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8-K - FORM 8-K - HomeStreet, Inc. | form8-k4q2014earningsrelea.htm |
EX-99.2 - SUMMARY EARNINGS RELEASE ISSUED BY HOMESTREET, INC. DATED JANUARY 26, 2015 - HomeStreet, Inc. | summaryearningsrelease_4q2.htm |
HomeStreet, Inc. Reports Fourth Quarter and Year-End 2014 Results
Q4 Net Income of $5.6 Million, or $0.38 per Diluted Share
2014 Net Income of $22.3 Million, or $1.49 per Diluted Share
SEATTLE – January 26, 2015 – (BUSINESS WIRE) – HomeStreet, Inc. (NASDAQ:HMST) (the “Company” or “HomeStreet”), the parent company of HomeStreet Bank (the “Bank”), today announced net income of $5.6 million, or $0.38 per diluted share, for the fourth quarter of 2014, compared to net income of $5.0 million, or $0.33 per share, for the third quarter of 2014 and a net loss of $861 thousand, or $(0.06) per share, for the fourth quarter of 2013. Excluding acquisition-related expenses of $889 thousand, net income for the quarter was $6.2 million,(1) or $0.41(1) per share, compared to net income of $5.4 million,(1) or $0.36(1) per share, for the third quarter of 2014 and $1.8 million,(1) or $0.12(1) per share, for the fourth quarter of 2013. For the full year 2014, net income was $22.3 million, or $1.49 per share. Excluding acquisition-related expenses, net income for 2014 was $24.2 million,(1) or $1.62(1) per share, compared to $26.8 million,(1) or $1.81(1) per share for 2013.
• | Consolidated results: |
◦ | Fourth quarter 2014 |
▪ | Net interest income was $27.5 million in the fourth quarter of 2014 compared to $25.3 million in the third quarter of 2014, resulting from a 6.4% increase in average interest-earning assets. |
▪ | Net interest margin was 3.53% compared to 3.50% in the third quarter of 2014 and 3.34% in the fourth quarter of 2013. |
▪ | Tangible book value increased to $19.39 per share as of December 31, 2014 compared to $18.86 per share as of September 30, 2014. |
◦ | Year-ended 2014 |
▪ | Net interest margin was 3.51%, up from 3.17% for 2013. |
▪ | Deposit balances of $2.45 billion increased 10.6% from the fourth quarter of 2013. Transaction and savings deposits increased 11.9% and noninterest-bearing checking and savings deposits grew 20.4% during the same period. |
▪ | During 2014, the Company added 11 home loan centers and three retail deposit branches to bring our total home loan centers to 55 and our total retail deposit branches to 33. |
▪ | Nonperforming assets and classified assets ended the quarter at 0.72% and 0.75% of total assets, respectively, down from 0.87% and 1.09% of total assets at September 30, 2014. |
▪ | Nonaccrual loans were 0.75% of total loans at December 31, 2014 compared to 1.36% of total loans at December 31, 2013. |
(1) | Net of acquisition-related expenses, a non-GAAP financial measure, as explained on page 6. |
• | Segment results: |
◦ | Commercial and Consumer Banking |
▪ | Commercial and Consumer Banking segment net income was $3.9 million(1) for the quarter, excluding acquisition-related expenses. |
▪ | Certificates of deposit increased $127.4 million, or 34.7%, to $494.5 million from $367.1 million at September 30, 2014, predominantly due to higher balances of brokered deposits. |
▪ | Loans held for investment increased 6.8% to $2.10 billion from $1.96 billion at September 30, 2014 and increased 12.14% from $1.87 billion at December 31, 2013. New loan commitments in the quarter totaled $307.6 million and originations totaled $144.3 million. |
◦Mortgage Banking
▪ | Mortgage Banking segment net income was $2.3 million for the quarter. |
▪ | Single family mortgage interest rate lock commitments were $1.17 billion, up 0.3% from the third quarter of 2014 and up 77.0% from the fourth quarter of 2013. |
▪ | Single family mortgage closed loan volume was $1.33 billion, up 2.8% from the third quarter of 2014 and up 72.1% from the fourth quarter of 2013. |
▪ | Mortgage Banking servicing income was $9.3 million, up 75.1% from $5.3 million in the third quarter of 2014 and up 24.7% from $7.4 million in the fourth quarter of 2013. |
▪ | The portfolio of single family loans serviced for others increased to $11.22 billion at year-end, up 5.9% from $10.59 billion at September 30, 2014. |
▪ | During the quarter, HomeStreet was the number one originator by volume of purchase mortgages in the Pacific Northwest (Washington, Oregon and Idaho) and in the Puget Sound region, based on the combined originations of HomeStreet and loans originated through an affiliated business arrangement known as WMS Series LLC. |
“During the past year, we made substantial progress on our strategy to grow and diversify earnings. We expanded our commercial and consumer banking business and built mortgage banking market share in new and existing markets,” said HomeStreet President and CEO Mark K. Mason. “We opened three de novo retail deposit branches and grew our transaction and savings deposits by 12% in the 12-month period. Loan portfolio growth was strong throughout the year, with total loans held for investment increasing 12% over the prior year despite our sale of $266.8 million in single family loans in the first and second quarters of 2014. Net interest income also improved as a result of a higher net interest margin and strong growth of nearly 20% in average interest-earning assets, and noninterest income grew nearly 43% over the last year. Over the course of the year we also expanded our home loan center network by 11 offices and mortgage production personnel grew by 18%. As a result, and despite a 39% decrease in industry loan volume, our single family closed loan volume designated for sale was approximately the same as in 2013.
"We have made substantial progress toward our planned acquisition of Simplicity Bancorp. We have received all required regulatory approvals and the shareholder meetings of HomeStreet and Simplicity are scheduled for January 29, 2015 and February 11, 2015, respectively. Additionally, we anticipate that the California Department of Business Oversight will convene a fairness hearing on February 10, 2015 relating to our request for a permit to register our stock to be exchanged in this transaction. We are excited about the potential this acquisition offers us for building a strong consumer and commercial banking franchise in Southern California to complement our growing mortgage banking business in the region.”
