (including interest-bearing instruments of $12,414 and $246,113) | $ | 25,285 | $ | 263,302 | (90 | ) | |||||
Investment securities available for sale | 416,329 | 329,047 | 27 | ||||||||
Loans held for sale (includes $607,578 and $130,546 carried at fair value) | 620,799 | 150,409 | 313 | ||||||||
Loans held for investment (net of allowance for loan losses of $27,561 and $42,689) | 1,308,974 | 1,300,873 | 1 | ||||||||
Mortgage servicing rights (includes $87,396 and $70,169 carried at fair value) | 95,493 | 77,281 | 24 | ||||||||
Other real estate owned | 23,941 | 38,572 | (38 | ) | |||||||
Federal Home Loan Bank stock, at cost | 36,367 | 37,027 | (2 | ) | |||||||
Premises and equipment, net | 15,232 | 6,569 | 132 | ||||||||
Accounts receivable and other assets | 88,810 | 61,877 | 44 | ||||||||
Total assets | $ | 2,631,230 | $ | 2,264,957 | 16 | ||||||
Liabilities and shareholders’ equity | |||||||||||
Liabilities: | |||||||||||
Deposits | $ | 1,976,835 | $ | 2,009,755 | (2 | ) | |||||
Federal Home Loan Bank advances | 259,090 | 57,919 | 347 | ||||||||
Accounts payable and accrued expenses | 69,686 | 49,019 | 42 | ||||||||
Long-term debt | 61,857 | 61,857 | — | ||||||||
Total liabilities | 2,367,468 | 2,178,550 | 9 | ||||||||
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 80,000,000 | |||||||||||
Issued and outstanding, 14,382,638 shares and 5,403,498 shares | 511 | 511 | — | ||||||||
Additional paid-in capital | 90,189 | 31 | NM | ||||||||
Retained earnings | 163,872 | 81,746 | 100 | ||||||||
Accumulated other comprehensive income | 9,190 | 4,119 | 123 | ||||||||
Total shareholders’ equity | 263,762 | 86,407 | 205 | ||||||||
Total liabilities and shareholders’ equity | $ | 2,631,230 | $ | 2,264,957 | 16 | ||||||
12
HomeStreet, Inc. and Subsidiaries
Five Quarter Consolidated Statements of Financial Condition
(in thousands, except share data) | Dec. 31, 2012 | Sept. 30, 2012 | June 30, 2012 | Mar. 31, 2012 | Dec. 31, 2011 | |||||||||||||||
Assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 25,285 | $ | 22,051 | $ | 75,063 | $ | 92,953 | $ | 263,302 | ||||||||||
Investment securities available for sale | 416,329 | 414,050 | 415,610 | 446,198 | 329,047 | |||||||||||||||
Loans held for sale | 620,799 | 535,908 | 415,189 | 291,868 | 150,409 | |||||||||||||||
Loans held for investment | 1,308,974 | 1,268,703 | 1,235,253 | 1,295,471 | 1,300,873 | |||||||||||||||
Mortgage servicing rights | 95,493 | 81,512 | 78,240 | 86,801 | 77,281 | |||||||||||||||
Other real estate owned | 23,941 | 17,003 | 40,618 | 31,640 | 38,572 | |||||||||||||||
Federal Home Loan Bank stock, at cost | 36,367 | 36,697 | 37,027 | 37,027 | 37,027 | |||||||||||||||
Premises and equipment, net | 15,232 | 13,060 | 10,226 | 7,034 | 6,569 | |||||||||||||||
Accounts receivable and other assets | 88,810 | 122,285 | 119,977 | 79,737 | 61,877 | |||||||||||||||
Total assets | $ | 2,631,230 | $ | 2,511,269 | $ | 2,427,203 | $ | 2,368,729 | $ | 2,264,957 | ||||||||||
Liabilities and shareholders’ equity | ||||||||||||||||||||
Liabilities: | ||||||||||||||||||||
Deposits | $ | 1,976,835 | $ | 1,981,814 | $ | 1,904,749 | $ | 2,000,633 | $ | 2,009,755 | ||||||||||
Federal Home Loan Bank advances | 259,090 | 131,597 | 65,590 | 57,919 | 57,919 | |||||||||||||||
Securities sold under agreements to repurchase | — | — | 100,000 | — | — | |||||||||||||||
Accounts payable and accrued expenses | 69,686 | 94,502 | 79,393 | 56,181 | 49,019 | |||||||||||||||
Long-term debt | 61,857 | 61,857 | 61,857 | 61,857 | 61,857 | |||||||||||||||
Total liabilities | 2,367,468 | 2,269,770 | 2,211,589 | 2,176,590 | 2,178,550 | |||||||||||||||
Shareholders’ equity: | ||||||||||||||||||||
Preferred stock, no par value | ||||||||||||||||||||
Authorized 10,000 shares | — | — | — | — | — | |||||||||||||||
Common stock, no par value | ||||||||||||||||||||
Authorized 80,000,000 | 511 | 511 | 511 | 511 | 511 | |||||||||||||||
Additional paid-in capital | 90,189 | 89,264 | 88,637 | 86,755 | 31 | |||||||||||||||
Retained earnings | 163,872 | 142,375 | 120,384 | 101,705 | 81,746 | |||||||||||||||
Accumulated other comprehensive income | 9,190 | 9,349 | 6,082 | 3,168 | 4,119 | |||||||||||||||
Total shareholders’ equity | 263,762 | 241,499 | 215,614 | 192,139 | 86,407 | |||||||||||||||