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Consolidated Results of Operations
Net Interest Income
Net interest income in the fourth quarter of 2014 was $27.5 million, up $2.2 million, or 8.7%, from the third quarter of 2014 and up $6.1 million, or 28.6%, from the fourth quarter of 2013 as a result of growth in average interest-earning assets. In the fourth quarter of 2014, net interest margin, on a tax equivalent basis, was 3.53% compared to 3.50% in the third quarter of 2014 and 3.34% in the fourth quarter of 2013.
Total average interest-earning assets in the fourth quarter of 2014 increased $187.8 million, or 6.4%, from the third quarter of 2014 primarily due to higher average balances of loans held for investment. Average interest-earning assets increased $516.4 million, or 19.7%, from the fourth quarter of 2013, primarily as a result of growth in average balances of loans held for sale and loans held for investment. Total average interest-bearing deposit balances increased from the fourth quarter of 2013 primarily due to growth in average money market deposits.
Noninterest Income
Noninterest income in the fourth quarter of 2014 was $51.5 million, up $5.7 million, or 12.4%, from $45.8 million in the third quarter of 2014 and up $15.4 million, or 42.7%, from $36.1 million in the fourth quarter of 2013. The increase from the prior quarter was primarily due to a $3.7 million increase in mortgage servicing income and a $1.5 million increase in net gain on mortgage origination and sale activities.
The increase in noninterest income from the fourth quarter of 2013 was primarily the result of a $14.3 million, or 57.7%, increase in net gain on mortgage origination and sale activities due mostly to an increase in single family mortgage interest rate lock volume.
Noninterest Expense
Noninterest expense for the fourth quarter of 2014 was $68.8 million, compared with $64.2 million for the third quarter of 2014 and $58.9 million for the fourth quarter of 2013. Included in noninterest expense for these periods were acquisition-related expenses of $889 thousand for the fourth quarter of 2014, $722 thousand for the third quarter of 2014 and $4.1 million for the fourth quarter of 2013. Excluding acquisition-related expenses, noninterest expense for the fourth quarter of 2014 was $67.9 million(1), compared to $63.4 million(1) for the third quarter of 2014 and $54.8 million(1) for the fourth quarter of 2013. The increase of $4.5 million, or 7.0%, from the third quarter of 2014 was primarily due to increased information services costs, increased salaries and related costs due to higher headcount, and higher commissions as a result of a 2.8% increase in single family mortgage closed loan volume. The increase from the fourth quarter of 2013 was primarily due to increased salary and related costs and other expenses related to growth in the business. As of December 31, 2014, we had 1,611 full-time equivalent employees, a 0.8% increase from 1,598 employees as of September 30, 2014, and a 7.3% increase from 1,502 employees as of December 31, 2013. During the 12-month period ending December 31, 2014, the Company added 11 home loan centers and three retail deposit branches to bring our total home loan centers to 55 and our total retail deposit branches to 33.
Income Taxes
The Company's income tax expense for the fourth quarter of 2014 was $4.1 million, representing an effective income tax rate of 42.0%. The Company’s effective income tax rate for the year, inclusive of discrete items, was 33.2%. Our fourth quarter effective income tax rate differed from the Federal statutory rate of 35% due to several tax benefit and expense items. Tax benefits that reduced the quarterly rate included investments in low income housing tax credit partnerships, tax exempt interest income, and return to provision true-ups from the 2013 filed tax returns. Tax expense items that increased the quarterly rate included capitalized transaction costs associated with the pending acquisition of Simplicity, state taxes, and the associated true-up of deferred tax items for the updated state tax rate. The increase in the effective income tax rate from the third quarter and
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year-to-date 2014 was the result of higher income apportionment to higher tax states after finalized state tax filings and lower than projected tax-free municipal bond interest.
Business Segments
Commercial and Consumer Banking Segment
Net income for the Commercial and Consumer Banking segment in the fourth quarter of 2014 was $3.3 million, compared to $3.5 million in the third quarter of 2014. Net income, excluding acquisition-related expenses, decreased $80 thousand, or 2.0%, to $3.9 million(1) in the fourth quarter of 2014, compared to net income of $4.0 million(1) in the third quarter of 2014. We recorded $500 thousand of provision for loan losses in the fourth quarter of 2014, compared to no provision recorded in the third quarter of 2014.
Commercial and Consumer Banking segment net income, excluding acquisition-related expenses, decreased $164 thousand from net income of $4.1 million(1) in the fourth quarter of 2013. We recorded $500 thousand of provision for loan losses in the fourth quarter of 2014, compared to no provision recorded in the fourth quarter of 2013. Mostly offsetting the impact of the change in the provision was a $4.0 million increase in net interest income due to higher average balances of interest-earning assets.
Loans Held for Investment
Loans held for investment, net, were $2.10 billion at December 31, 2014, an increase of $134.4 million, or 6.8%, from September 30, 2014 and an increase of $227.3 million, or 12.1%, from December 31, 2013. During the quarter, we transferred approximately $75.6 million of loans held for sale to loans held for investment. New loan commitments in the quarter totaled $307.6 million and originations totaled $144.3 million.
Asset Quality
Nonperforming assets were $25.5 million, or 0.72% of total assets at December 31, 2014, compared to $30.4 million, or 0.87% of total assets at September 30, 2014. Classified assets of $26.4 million, or 0.75% of total assets at December 31, 2014, decreased by $11.6 million, or 30.5%, from $38.0 million, or 1.09% of total assets, at September 30, 2014. These improvements were primarily due to the upgrade of certain commercial loans to accrual status as well as the sale of single family OREO properties.
Nonaccrual loans of $16.0 million, or 0.75% of total loans at December 31, 2014, decreased from $19.9 million, or 1.00% of total loans at September 30, 2014. Other real estate owned ("OREO") balances were $9.4 million at December 31, 2014, a decrease of $1.0 million, or 9.8%, from $10.5 million at September 30, 2014. Delinquent loans of $63.6 million, or 2.99% of total loans at December 31, 2014, decreased from $65.3 million, or 3.28% of total loans at September 30, 2014. Excluding Federal Housing Administration ("FHA")-insured and Department of Veterans' Affairs ("VA")-guaranteed single family mortgage loans, delinquent loans were $22.6 million, or 1.11% of total non-FHA/VA loans at December 31, 2014, compared to $24.5 million, or 1.29% of total non-FHA/VA loans at September 30, 2014. Included in nonaccrual loans at December 31, 2014 and September 30, 2014 are $4.4 million and $6.3 million, respectively, of loans that are guaranteed by the Small Business Administration ("SBA").