Total liabilities and shareholders’ equity | $ | 2,631,230 | $ | 2,511,269 | $ | 2,427,203 | $ | 2,368,729 | $ | 2,264,957 | ||||||||||
13
HomeStreet, Inc. and Subsidiaries
Average Balances, Yields and Rates Paid (Taxable-equivalent basis)
Quarter ended Dec. 31, | ||||||||||||||||||||||
2012 | 2011 | |||||||||||||||||||||
(in thousands) | Average Balance | Interest | Average Yield/Cost | Average Balance | Interest | Average Yield/Cost | ||||||||||||||||
Assets: | ||||||||||||||||||||||
Interest-earning assets (1): | ||||||||||||||||||||||
Cash & cash equivalents | $ | 28,029 | $ | 26 | 0.39 | % | $ | 180,596 | $ | 200 | 0.46 | % | ||||||||||
Investment securities | 418,261 | 2,682 | 2.56 | % | 338,933 | 1,867 | 2.20 | % | ||||||||||||||
Loans held for sale | 500,822 | 4,175 | 3.36 | % | 173,940 | 1,801 | 4.14 | % | ||||||||||||||
Loans held for investment | 1,297,615 | 14,571 | 4.48 | % | 1,385,037 | 15,589 | 4.49 | % | ||||||||||||||
Total interest-earning assets | 2,244,727 | 21,454 | 3.82 | % | 2,078,506 | 19,457 | 3.73 | % | ||||||||||||||
Noninterest-earning assets (2) | 238,433 | 206,827 | ||||||||||||||||||||
Total assets | $ | 2,483,160 | $ | 2,285,333 | ||||||||||||||||||
Liabilities and shareholders’ equity: | ||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||
Interest-bearing demand accounts | $ | 159,192 | 130 | 0.32 | % | $ | 136,627 | 117 | 0.34 | % | ||||||||||||
Savings accounts | 104,748 | 105 | 0.40 | % | 63,883 | 78 | 0.48 | % | ||||||||||||||
Money market accounts | 677,135 | 855 | 0.50 | % | 484,310 | 721 | 0.59 | % | ||||||||||||||
Certificate accounts | 668,000 | 2,666 | 1.59 | % | 1,060,673 | 4,471 | 1.67 | % | ||||||||||||||
Total interest-bearing deposits | 1,609,075 | 3,756 | 0.93 | % | 1,745,493 | 5,387 | 1.22 | % | ||||||||||||||
FHLB advances | 122,516 | 282 | 0.95 | % | 59,169 | 699 | 4.68 | % | ||||||||||||||
Securities sold under agreements to repurchase | 558 | 1 | 0.26 | % | — | — | — | % | ||||||||||||||
Long-term debt | 61,857 | 292 | 1.89 | % | 61,857 | 459 | 2.97 | % | ||||||||||||||
Other borrowings | — | 4 | — | % | — | 16 | — | % | ||||||||||||||
Total interest-bearing liabilities | 1,794,006 | 4,335 | 0.96 | % | 1,866,519 | 6,561 | 1.40 | % | ||||||||||||||
Other noninterest-bearing liabilities | 426,991 | 334,776 | ||||||||||||||||||||
Total liabilities | 2,220,997 | 2,201,295 | ||||||||||||||||||||
Shareholders’ equity | 262,163 | 84,038 | ||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 2,483,160 | $ | 2,285,333 | ||||||||||||||||||
Net interest income (3) | $ | 17,119 | $ | 12,896 | ||||||||||||||||||
Net interest spread | 2.86 | % | 2.33 | % | ||||||||||||||||||
Impact of noninterest-bearing sources | 0.20 | % | 0.15 | % | ||||||||||||||||||
Net interest margin | 3.06 | % | 2.48 | % | ||||||||||||||||||
(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, which is a non-GAAP measure, primarily related to tax-exempt income on certain loans and securities of $528 thousand for the quarter ended December 31, 2012 and $112 thousand for the quarter ended December 31, 2011, respectively. The Company's estimated marginal tax rate was 36% for the periods presented. |
14
HomeStreet, Inc. and Subsidiaries
Average Balances, Yields and Rates Paid (Taxable-equivalent basis) (continued)
Year Ended Dec. 31, | ||||||||||||||||||||||
2012 | 2011 | |||||||||||||||||||||
(in thousands) | Average Balance | Interest | Average Yield/Cost | Average Balance | Interest | Average Yield/Cost | ||||||||||||||||
Assets: | ||||||||||||||||||||||
Interest-earning assets (1): | ||||||||||||||||||||||
Cash & cash equivalents | $ | 94,478 | $ | 231 | 0.24 | % | $ | 159,031 | $ | 465 | 0.29 | % | ||||||||||
Investment securities | 410,819 | 11,064 | 2.69 | % | 306,813 | 7,083 | 2.31 | % | ||||||||||||||
Loans held for sale | 358,520 | 12,713 | 3.54 | % | 126,038 | 5,602 | 4.44 | % | ||||||||||||||
Loans held for investment | 1,303,010 | 58,490 | 4.49 | % | 1,477,976 | 66,342 | 4.49 | % | ||||||||||||||
Total interest-earning assets | 2,166,827 | 82,498 | 3.81 | % | 2,069,858 | 79,492 | 3.84 | % | ||||||||||||||
Noninterest-earning assets (2) | 225,704 | 229,943 | ||||||||||||||||||||
Total assets | $ | 2,392,531 | $ | 2,299,801 | ||||||||||||||||||