The allowance for credit losses was $22.5 million at December 31, 2014 compared to $22.1 million at September 30, 2014. The allowance for loan losses as a percentage of loans held for investment was 1.04% at December 31, 2014 compared to 1.10% at September 30, 2014. Excluding acquired loans, the allowance for loan losses as a percentage of total loans was 1.10% at December 31, 2014, compared to 1.18% at September 30, 2014. We recorded a $500 thousand provision in the fourth quarter of 2014, compared to no provision recorded in the fourth quarter of 2013. Net charge-offs in the fourth quarter of 2014 totaled $87 thousand, compared to net charge-offs of $57 thousand in the third quarter of 2014 and $805 thousand in the fourth quarter of 2013.
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Deposits
Deposit balances were $2.45 billion at December 31, 2014 compared to $2.43 billion at September 30, 2014 and $2.21 billion at December 31, 2013. Certificates of deposit increased $127.4 million, or 34.7%, from September 30, 2014, predominantly due to higher balances of brokered deposits. Transaction and savings deposits decreased $51.5 million, or 2.9%, from the prior quarter.
Mortgage Banking Segment
Net income for the Mortgage Banking segment was $2.3 million in the fourth quarter of 2014, compared to net income of $1.4 million in the third quarter of 2014 and a net loss of $2.3 million in the fourth quarter of 2013. The $835 thousand increase from the third quarter of 2014 was primarily due to higher mortgage servicing income, partially offset by higher commission expense resulting from increased closed loan volume in the fourth quarter of 2014. The $4.6 million increase in earnings from the fourth quarter of 2013 primarily resulted from higher noninterest income due to a 77.0% increase in interest rate lock commitments.
Mortgage Origination for Sale
Single family mortgage interest rate lock commitments, net of estimated fallout, totaled $1.17 billion in the fourth quarter of 2014, an increase of $3.9 million, or 0.3%, from the third quarter of 2014 and up $509.6 million, or 77.0%, from $662.0 million in the fourth quarter of 2013. The increase from the third quarter of 2014 was primarily the result of increased refinance mortgage activity during the quarter. The increase from the fourth quarter of 2013 primarily reflected increased loan volume from the expansion of our mortgage production offices and an 18.1% increase in mortgage production personnel year over year.
Single family closed loan volume designated for sale was $1.33 billion in the fourth quarter of 2014, up $35.8 million, or 2.8%, from $1.29 billion in the third quarter of 2014 and up $557.6 million, or 72.1%, from $773.1 million in the fourth quarter of 2013. At December 31, 2014, the combined pipeline of interest rate lock commitments, net of estimated fallout, and mortgage loans held for sale was $891.4 million, compared to $974.0 million at September 30, 2014 and $476.0 million at December 31, 2013.
Net gain on single family mortgage loan origination and sale activities in the fourth quarter of 2014 was $36.5 million compared to $36.8 million in the third quarter of 2014 and $23.3 million in the fourth quarter of 2013.
Due to differences in the timing of revenue recognition between components of the gain on loan origination and sale activities, the Company analyzes the profitability of these activities using a "Composite Margin," which is comprised of the ratios of the components to their respective populations of interest rate lock commitments and closed loans. The Composite Margin for the fourth quarter of 2014 was 310 basis points, down from 316 basis points in the third quarter of 2014 and 350 basis points in the fourth quarter of 2013.
Mortgage Servicing
Single family mortgage servicing income of $9.3 million in the fourth quarter of 2014 increased $4.0 million, or 75.1%, from the third quarter of 2014 and increased $1.8 million, or 24.7%, from the fourth quarter of 2013. The increase compared to the third quarter of 2014 and the fourth quarter of 2013 was due to improved risk management results and slower long-term prepayment speed expectations.
Single family mortgage servicing fees collected in the fourth quarter of 2014 decreased $524 thousand, or 6.5%, from the third quarter of 2014 and decreased $1.3 million, or 14.8%, from the fourth quarter of 2013. The decrease from the fourth quarter of 2013 was primarily due to lower balances in our loans serviced for others portfolio as a result of the June 30, 2014 sale of single family MSRs. The portfolio of single family loans serviced for others was $11.22 billion at December 31, 2014 compared to $10.59 billion at September 30, 2014, and $11.80 billion at December 31, 2013.
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Noninterest Expense
Mortgage Banking segment noninterest expense of $47.6 million increased $2.4 million, or 5.3%, from the third quarter of 2014. This increase was partially attributable to increased commission and incentive expense as closed loan volumes increased 2.8% from the third quarter of 2014 resulting from our growth and expansion into new markets.
Capital
Regulatory capital ratios for the Bank were as follows:
Dec. 31, 2014* | Sept. 30, 2014 | Dec. 31, 2013 | Well-capitalized ratios | |||||||||
Tier 1 leverage capital (to average assets) | 9.36 | % | 9.63 | % | 9.96 | % | 5.00 | % | ||||
Tier 1 risk-based capital (to risk-weighted assets) | 13.08 | % | 13.03 | % | 14.12 | % | 6.00 | % | ||||
Total risk-based capital (to risk-weighted assets) | 14.00 | % | 13.95 | % | 15.28 | % | 10.00 | % |
* | Regulatory capital ratios at December 31, 2014 are preliminary. |
(1) | The press release contains certain non-GAAP financial disclosures for consolidated net income excluding acquisition-related expenses, diluted earnings per share excluding acquisition-related expenses, and Commercial and Consumer Banking segment net income excluding acquisition-related expenses. The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company's operational performance and to enhance investors' overall understanding of such financial performance. For corresponding reconciliations to GAAP financial measures, see Non-GAAP Financial Measures beginning on page 29 of this earnings release. |
Conference Call
HomeStreet, Inc. will conduct a quarterly earnings conference call on Tuesday, January 27, 2015 at 1:00 p.m. ET. The Company will discuss fourth quarter 2014 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/10056110 or may join the call by dialing 1-877-508-9589 (1-855-669-9657 in Canada) 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 10056110.