Liabilities and Shareholders’ Equity: | ||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||
Interest-bearing demand accounts | $ | 151,029 | 498 | 0.33 | % | $ | 129,254 | 575 | 0.44 | % | ||||||||||||
Savings accounts | 90,246 | 395 | 0.44 | % | 57,513 | 335 | 0.58 | % | ||||||||||||||
Money market accounts | 613,546 | 3,243 | 0.53 | % | 450,362 | 3,018 | 0.67 | % | ||||||||||||||
Certificate accounts | 790,038 | 12,605 | 1.60 | % | 1,177,335 | 20,887 | 1.77 | % | ||||||||||||||
Total interest-bearing deposits | 1,644,859 | 16,741 | 1.02 | % | 1,814,464 | 24,815 | 1.37 | % | ||||||||||||||
FHLB advances | 93,325 | 1,788 | 1.91 | % | 93,755 | 3,821 | 4.08 | % | ||||||||||||||
Securities sold under agreements to repurchase | 17,806 | 70 | 0.39 | % | — | — | — | % | ||||||||||||||
Long-term debt | 61,857 | 1,333 | 2.16 | % | 62,506 | 2,046 | 3.27 | % | ||||||||||||||
Other borrowings | — | 16 | — | % | — | 16 | — | % | ||||||||||||||
Total interest-bearing liabilities | 1,817,847 | 19,948 | 1.10 | % | 1,970,725 | 30,698 | 1.56 | % | ||||||||||||||
Other noninterest-bearing liabilities | 365,055 | 260,539 | ||||||||||||||||||||
Total liabilities | 2,182,902 | 2,231,264 | ||||||||||||||||||||
Shareholders’ equity | 209,629 | 68,537 | ||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 2,392,531 | $ | 2,299,801 | ||||||||||||||||||
Net interest income (3) | $ | 62,550 | $ | 48,794 | ||||||||||||||||||
Net interest spread | 2.71 | % | 2.28 | % | ||||||||||||||||||
Impact of noninterest-bearing sources | 0.18 | % | 0.08 | % | ||||||||||||||||||
Net interest margin | 2.89 | % | 2.36 | % | ||||||||||||||||||
(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, which is a non-GAAP measure, primarily related to tax-exempt income on certain loans and securities of $1.8 million for the twelve months ended December 31, 2012 and $300 thousand for the twelve months ended December 31, 2011, respectively. The Company's estimated marginal tax rate was 36% for the periods presented. |
15
HomeStreet, Inc. and Subsidiaries
Five Quarter Investment Securities Available for Sale
(in thousands, except for duration data) | Dec. 31, 2012 | Sept. 30, 2012 | June 30, 2012 | Mar. 31, 2012 | Dec. 31, 2011 | |||||||||||||||
Mortgage backed: | ||||||||||||||||||||
Residential | $ | 62,853 | $ | 63,365 | $ | 48,136 | $ | 40,575 | $ | — | ||||||||||
Commercial | 14,380 | 14,532 | 14,602 | 14,410 | 14,483 | |||||||||||||||
Municipal bonds | 129,174 | 128,595 | 126,681 | 79,051 | 49,584 | |||||||||||||||
Collateralized mortgage obligations: | ||||||||||||||||||||
Residential | 170,199 | 167,513 | 185,970 | 245,889 | 223,390 | |||||||||||||||
Commercial | 9,043 | 9,110 | 9,165 | 10,019 | 10,070 | |||||||||||||||
Agency | — | — | — | 25,007 | — | |||||||||||||||
US Treasury | 30,679 | 30,935 | 31,056 | 31,247 | 31,520 | |||||||||||||||
$ | 416,328 | $ | 414,050 | $ | 415,610 | $ | 446,198 | $ | 329,047 | |||||||||||
Weighted average duration in years | 4.9 | 5.0 | 5.1 | 5.1 | 4.4 | |||||||||||||||
Five Quarter Loans Held for Investment
(in thousands) | Dec. 31, 2012 | Sept. 30, 2012 | June 30, 2012 | Mar. 31, 2012 | Dec. 31, 2011 | |||||||||||||||
Consumer loans | ||||||||||||||||||||
Single family residential | $ | 673,865 | $ | 602,164 | $ | 537,174 | $ | 506,103 | $ | 496,934 | ||||||||||
Home equity | 136,746 | 141,343 | 147,587 | 152,924 | 158,936 | |||||||||||||||
810,611 | 743,507 | 684,761 | 659,027 | 655,870 | ||||||||||||||||
Commercial loans | ||||||||||||||||||||
Commercial real estate | 361,879 | 360,919 | 370,064 | 391,727 | 402,139 | |||||||||||||||
Multifamily residential | 17,012 | 36,912 | 47,069 | 56,328 | 56,379 | |||||||||||||||
Construction/land development | 71,033 | 77,912 | 83,797 | 158,552 | 173,405 | |||||||||||||||
Commercial business | 79,576 | 80,056 | 79,980 | 68,932 | 59,831 | |||||||||||||||
529,500 | 555,799 | 580,910 | 675,539 | 691,754 | ||||||||||||||||
1,340,111 | 1,299,306 | 1,265,671 | 1,334,566 | 1,347,624 | ||||||||||||||||
Net deferred loan fees and discounts | (3,576 | ) | (3,142 | ) | (3,508 | ) | (3,891 | ) | (4,062 | ) | ||||||||||
1,336,535 | 1,296,164 | 1,262,163 | 1,330,675 | 1,343,562 | ||||||||||||||||
Allowance for loan losses | (27,561 | ) | (27,461 | ) | (26,910 | ) | (35,204 | ) | (42,689 | ) | ||||||||||
$ | 1,308,974 | $ | 1,268,703 | $ | 1,235,253 | $ | 1,295,471 | $ | 1,300,873 | |||||||||||
Allowance as a % of loans held for investment | 2.07 | % | 2.12 | % | 2.13 | % | 2.64 | % | 3.18 | % | ||||||||||
Allowance as a % of nonaccrual loans | 92.20 | % | 71.80 | % | 81.28 | % | 46.58 | % | 55.81 | % | ||||||||||
16
HomeStreet, Inc. and Subsidiaries
Five Quarter Credit Quality Activity
Allowance for Credit Losses (roll-forward)
Quarter ended | ||||||||||||||||||||
(in thousands) | Dec. 31, 2012 | Sept. 30, 2012 | June 30, 2012 | Mar. 31, 2012 | Dec. 31, 2011 | |||||||||||||||
Allowance for Credit Losses (roll-forward): | ||||||||||||||||||||
Beginning balance | $ | 27,627 | $ | 27,125 | $ | 35,402 | $ | 42,800 | $ | 53,386 | ||||||||||
Provision for credit losses | 4,000 | 5,500 | 2,000 | — | — | |||||||||||||||
(Charge-offs), net of recoveries | (3,876 | ) | (4,998 | ) | (10,277 | ) | (7,398 | ) | (10,586 | ) | ||||||||||
Ending balance | $ | 27,751 | $ | 27,627 | $ | 27,125 | $ | 35,402 | $ | 42,800 | ||||||||||
Nonperforming assets (NPAs) roll-forward
Quarter ended | ||||||||||||||||||||
(in thousands) | Dec. 31, 2012 | Sept. 30, 2012 | June 30, 2012 | Mar. 31, 2012 | Dec. 31, 2011 | |||||||||||||||
Beginning balance | $ | 55,250 | $ | 73,725 | $ | 107,215 | $ | 115,056 | $ | 159,462 | ||||||||||
Additions | 9,973 | 20,703 | 13,208 | 18,776 | 7,251 | |||||||||||||||
Reductions: | ||||||||||||||||||||
Charge-offs | (3,876 | ) | (4,441 | ) | (10,277 | ) | (7,398 | ) | (10,586 | ) | ||||||||||
OREO sales | (2,028 | ) | (25,946 | ) | (9,804 | ) | (8,878 | ) | (26,037 | ) | ||||||||||
OREO writedowns | (1,216 | ) | (2,623 | ) | (5,578 | ) | (2,754 | ) | (3,564 | ) | ||||||||||
Principal paydown, payoff advances | (1,807 | ) | (4,794 | ) | (12,037 | ) | (1,321 | ) | (3,871 | ) | ||||||||||
Transferred back to accrual status | (2,463 | ) | (1,374 | ) | (9,002 | ) | (6,266 | ) | (7,599 | ) | ||||||||||
Total reductions | (11,390 | ) | (39,178 | ) | (46,698 | ) | (26,617 | ) | (51,657 | ) | ||||||||||
Net additions/(reductions) | (1,417 | ) | (18,475 | ) | (33,490 | ) | (7,841 | ) | (44,406 | ) | ||||||||||
Ending balance | $ | 53,833 | $ | 55,250 | $ | 73,725 | $ | 107,215 | $ | 115,056 | ||||||||||
17
HomeStreet, Inc. and Subsidiaries
Five Quarter Nonperforming Assets by Loan Class
(in thousands) | Dec. 31, 2012 | Sept. 30, 2012 | June 30, 2012 | Mar. 31, 2012 | Dec. 31, 2011 | |||||||||||||||
Nonaccrual loans: | ||||||||||||||||||||
Consumer loans | ||||||||||||||||||||
Single family residential | $ | 13,304 | $ | 12,900 | $ | 7,530 | $ | 14,290 | $ | 12,104 | ||||||||||
Home equity | 2,970 | 1,024 | 1,910 | 1,853 | 2,464 | |||||||||||||||
16,274 | 13,924 | 9,440 | 16,143 | 14,568 | ||||||||||||||||
Commercial loans: | ||||||||||||||||||||
Commercial real estate | 6,403 | 16,186 | 14,265 | 9,222 | 10,184 | |||||||||||||||
Multifamily residential | — | — | — | — | 2,394 | |||||||||||||||
Construction/land development | 5,042 | 5,848 | 9,373 | 49,708 | 48,387 | |||||||||||||||
Commercial business | 2,173 | 2,289 | 29 | 502 | 951 | |||||||||||||||
13,618 | 24,323 | 23,667 | 59,432 | 61,916 | ||||||||||||||||
Total nonaccrual loans | $ | 29,892 | $ | 38,247 | $ | 33,107 | $ | 75,575 | $ | 76,484 | ||||||||||
Nonaccrual loans to total loans | 2.23 | % | 2.94 | % | 2.62 | % | 5.66 | % | 5.69 | % | ||||||||||
Other real estate owned: | ||||||||||||||||||||
Consumer | ||||||||||||||||||||
Single family residential | $ | 4,071 | $ | 2,787 | $ | 3,142 | $ | 3,243 | $ | 6,600 | ||||||||||
4,071 | 2,787 | 3,142 | 3,243 | 6,600 | ||||||||||||||||
Commercial | ||||||||||||||||||||
Commercial real estate | 10,283 | 3,489 | 3,184 | 284 | 2,055 | |||||||||||||||
Construction/land development | 9,587 | 10,727 | 34,292 | 28,113 | 29,917 | |||||||||||||||
19,870 | 14,216 | 37,476 | 28,397 | 31,972 | ||||||||||||||||
Total other real estate owned | $ | 23,941 | $ | 17,003 | $ | 40,618 | $ | 31,640 | $ | 38,572 | ||||||||||
Nonperforming assets: | ||||||||||||||||||||
Consumer | ||||||||||||||||||||
Single family residential | $ | 17,375 | $ | 15,687 | $ | 10,672 | $ | 17,533 | $ | 18,704 | ||||||||||
Home equity loans | 2,970 | 1,024 | 1,910 | 1,853 | 2,464 | |||||||||||||||