About HomeStreet, Inc.
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 savings bank. HomeStreet offers consumer, commercial, and private banking services and investment and insurance products in Washington, Oregon, and Hawaii, and originates residential and commercial mortgages and construction loans for borrowers located in the Western United States. For more information, visit http://ir.homestreet.com. Information contained in or linked from our website is not incorporated into, and does not form a part of, this release.
Forward-Looking Statements
This press release contains forward-looking statements concerning HomeStreet, Inc. and HomeStreet Bank and their operations, performance, financial conditions and likelihood of success. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements are based on many beliefs, assumptions, estimates and expectations of our future performance, taking into account information currently available to us, and include statements about the competitiveness of the banking industry. When
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used in this press release, the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “should,” “will” and “would” and similar expressions (including the negative of these terms) may help identify forward-looking statements. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company. Forward-looking statements speak only as of the date made, and we do not undertake to update them to reflect changes or events that occur after that date.
We caution readers that a number of factors could cause actual results to differ materially from those expressed in, implied or projected by, such forward-looking statements. Among other things, our ability to expand our banking operations geographically and across market sectors, grow our franchise and capitalize on market opportunities, meet the growth targets that management has set for the Company, maintain our position in the industry and generate positive net income and cash flow, may be limited due to future risks and uncertainties including, but not limited to, changes in general economic conditions that impact our markets and our business, actions by the Federal Reserve affecting monetary and fiscal policy, regulatory and legislative actions that may increase capital requirements or otherwise constrain our ability to do business, our ability to maintain electronic and physical security of our customer data, our ability to attract and retain key personnel, our ability to make accurate estimates of the value of our non-cash assets and liabilities, significant increases in the competition we face in our industry and market and the extent of our success in problem asset resolution efforts. Closing of the acquisition discussed in this press release will be contingent on meeting certain conditions, including the receipt of regulatory approvals and certain shareholder approvals from the shareholders of each entity. Such transaction may be delayed in closing, may require significant management attention, and may fall short of anticipated size and value. We may not immediately realize the benefits expected from our anticipated acquisition or our recently completed bank and branch acquisitions, and integration of acquired operations may take longer or prove more expensive than anticipated. In addition, we may not recognize all or a substantial portion of the value of our rate-lock loan activity due to challenges our customers may face in meeting current underwriting standards, a decrease in interest rates, an increase in competition for such loans, unfavorable changes in general economic conditions, including housing prices, the job market, consumer confidence and spending habits either nationally or in the regional and local market areas in which the Company does business and 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 recognize to pose risk to the achievement of our business goals and our operational and financial objectives is contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 and Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2014. 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, 2013 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, 2013, as contained in the Company's Annual Report on Form 10-K for such fiscal year.
Additional Information About the Merger and Where to Find it
The merger of Simplicity Bancorp, Inc. (“Simplicity”) with and into HomeStreet (the “merger”) will require the approval of Simplicity’s stockholders, and the issuance of shares comprising the merger consideration will require the approval of HomeStreet’s shareholders. This earnings release is not a recommendation in favor of a vote on the transaction or on the issuance of shares in the transaction, nor is it a solicitation of proxies in connection with any such vote. HomeStreet and Simplicity filed a joint proxy statement and other relevant documents with the SEC on January 6, 2015 in connection with the merger. The parties have also applied for registration of the HomeStreet shares to be issued in the transaction following a fairness hearing to be convened by the Commissioner of the California Department of Business Oversight. Details about the
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fairness hearing, including a formal notice of the hearing, will be published and made available to Simplicity stockholders in accordance with Section 25142 of the California Corporations Code.
SHAREHOLDERS OF SIMPLICITY AND HOMESTREET ARE ADVISED TO READ THE JOINT PROXY STATEMENT, AS WELL AS THE FAIRNESS HEARING NOTICE WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC AND THE CALIFORNIA DEPARTMENT OF BUSINESS OVERSIGHT, IN ADDITION TO ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
The joint proxy statement, fairness hearing notice (when it becomes available), and other relevant materials, and any other documents filed with or furnished to the SEC by HomeStreet or Simplicity, may be obtained free of charge at the SEC’s website at www.sec.gov. In addition, investors and security holders may obtain free copies of these documents by contacting the Corporate Secretary of HomeStreet at 800-654-1075 or the Corporate Secretary of Simplicity at 800-524-2274. HomeStreet and Simplicity and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from Simplicity and HomeStreet shareholders in connection with the proposed merger. Information concerning such participants’ ownership of Simplicity and HomeStreet common shares is set forth in the joint proxy statement. This communication does not constitute an offer to sell, or a solicitation of an offer to buy, any securities.
Source: HomeStreet, Inc.