20,345 | 16,711 | 12,582 | 19,386 | 21,168 | ||||||||||||||||
Commercial | ||||||||||||||||||||
Commercial real estate | 16,686 | 19,675 | 17,449 | 9,506 | 12,239 | |||||||||||||||
Multifamily residential | — | — | — | — | 2,394 | |||||||||||||||
Construction/land development | 14,629 | 16,575 | 43,665 | 77,821 | 78,304 | |||||||||||||||
Commercial business | 2,173 | 2,289 | 29 | 502 | 951 | |||||||||||||||
33,488 | 38,539 | 61,143 | 87,829 | 93,888 | ||||||||||||||||
Total nonperforming assets | $ | 53,833 | $ | 55,250 | $ | 73,725 | $ | 107,215 | $ | 115,056 | ||||||||||
Nonperforming assets to total assets | 2.05 | % | 2.20 | % | 3.04 | % | 4.53 | % | 5.08 | % | ||||||||||
18
HomeStreet, Inc. and Subsidiaries
Delinquencies by Loan Class
(in thousands) | 30-59 days past due | 60-89 days past due | 90 days or more past due (1) | Total past due | Current | Total loans | ||||||||||||||||||
December 31, 2012 | ||||||||||||||||||||||||
Consumer loans | ||||||||||||||||||||||||
Single family residential | $ | 11,916 | $ | 4,732 | $ | 53,962 | $ | 70,610 | $ | 603,255 | $ | 673,865 | ||||||||||||
Home equity | 787 | 242 | 2,970 | 3,999 | 132,747 | 136,746 | ||||||||||||||||||
12,703 | 4,974 | 56,932 | 74,609 | 736,002 | 810,611 | |||||||||||||||||||
Commercial loans | ||||||||||||||||||||||||
Commercial real estate | — | — | 6,403 | 6,403 | 355,476 | 361,879 | ||||||||||||||||||
Multifamily residential | — | — | — | — | 17,012 | 17,012 | ||||||||||||||||||
Construction/land development | — | — | 5,042 | 5,042 | 65,991 | 71,033 | ||||||||||||||||||
Commercial business | — | — | 2,173 | 2,173 | 77,403 | 79,576 | ||||||||||||||||||
— | — | 13,618 | 13,618 | 515,882 | 529,500 | |||||||||||||||||||
$ | 12,703 | $ | 4,974 | $ | 70,550 | $ | 88,227 | $ | 1,251,884 | $ | 1,340,111 | |||||||||||||
As a % of total loans | 0.95 | % | 0.37 | % | 5.26 | % | 6.58 | % | 93.42 | % | 100.00 | % | ||||||||||||
December 31, 2011 | ||||||||||||||||||||||||
Consumer loans | ||||||||||||||||||||||||
Single family residential | $ | 7,694 | $ | 8,552 | $ | 47,861 | $ | 64,107 | $ | 432,827 | $ | 496,934 | ||||||||||||
Home equity | 957 | 500 | 2,464 | 3,921 | 155,015 | 158,936 | ||||||||||||||||||
8,651 | 9,052 | 50,325 | 68,028 | 587,842 | 655,870 | |||||||||||||||||||
Commercial loans | ||||||||||||||||||||||||
Commercial real estate | — | — | 10,184 | 10,184 | 391,955 | 402,139 | ||||||||||||||||||
Multifamily residential | — | — | 2,394 | 2,394 | 53,985 | 56,379 | ||||||||||||||||||
Construction/land development | 9,916 | — | 48,387 | 58,303 | 115,102 | 173,405 | ||||||||||||||||||
Commercial business | — | — | 951 | 951 | 58,880 | 59,831 | ||||||||||||||||||
9,916 | — | 61,916 | 71,832 | 619,922 | 691,754 | |||||||||||||||||||
$ | 18,567 | $ | 9,052 | $ | 112,241 | $ | 139,860 | $ | 1,207,764 | $ | 1,347,624 | |||||||||||||
As a % of total loans | 1.38 | % | 0.67 | % | 8.33 | % | 10.38 | % | 89.62 | % | 100.00 | % | ||||||||||||
(1) | Includes $40.7 million and $35.8 million of single family residential loans past due and still accruing at December 31, 2012 and December 31, 2011 respectively, whose repayments are insured by the FHA or guaranteed by the VA. |
19
HomeStreet, Inc. and Subsidiaries
Troubled Debt Restructurings (TDRs)
Troubled Debt Restructurings by Accrual and Nonaccrual Status
(in thousands) | Dec. 31, 2012 | Sept. 30, 2012 | June 30, 2012 | Mar. 31, 2012 | Dec. 31, 2011 | |||||||||||||||
Accrual | ||||||||||||||||||||
Consumer loans | ||||||||||||||||||||
Single family residential | $ | 67,483 | $ | 67,647 | $ | 73,743 | $ | 70,977 | $ | 62,792 | ||||||||||
Home equity | 2,288 | 2,705 | 2,538 | 2,145 | 2,056 | |||||||||||||||
69,771 | 70,352 | 76,281 | 73,122 | 64,848 | ||||||||||||||||
Commercial loans | ||||||||||||||||||||
Commercial real estate | 21,071 | 16,540 | 16,539 | 25,778 | 25,040 | |||||||||||||||
Multifamily residential | 3,221 | 6,030 | 6,038 | 6,045 | 6,053 | |||||||||||||||
Construction/land development | 6,365 | 13,802 | 7,875 | 7,978 | 8,799 | |||||||||||||||
Commercial business | 147 | 154 | 162 | 287 | 191 | |||||||||||||||
30,804 | 36,526 | 30,614 | 40,088 | 40,083 | ||||||||||||||||
$ | 100,575 | $ | 106,878 | $ | 106,895 | $ | 113,210 | $ | 104,931 | |||||||||||
Nonaccrual | ||||||||||||||||||||
Consumer loans | ||||||||||||||||||||
Single family residential | $ | 3,931 | $ | 6,210 | $ | 1,395 | $ | 4,090 | $ | 3,801 | ||||||||||
Home equity | 465 | 64 | 231 | 347 | 419 | |||||||||||||||
4,396 | 6,274 | 1,626 | 4,437 | 4,220 | ||||||||||||||||
Commercial loans | ||||||||||||||||||||
Commercial real estate | 770 | 7,716 | 9,037 | — | — | |||||||||||||||
Multifamily residential | — | — | — | — | — | |||||||||||||||
Construction/land development | 5,042 | 5,845 | 9,370 | 17,929 | 18,633 | |||||||||||||||
Commercial business | — | 22 | 29 | 360 | 687 | |||||||||||||||
5,812 | 13,583 | 18,436 | 18,289 | 19,320 | ||||||||||||||||
$ | 10,208 | $ | 19,857 | $ | 20,062 | $ | 22,726 | $ | 23,540 | |||||||||||
Total | ||||||||||||||||||||
Consumer loans | ||||||||||||||||||||
Single family residential | $ | 71,414 | $ | 73,857 | $ | 75,138 | $ | 75,067 | $ | 66,593 | ||||||||||
Home equity | 2,753 | 2,769 | 2,769 | 2,492 | 2,475 | |||||||||||||||
74,167 | 76,626 | 77,907 | 77,559 | 69,068 | ||||||||||||||||
Commercial loans | ||||||||||||||||||||
Commercial real estate | 21,841 | 24,256 | 25,576 | 25,778 | 25,040 | |||||||||||||||
Multifamily residential | 3,221 | 6,030 | 6,038 | 6,045 | 6,053 | |||||||||||||||
Construction/land development | 11,407 | 19,647 | 17,245 | 25,907 | 27,432 | |||||||||||||||
Commercial business | 147 | 176 | 191 | 647 | 878 | |||||||||||||||
36,616 | 50,109 | 49,050 | 58,377 | 59,403 | ||||||||||||||||
$ | 110,783 | $ | 126,735 | $ | 126,957 | $ | 135,936 | $ | 128,471 | |||||||||||
20
HomeStreet, Inc. and Subsidiaries
Troubled Debt Restructurings (TDRs)
Troubled Debt Restructurings - Re-Defaults
Quarter ended | ||||||||||||||||||||
(in thousands) | Dec. 31, 2012 | Sept. 30, 2012 | June 30, 2012 | Mar. 31, 2012 | Dec. 31, 2011 | |||||||||||||||
Recorded investment of re-defaults(1) | ||||||||||||||||||||
Consumer loans | ||||||||||||||||||||
Single family residential | $ | 1,386 | $ | 5,123 | $ | 1,364 | $ | 760 | $ | 1,286 | ||||||||||
Home equity | — | — | — | 34 | — | |||||||||||||||
1,386 | 5,123 | 1,364 | 794 | 1,286 | ||||||||||||||||
Commercial loans | ||||||||||||||||||||
Commercial real estate | — | 7,716 | — | — | — | |||||||||||||||
Multifamily residential | — | — | — | — | — | |||||||||||||||
Construction/land development | — | — | — | — | 8,264 | |||||||||||||||
Commercial business | — | — | 29 | — | 145 | |||||||||||||||
— | 7,716 | 29 | — | 8,409 | ||||||||||||||||
$ | 1,386 | $ | 12,839 | $ | 1,393 | $ | 794 | $ | 9,695 | |||||||||||
(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. |
21
HomeStreet, Inc. and Subsidiaries
Five Quarter Mortgage Banking Operations
Mortgage Servicing Income
Quarter ended | ||||||||||||||||||||
(in thousands) | Dec. 31, 2012 | Sept. 30, 2012 | June 30, 2012 | Mar. 31, 2012 | Dec. 31, 2011 | |||||||||||||||
Servicing income, net: | ||||||||||||||||||||
Servicing fees and other | $ | 7,523 | $ | 7,168 | $ | 6,705 | $ | 6,436 | $ | 6,518 | ||||||||||
Changes in fair value of single family MSRs due to modeled amortization (1) | (6,280 | ) | (5,360 | ) | (4,052 | ) | (4,969 | ) | (4,176 | ) | ||||||||||
Amortization of multifamily MSRs | (463 | ) | (598 | ) | (462 | ) | (491 | ) | (366 | ) | ||||||||||
780 | 1,210 | 2,191 | 976 | 1,976 | ||||||||||||||||
Risk management, single family MSRs: | ||||||||||||||||||||
Changes in fair value of MSRs due to changes in model inputs and/or assumptions (2) | 2,489 | (5,565 | ) | (15,354 | ) | 7,411 | (3,910 | ) | ||||||||||||
Net gain (loss) from derivatives economically hedging MSRs | (2,618 | ) | 4,861 | 20,254 | (514 | ) | 7,897 | |||||||||||||
(129 | ) | (704 | ) | 4,900 | 6,897 | 3,987 | ||||||||||||||
Mortgage servicing income | $ | 651 | $ | 506 | $ | 7,091 | $ | 7,873 | $ | 5,963 | ||||||||||
(1) | Represents changes due to collection/realization of expected cash flows and curtailments over time. |
(2) | Principally reflects changes in model assumptions and prepayment speed assumptions, which are primarily affected by changes in interest rates. |
Loans Serviced for Others
(in thousands) | Dec. 31, 2012 | Sept. 30, 2012 | June 30, 2012 | Mar. 31, 2012 | Dec. 31, 2011 | |||||||||||||||
Single family residential | ||||||||||||||||||||
U.S. government agency MBS | $ | 8,508,458 | $ | 7,724,562 | $ | 7,061,232 | $ | 6,530,578 | $ | 6,464,815 | ||||||||||