Contact: | Investor Relations & Media: | |
HomeStreet, Inc. | ||
Terri Silver, 206-389-6303 | ||
terri.silver@homestreet.com | ||
http://ir.homestreet.com |
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HomeStreet, Inc. and Subsidiaries
Summary Financial Data
Quarter Ended | Twelve Months Ended | |||||||||||||||||||||||||||
(dollars in thousands, except share data) | Dec. 31, 2014 | Sept. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |||||||||||||||||||||
Income statement data (for the period ended): | ||||||||||||||||||||||||||||
Net interest income | $ | 27,502 | $ | 25,308 | $ | 23,147 | $ | 22,712 | $ | 21,382 | $ | 98,669 | $ | 74,444 | ||||||||||||||
Provision (reversal of provision) for loan losses | 500 | — | — | (1,500 | ) | — | (1,000 | ) | 900 | |||||||||||||||||||
Noninterest income | 51,487 | 45,813 | 53,650 | 34,707 | 36,072 | 185,657 | 190,745 | |||||||||||||||||||||
Noninterest expense | 68,791 | 64,158 | 62,971 | 56,091 | 58,868 | 252,011 | 229,495 | |||||||||||||||||||||
Acquisition-related expenses (included in noninterest expense) | 889 | 722 | 606 | 838 | 4,080 | 3,055 | 4,549 | |||||||||||||||||||||
Net income (loss) before taxes | 9,698 | 6,963 | 13,826 | 2,828 | (1,414 | ) | 33,315 | 34,794 | ||||||||||||||||||||
Income tax expense (benefit) | 4,077 | 1,988 | 4,464 | 527 | (553 | ) | 11,056 | 10,985 | ||||||||||||||||||||
Net income (loss) | $ | 5,621 | $ | 4,975 | $ | 9,362 | $ | 2,301 | $ | (861 | ) | $ | 22,259 | $ | 23,809 | |||||||||||||
Basic earnings (loss) per common share | $ | 0.38 | $ | 0.34 | $ | 0.63 | $ | 0.16 | $ | (0.06 | ) | $ | 1.50 | $ | 1.65 | |||||||||||||
Diluted earnings (loss) per common share | $ | 0.38 | $ | 0.33 | $ | 0.63 | $ | 0.15 | $ | (0.06 | ) | $ | 1.49 | $ | 1.61 | |||||||||||||
Common shares outstanding | 14,856,611 | 14,852,971 | 14,849,692 | 14,846,519 | 14,799,991 | 14,856,611 | 14,799,991 | |||||||||||||||||||||
Weighted average common shares | ||||||||||||||||||||||||||||
Basic | 14,811,699 | 14,805,780 | 14,800,853 | 14,784,424 | 14,523,405 | 14,800,689 | 14,412,059 | |||||||||||||||||||||
Diluted | 14,973,222 | 14,968,238 | 14,954,998 | 14,947,864 | 14,523,405 | 14,961,081 | 14,798,168 | |||||||||||||||||||||
Dividends per share | $ | — | $ | — | $ | — | $ | 0.11 | $ | 0.11 | $ | 0.11 | $ | 0.33 | ||||||||||||||
Book value per share | $ | 20.34 | $ | 19.83 | $ | 19.41 | $ | 18.42 | $ | 17.97 | $ | 20.34 | $ | 17.97 | ||||||||||||||
Tangible book value per share (1) | $ | 19.39 | $ | 18.86 | $ | 18.42 | $ | 17.47 | $ | 17.00 | $ | 19.39 | $ | 17.00 | ||||||||||||||
Financial position (at period end): | ||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 30,502 | $ | 34,687 | $ | 74,991 | $ | 47,714 | $ | 33,908 | $ | 30,502 | $ | 33,908 | ||||||||||||||
Investment securities | 455,332 | 449,948 | 454,966 | 446,639 | 498,816 | 455,332 | 498,816 | |||||||||||||||||||||
Loans held for sale | 621,235 | 698,111 | 549,440 | 588,465 | 279,941 | 621,235 | 279,941 | |||||||||||||||||||||
Loans held for investment, net | 2,099,129 | 1,964,762 | 1,812,895 | 1,662,623 | 1,871,813 | 2,099,129 | 1,871,813 | |||||||||||||||||||||
Mortgage servicing rights | 123,324 | 124,593 | 117,991 | 158,741 | 162,463 | 123,324 | 162,463 | |||||||||||||||||||||
Other real estate owned | 9,448 | 10,478 | 11,083 | 12,089 | 12,911 | 9,448 | 12,911 | |||||||||||||||||||||
Total assets | 3,535,090 | 3,474,656 | 3,235,676 | 3,124,812 | 3,066,054 | 3,535,090 | 3,066,054 | |||||||||||||||||||||
Deposits | 2,445,430 | 2,425,458 | 2,417,712 | 2,371,358 | 2,210,821 | 2,445,430 | 2,210,821 | |||||||||||||||||||||
FHLB advances | 597,590 | 598,590 | 384,090 | 346,590 | 446,590 | 597,590 | 446,590 | |||||||||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 50,000 | 14,225 | 14,681 | — | — | 50,000 | — | |||||||||||||||||||||
Shareholders’ equity | 302,238 | 294,568 | 288,249 | 273,510 | 265,926 | 302,238 | 265,926 | |||||||||||||||||||||
Financial position (averages): | ||||||||||||||||||||||||||||
Investment securities | $ | 454,127 | $ | 457,545 | $ | 447,458 | $ | 477,384 | $ | 565,869 | $ | 459,060 | $ | 515,000 | ||||||||||||||
Loans held for investment | 2,044,873 | 1,917,503 | 1,766,788 | 1,830,330 | 1,732,955 | 1,890,537 | 1,496,146 | |||||||||||||||||||||
Total interest-earning assets | 3,140,708 | 2,952,916 | 2,723,687 | 2,654,078 | 2,624,287 | 2,869,414 | 2,422,136 | |||||||||||||||||||||
Total interest-bearing deposits | 1,892,399 | 1,861,164 | 1,900,681 | 1,880,358 | 1,837,461 | 1,883,622 | 1,661,568 | |||||||||||||||||||||
FHLB advances | 606,753 | 442,409 | 350,271 | 323,832 | 343,366 | 431,623 | 293,871 | |||||||||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 23,338 | 11,149 | 1,129 | — | — | 8,977 | 2,721 | |||||||||||||||||||||
Total interest-bearing liabilities | 2,584,347 | 2,376,579 | 2,313,937 | 2,267,904 | 2,245,024 | 2,386,537 | 2,020,613 | |||||||||||||||||||||