Other | 362,230 | 385,107 | 407,750 | 416,700 | 420,470 | |||||||||||||||
8,870,688 | 8,109,669 | 7,468,982 | 6,947,278 | 6,885,285 | ||||||||||||||||
Commercial | ||||||||||||||||||||
Multifamily | 727,118 | 760,820 | 772,473 | 766,433 | 758,535 | |||||||||||||||
Other | 53,235 | 53,617 | 56,840 | 59,370 | 56,785 | |||||||||||||||
780,353 | 814,437 | 829,313 | 825,803 | 815,320 | ||||||||||||||||
Total loans serviced for others | $ | 9,651,041 | $ | 8,924,106 | $ | 8,298,295 | $ | 7,773,081 | $ | 7,700,605 | ||||||||||
22
HomeStreet, Inc. and Subsidiaries
Five Quarter Mortgage Banking Operations (continued)
Single Family Capitalized Mortgage Servicing Rights
Quarter ended | ||||||||||||||||||||
(in thousands) | Dec. 31, 2012 | Sept. 30, 2012 | June 30, 2012 | Mar. 31, 2012 | Dec. 31, 2011 | |||||||||||||||
Beginning balance | $ | 73,787 | $ | 70,585 | $ | 79,381 | $ | 70,169 | $ | 67,471 | ||||||||||
Originations | 17,397 | 14,121 | 10,598 | 6,723 | 10,759 | |||||||||||||||
Purchases | 3 | 6 | 12 | 47 | 25 | |||||||||||||||
Changes due to modeled amortization (1) | (6,280 | ) | (5,360 | ) | (4,052 | ) | (4,969 | ) | (4,176 | ) | ||||||||||
Net additions and amortization | 11,120 | 8,767 | 6,558 | 1,801 | 6,608 | |||||||||||||||
Changes in fair value due to changes in model inputs and/or assumptions (2) | 2,489 | (5,565 | ) | (15,354 | ) | 7,411 | (3,910 | ) | ||||||||||||
Ending balance | $ | 87,396 | $ | 73,787 | $ | 70,585 | $ | 79,381 | $ | 70,169 | ||||||||||
Ratio of MSR carrying value to related loans serviced for others | 0.99 | % | 0.91 | % | 0.95 | % | 1.14 | % | 1.02 | % | ||||||||||
MSR servicing fee multiple (3) | 3.13 | 2.81 | 2.82 | 3.30 | 2.91 | |||||||||||||||
Weighted-average note rate (loans serviced for others) | 4.34 | % | 4.52 | % | 4.69 | % | 4.83 | % | 4.93 | % | ||||||||||
Weighted-average servicing fee (loans serviced for others) | 0.31 | % | 0.33 | % | 0.34 | % | 0.35 | % | 0.35 | % | ||||||||||
(1) | Represents changes due to collection/realization of expected future cash flows over time. |
(2) | Principally reflects changes in model assumptions and prepayment speed assumptions, which are primarily affected by changes in 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. |
Commercial Multifamily Capitalized Mortgage Servicing Rights
Quarter ended | ||||||||||||||||||||
(in thousands) | Dec. 31, 2012 | Sept. 30, 2012 | June 30, 2012 | Mar. 31, 2012 | Dec. 31, 2011 | |||||||||||||||
Beginning balance | $ | 7,725 | $ | 7,655 | $ | 7,420 | $ | 7,112 | $ | 6,612 | ||||||||||
Originations | 835 | 668 | 697 | 799 | 866 | |||||||||||||||
Amortization | (463 | ) | (598 | ) | (462 | ) | (491 | ) | (366 | ) | ||||||||||
Ending balance | $ | 8,097 | $ | 7,725 | $ | 7,655 | $ | 7,420 | $ | 7,112 | ||||||||||
Ratio of MSR carrying value to related loans serviced for others | 1.04 | % | 0.95 | % | 0.92 | % | 0.90 | % | 0.87 | % | ||||||||||
MSR servicing fee multiple (1) | 2.70 | 2.47 | 2.45 | 2.41 | 2.42 | |||||||||||||||
Weighted-average note rate (loans serviced for others) | 5.38 | % | 5.48 | % | 5.54 | % | 5.60 | % | 5.67 | % | ||||||||||
Weighted-average servicing fee (loans serviced for others) | 0.38 | % | 0.38 | % | 0.38 | % | 0.37 | % | 0.36 | % | ||||||||||
(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. |
23
HomeStreet, Inc. and Subsidiaries
Five Quarter Mortgage Banking Operations (continued)
Mortgage Banking Activity
Quarter ended | ||||||||||||||||||||
(in thousands) | Dec. 31, 2012 | Sept. 30, 2012 | June 30, 2012 | Mar. 31, 2012 | Dec. 31, 2011 | |||||||||||||||
Production volumes: | ||||||||||||||||||||
Single family mortgage closed loan volume (1) | $ | 1,518,971 | $ | 1,368,238 | $ | 1,068,656 | $ | 712,302 | $ | 624,111 | ||||||||||
Single family mortgage interest rate lock commitments | 1,254,954 | 1,313,182 | 1,303,390 | 915,141 | 543,164 | |||||||||||||||
Single family mortgage loans sold | 1,434,947 | 1,238,879 | 962,704 | 534,310 | 710,706 | |||||||||||||||
Multifamily mortgage originations | $ | 40,244 | $ | 20,209 | $ | 35,908 | $ | 15,713 | $ | 49,071 | ||||||||||
Multifamily mortgage loans sold | 33,689 | 26,515 | 27,178 | 31,423 | 33,461 | |||||||||||||||