Shareholders’ equity | 305,068 | 295,229 | 284,365 | 272,596 | 268,328 | 289,420 | 249,081 |
9
HomeStreet, Inc. and Subsidiaries
Summary Financial Data (continued)
Quarter Ended | Twelve Months Ended | ||||||||||||||||||||||||||||
(dollars in thousands, except share data) | Dec. 31, 2014 | Sept. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | ||||||||||||||||||||||
Financial performance: | |||||||||||||||||||||||||||||
Return on average shareholders’ equity (2) | 7.37 | % | 6.74 | % | 13.17 | % | 3.38 | % | (1.28 | )% | 7.69 | % | 9.56 | % | |||||||||||||||
Return on average tangible shareholders' equity(1) | 7.73 | % | 7.09 | % | 13.85 | % | 3.56 | % | (1.33 | )% | 8.09 | % | 9.67 | % | |||||||||||||||
Return on average assets | 0.65 | % | 0.61 | % | 1.22 | % | 0.30 | % | (0.12 | )% | 0.69 | % | 0.88 | % | |||||||||||||||
Net interest margin (3) | 3.53 | % | 3.50 | % | 3.48 | % | 3.51 | % | 3.34 | % | 3.51 | % | 3.17 | % | (4) | ||||||||||||||
Efficiency ratio (5) | 87.09 | % | 90.21 | % | 82.00 | % | 97.69 | % | 102.46 | % | 88.63 | % | 86.54 | % | |||||||||||||||
Asset quality: | |||||||||||||||||||||||||||||
Allowance for credit losses | $ | 22,524 | $ | 22,111 | $ | 22,168 | $ | 22,317 | $ | 24,089 | $ | 22,524 | $ | 24,089 | |||||||||||||||
Allowance for loan losses/total loans(6) | 1.04 | % | 1.10 | % | 1.19 | % | 1.31 | % | 1.26 | % | 1.04 | % | 1.26 | % | |||||||||||||||
Allowance for loan losses/nonaccrual loans | 137.51 | % | 109.75 | % | 103.44 | % | 96.95 | % | 93.00 | % | 137.51 | % | 93.00 | % | |||||||||||||||
Total classified assets | $ | 26,424 | $ | 38,014 | $ | 40,178 | $ | 46,937 | $ | 50,600 | $ | 26,424 | $ | 50,600 | |||||||||||||||
Classified assets/total assets | 0.75 | % | 1.09 | % | 1.24 | % | 1.50 | % | 1.65 | % | 0.75 | % | 1.65 | % | |||||||||||||||
Total nonaccrual loans(7)(8) | $ | 16,014 | $ | 19,906 | $ | 21,197 | $ | 22,823 | $ | 25,707 | $ | 16,014 | $ | 25,707 | |||||||||||||||
Nonaccrual loans/total loans | 0.75 | % | 1.00 | % | 1.16 | % | 1.35 | % | 1.36 | % | 0.75 | % | 1.36 | % | |||||||||||||||
Other real estate owned | $ | 9,448 | $ | 10,478 | $ | 11,083 | $ | 12,089 | $ | 12,911 | $ | 9,448 | $ | 12,911 | |||||||||||||||
Total nonperforming assets(8) | $ | 25,462 | $ | 30,384 | $ | 32,280 | $ | 34,912 | $ | 38,618 | $ | 25,462 | $ | 38,618 | |||||||||||||||
Nonperforming assets/total assets | 0.72 | % | 0.87 | % | 1.00 | % | 1.12 | % | 1.26 | % | 0.72 | % | 1.26 | % | |||||||||||||||
Net charge-offs | $ | 87 | $ | 57 | $ | 149 | $ | 272 | $ | 805 | $ | 565 | $ | 4,562 | |||||||||||||||
Regulatory capital ratios for the Bank: | |||||||||||||||||||||||||||||
Tier 1 leverage capital (to average assets) | 9.36 | % | (9) | 9.63 | % | 10.17 | % | 9.94 | % | 9.96 | % | 9.36 | % | (9) | 9.96 | % | |||||||||||||
Tier 1 risk-based capital (to risk-weighted assets) | 13.08 | % | (9) | 13.03 | % | 13.84 | % | 13.99 | % | 14.12 | % | 13.08 | % | (9) | 14.12 | % | |||||||||||||
Total risk-based capital (to risk-weighted assets) | 14.00 | % | (9) | 13.95 | % | 14.84 | % | 15.04 | % | 15.28 | % | 14.00 | % | (9) | 15.28 | % | |||||||||||||
Other data: | |||||||||||||||||||||||||||||
Full-time equivalent employees (ending) | 1,611 | 1,598 | 1,546 | 1,491 | 1,502 | 1,611 | 1,502 |
(1) | Tangible equity ratios and tangible book value per share of common stock are non-GAAP financial measures. Other companies may define or calculate these measures differently. Tangible book value is calculated by dividing shareholders' common equity less average goodwill and intangible assets, net (excluding MSRs) by the number of common shares outstanding. The return on average tangible shareholders' equity is calculated by dividing net earnings available to common shareholders (annualized) by average shareholders' common equity less average goodwill and intangible assets, net (excluding MSRs). For additional information on these ratios and for corresponding reconciliations to GAAP financial measures, see Non-GAAP Financial Measures in this earnings release. |
(2) | Net earnings available to common shareholders (annualized) divided by average shareholders’ equity. |
(3) | Net interest income divided by total average interest-earning assets on a tax equivalent basis. |
(4) | Net interest margin for the first quarter of 2013 included $1.4 million in interest expense related to the correction of the cumulative effect of an error in prior years, resulting from the under accrual of interest due on the TruPS for which the Company had deferred the payment of interest. Excluding the impact of the prior period interest expense correction, the net interest margin was 3.23% for the year ended December 31, 2013. |
(5) | Noninterest expense divided by total net revenue (net interest income and noninterest income). |
(6) | Includes loans acquired with bank acquisitions. Excluding acquired loans, allowance for loan losses /total loans was 1.10%, 1.18%, 1.31%, 1.46% and 1.40% at December 31, 2014, September 30, 2014, June 30, 2014, March 31, 2014 and December 31, 2013, respectively. |