Net gain on mortgage loan origination and sale activities: | ||||||||||||||||||||
Single family: | ||||||||||||||||||||
Secondary marketing gains | $ | 40,757 | $ | 42,021 | $ | 29,950 | $ | 17,057 | $ | 2,669 | ||||||||||
Provision for repurchase losses | (123 | ) | (526 | ) | (1,930 | ) | (390 | ) | (12 | ) | ||||||||||
Net gain from secondary marketing activities | 40,634 | 41,495 | 28,020 | 16,667 | 2,657 | |||||||||||||||
Mortgage servicing rights originated | 17,397 | 14,121 | 10,598 | 6,723 | 10,758 | |||||||||||||||
Loan origination and funding fees | 9,091 | 8,577 | 7,070 | 4,944 | 4,401 | |||||||||||||||
Total single family | 67,122 | 64,193 | 45,688 | 28,334 | 17,816 | |||||||||||||||
Multifamily | 1,631 | 1,040 | 1,039 | 1,162 | 1,185 | |||||||||||||||
Total net gain on mortgage loan origination and sale activities | $ | 68,753 | $ | 65,233 | $ | 46,727 | $ | 29,496 | $ | 19,001 | ||||||||||
Single family margins (in basis points): | ||||||||||||||||||||
Mortgage servicing rights originated / mortgage loans sold | 121 | 114 | 110 | 126 | 151 | |||||||||||||||
Secondary marketing gains, net of repurchase provision / interest rate lock commitments | 313(2) | 316 | 215 | 182 | 49 | |||||||||||||||
Loan origination and funding fees / mortgage originations(1) | 60 | 63 | 66 | 69 | 71 | |||||||||||||||
Composite Margin | 494(2) | 493 | 391 | 377 | 271 | |||||||||||||||
(1) | Represents single family mortgage production volume designated for sale during each respective period. |
(2) | Excludes the impact of a $1.3 million correction that was recorded in secondary marketing gains in the fourth quarter of 2012 for the cumulative effect of an error in prior years related to the fair value measurement of loans held for sale. Including the impact of this correction, the secondary marketing gain margin and Composite Margin were 324 and 505 basis points, respectively, in the fourth quarter of 2012. |
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HomeStreet, Inc. and Subsidiaries
Five Quarter Deposits
(in thousands) | Dec. 31, 2012 | Sept. 30, 2012 | June 30, 2012 | Mar. 31, 2012 | Dec. 31, 2011 | |||||||||||||||
Deposits by Product: | ||||||||||||||||||||
Noninterest bearing accounts - checking and savings | $ | 83,563 | $ | 77,149 | $ | 64,404 | $ | 68,245 | $ | 69,276 | ||||||||||
Interest bearing transaction and savings deposits: | ||||||||||||||||||||
NOW accounts | 174,699 | 172,086 | 170,098 | 154,670 | 138,936 | |||||||||||||||
Statement savings accounts due on demand | 103,932 | 104,239 | 88,104 | 79,438 | 66,898 | |||||||||||||||
Money market accounts due on demand | 683,906 | 675,363 | 630,798 | 559,563 | 499,457 | |||||||||||||||
Total interest bearing transaction and savings deposits | 962,537 | 951,688 | 889,000 | 793,671 | 705,291 | |||||||||||||||
Total transaction and savings deposits | 1,046,100 | 1,028,837 | 953,404 | 861,916 | 774,567 | |||||||||||||||
Certificates of deposit | 655,467 | 684,604 | 755,646 | 890,694 | 1,033,798 | |||||||||||||||
Noninterest bearing accounts - other | 275,268 | 268,373 | 195,699 | 248,023 | 201,390 | |||||||||||||||
Total deposits | $ | 1,976,835 | $ | 1,981,814 | $ | 1,904,749 | $ | 2,000,633 | $ | 2,009,755 | ||||||||||
Percent of total deposits: | ||||||||||||||||||||
Noninterest bearing accounts - checking and savings | 4.2 | % | 3.9 | % | 3.4 | % | 3.4 | % | 3.4 | % | ||||||||||
Interest bearing transaction and savings deposits: | ||||||||||||||||||||
NOW accounts | 8.8 | % | 8.7 | % | 8.9 | % | 7.7 | % | 6.9 | % | ||||||||||
Statement savings accounts due on demand | 5.3 | % | 5.3 | % | 4.6 | % | 4.0 | % | 3.3 | % | ||||||||||
Money market accounts due on demand | 34.6 | % | 34.1 | % | 33.1 | % | 28.0 | % | 24.9 | % | ||||||||||
Total interest bearing transaction and savings deposits | 48.7 | % | 48.1 | % | 46.6 | % | 39.7 | % | 35.1 | % | ||||||||||
Total transaction and savings deposits | 52.9 | % | 52.0 | % | 50.0 | % | 43.1 | % | 38.5 | % | ||||||||||
Certificates of deposit | 33.2 | % | 34.5 | % | 39.7 | % | 44.5 | % | 51.4 | % | ||||||||||
Noninterest bearing accounts - other | 13.9 | % | 13.5 | % | 10.3 | % | 12.4 | % | 10.1 | % | ||||||||||
Total deposits | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||
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