(7) | Generally, loans are placed on nonaccrual status when they are 90 or more days past due. |
(8) | Includes $4.4 million, $6.3 million, $6.5 million, $6.6 million and $6.5 million of nonperforming loans at December 31, 2014, September 30, 2014, June 30, 2014, March 31, 2014 and December 31, 2013, respectively, which are guaranteed by the SBA. |
(9) | Regulatory capital ratios at December 31, 2014 are preliminary. |
10
HomeStreet, Inc. and Subsidiaries
Consolidated Statements of Operations
Three Months Ended December 31, | % | Year Ended December 31, | % | |||||||||||||||||||
(in thousands, except share data) | 2014 | 2013 | Change | 2014 | 2013 | Change | ||||||||||||||||
Interest income: | ||||||||||||||||||||||
Loans | $ | 28,242 | $ | 21,522 | 31 | % | $ | 100,107 | $ | 76,442 | 31 | % | ||||||||||
Investment securities | 2,366 | 2,839 | (17 | ) | 10,565 | 12,391 | (15 | ) | ||||||||||||||
Other | 172 | 61 | 182 | 621 | 143 | 334 | ||||||||||||||||
30,780 | 24,422 | 26 | 111,293 | 88,976 | 25 | |||||||||||||||||
Interest expense: | ||||||||||||||||||||||
Deposits | 2,351 | 2,338 | 1 | 9,431 | 10,416 | (9 | ) | |||||||||||||||
Federal Home Loan Bank advances | 614 | 419 | 47 | 1,980 | 1,532 | 29 | ||||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 15 | — | NM | 22 | 11 | 100 | ||||||||||||||||
Long-term debt | 269 | 272 | (1 | ) | 1,120 | 2,546 | (56 | ) | ||||||||||||||
Other | 29 | 11 | 164 | 71 | 27 | 163 | ||||||||||||||||
3,278 | 3,040 | 8 | 12,624 | 14,532 | (13 | ) | ||||||||||||||||
Net interest income | 27,502 | 21,382 | 29 | 98,669 | 74,444 | 33 | ||||||||||||||||
Provision (reversal of provision) for credit losses | 500 | — | NM | (1,000 | ) | 900 | NM | |||||||||||||||
Net interest income after provision for credit losses | 27,002 | 21,382 | 26 | 99,669 | 73,544 | 36 | ||||||||||||||||
Noninterest income: | ||||||||||||||||||||||
Net gain on mortgage loan origination and sale activities | 39,176 | 24,842 | 58 | 144,122 | 164,712 | (13 | ) | |||||||||||||||
Mortgage servicing income | 9,808 | 7,807 | 26 | 34,092 | 17,073 | 100 | ||||||||||||||||
Income (loss) from WMS Series LLC | 170 | (359 | ) | (147 | ) | 101 | 704 | NM | ||||||||||||||
Loss on debt extinguishment | — | — | NM | (573 | ) | — | NM | |||||||||||||||
Depositor and other retail banking fees | 896 | 899 | — | 3,572 | 3,172 | 13 | ||||||||||||||||
Insurance agency commissions | 261 | 252 | 4 | 1,153 | 864 | 33 | ||||||||||||||||
Gain on sale of investment securities available for sale | 1,185 | 1,766 | (33 | ) | 2,358 | 1,772 | 33 | |||||||||||||||
Other | (9 | ) | 865 | (101 | ) | 832 | 2,448 | (66 | ) | |||||||||||||
51,487 | 36,072 | 43 | 185,657 | 190,745 | (3 | ) | ||||||||||||||||
Noninterest expense: | ||||||||||||||||||||||
Salaries and related costs | 44,706 | 36,110 | 24 | 163,387 | 149,440 | 9 | ||||||||||||||||
General and administrative | 11,240 | 9,932 | 13 | 42,833 | 40,366 | 6 | ||||||||||||||||
Legal | 500 | 498 | — | 2,071 | 2,552 | (19 | ) | |||||||||||||||
Consulting | 1,042 | 3,294 | (68 | ) | 3,224 | 5,637 | (43 | ) | ||||||||||||||
Federal Deposit Insurance Corporation assessments | 442 | 496 | (11 | ) | 2,316 | 1,433 | 62 | |||||||||||||||
Occupancy | 4,556 | 4,098 | 11 | 18,598 | 13,765 | 35 | ||||||||||||||||
Information services | 6,455 | 4,369 | 48 | 20,052 | 14,491 | 38 | ||||||||||||||||
Net cost of operation and sale of other real estate owned | (150 | ) | 71 | (311 | ) | (470 | ) | 1,811 | NM | |||||||||||||
68,791 | 58,868 | 17 | 252,011 | 229,495 | 10 | |||||||||||||||||
Income (loss) before income taxes | 9,698 | (1,414 | ) | (786 | ) | 33,315 | 34,794 | (4 | ) | |||||||||||||
Income tax expense (benefit) | 4,077 | (553 | ) | (837 | ) | 11,056 | 10,985 | 1 | ||||||||||||||
NET INCOME (LOSS) | $ | 5,621 | $ | (861 | ) | (753 | ) | $ | 22,259 | $ | 23,809 | (7 | ) | |||||||||
Basic income (loss) per share | $ | 0.38 | $ | (0.06 | ) | NM | $ | 1.50 | $ | 1.65 | (9 | ) | ||||||||||
Diluted income (loss) per share | $ | 0.38 | $ | (0.06 | ) | NM | $ | 1.49 | $ | 1.61 | (7 | ) | ||||||||||
Basic weighted average number of shares outstanding | 14,811,699 | 14,523,405 | 2 | 14,800,689 | 14,412,059 | 3 | ||||||||||||||||
Diluted weighted average number of shares outstanding | 14,973,222 | 14,523,405 | 3 | 14,961,081 | 14,798,168 | 1 |
11
HomeStreet, Inc. and Subsidiaries
Five Quarter Consolidated Statements of Operation
Quarter ended | ||||||||||||||||||||
(in thousands, except share data) | Dec. 31, 2014 | Sept. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | |||||||||||||||
Interest income: | ||||||||||||||||||||
Loans | $ | 28,242 | $ | 25,763 | $ | 23,419 | $ | 22,683 | $ | 21,522 | ||||||||||
Investment securities | 2,366 | 2,565 | 2,664 | 2,970 | 2,839 | |||||||||||||||
Other | 172 | 150 | 142 | 157 | 61 | |||||||||||||||
30,780 | 28,478 | 26,225 | 25,810 | 24,422 | ||||||||||||||||
Interest expense: | ||||||||||||||||||||
Deposits | 2,351 | 2,364 | 2,356 | 2,360 | 2,338 | |||||||||||||||
Federal Home Loan Bank advances | 614 | 509 | 444 | 413 | 419 | |||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 15 | 6 | 1 | — | — | |||||||||||||||
Long-term debt | 269 | 271 | 265 | 315 | 272 | |||||||||||||||
Other | 29 | 20 | 12 | 10 | 11 | |||||||||||||||
3,278 | 3,170 | 3,078 | 3,098 | 3,040 | ||||||||||||||||
Net interest income | 27,502 | 25,308 | 23,147 | 22,712 | 21,382 | |||||||||||||||
Provision (reversal of provision) for credit losses | 500 | — | — | (1,500 | ) | — | ||||||||||||||
Net interest income after provision for credit losses | 27,002 | 25,308 | 23,147 | 24,212 | 21,382 | |||||||||||||||
Noninterest income: | ||||||||||||||||||||
Net gain on mortgage loan origination and sale activities | 39,176 | 37,642 | 41,794 | 25,510 | 24,842 | |||||||||||||||
Mortgage servicing income | 9,808 | 6,155 | 10,184 | 7,945 | 7,807 | |||||||||||||||
Income (loss) from WMS Series LLC | 170 | (122 | ) | 246 | (193 | ) | (359 | ) | ||||||||||||
Gain (loss) on debt extinguishment | — | 2 | 11 | (586 | ) | — | ||||||||||||||
Depositor and other retail banking fees | 896 | 944 | 917 | 815 | 899 | |||||||||||||||
Insurance agency commissions | 261 | 256 | 232 | 404 | 252 | |||||||||||||||
Gain (loss) on sale of investment securities available for sale | 1,185 | 480 | (20 | ) | 713 | 1,766 | ||||||||||||||
Other | (9 | ) | 456 | 286 | 99 | 865 | ||||||||||||||
51,487 | 45,813 | 53,650 | 34,707 | 36,072 | ||||||||||||||||
Noninterest expense: | ||||||||||||||||||||
Salaries and related costs | 44,706 | 42,604 | 40,606 | 35,471 | 36,110 | |||||||||||||||
General and administrative | 11,240 | 10,326 | 11,145 | 10,122 | 9,932 | |||||||||||||||
Legal | 500 | 630 | 542 | 399 | 498 | |||||||||||||||
Consulting | 1,042 | 628 | 603 | 951 | 3,294 | |||||||||||||||
Federal Deposit Insurance Corporation assessments | 442 | 682 | 572 | 620 | 496 | |||||||||||||||
Occupancy | 4,556 | 4,935 | 4,675 | 4,432 | 4,098 | |||||||||||||||
Information services | 6,455 | 4,220 | 4,862 | 4,515 | 4,369 | |||||||||||||||
Net cost of operation and sale of other real estate owned | (150 | ) | 133 | (34 | ) | (419 | ) | 71 | ||||||||||||
68,791 | 64,158 | 62,971 | 56,091 | 58,868 | ||||||||||||||||
Income (loss) before income tax expense | 9,698 | 6,963 | 13,826 | 2,828 | (1,414 | ) | ||||||||||||||
Income tax expense (benefit) | 4,077 | 1,988 | 4,464 | 527 | (553 | ) | ||||||||||||||
NET INCOME (LOSS) | $ | 5,621 | $ | 4,975 | $ | 9,362 | $ | 2,301 | $ | (861 | ) | |||||||||
Basic income (loss) per share | $ | 0.38 | $ | 0.34 | $ | 0.63 | $ | 0.16 | $ | (0.06 | ) | |||||||||
Diluted income (loss) per share | $ | 0.38 | $ | 0.33 | $ | 0.63 | $ | 0.15 | $ | (0.06 | ) | |||||||||
Basic weighted average number of shares outstanding | 14,811,699 | 14,805,780 | 14,800,853 | 14,784,424 | 14,523,405 | |||||||||||||||
Diluted weighted average number of shares outstanding | 14,973,222 | 14,968,238 | 14,954,998 | 14,947,864 | 14,523,405 |
12
HomeStreet, Inc. and Subsidiaries
Consolidated Statements of Financial Condition
(in thousands, except share data) | Dec. 31, 2014 | Dec. 31, 2013 | % Change | ||||||||
Assets: | |||||||||||
Cash and cash equivalents (including interest-earning instruments of $10,271 and $9,436) | $ | 30,502 | $ | 33,908 | (10 | )% | |||||
Investment securities (includes $427,326 and $481,683 carried at fair value) | 455,332 | 498,816 | (9 | ) | |||||||
Loans held for sale (includes $610,350 and $279,385 carried at fair value) | 621,235 | 279,941 | 122 | ||||||||
Loans held for investment (net of allowance for loan losses of $22,021 and $23,908) | 2,099,129 | 1,871,813 | 12 | ||||||||
Mortgage servicing rights (includes $112,439 and $153,128 carried at fair value) | 123,324 | 162,463 | (24 | ) | |||||||
Other real estate owned | 9,448 | 12,911 | (27 | ) | |||||||
Federal Home Loan Bank stock, at cost | 33,915 | 35,288 | (4 | ) | |||||||
Premises and equipment, net | 45,251 | 36,612 | 24 | ||||||||
Goodwill | 11,945 | 12,063 | (1 | ) | |||||||
Other assets | 105,009 | 122,239 | (14 | ) | |||||||
Total assets | $ | 3,535,090 | $ | 3,066,054 | 15 | ||||||
Liabilities and shareholders’ equity: | |||||||||||
Liabilities: | |||||||||||
Deposits | $ | 2,445,430 | $ | 2,210,821 | 11 | ||||||
Federal Home Loan Bank advances | 597,590 | 446,590 | 34 | ||||||||
Federal funds purchased and securities sold under agreements to repurchase | 50,000 | — | NM | ||||||||
Accounts payable and other liabilities | 77,975 | 77,906 | — | ||||||||
Long-term debt | 61,857 | 64,811 | (5 | ) | |||||||
Total liabilities | 3,232,852 | 2,800,128 | 15 | ||||||||
Shareholders’ equity: | |||||||||||
Preferred stock, no par value | |||||||||||
Authorized 10,000 shares | |||||||||||
Issued and outstanding, 0 shares and 0 shares | — | — | — | ||||||||
Common stock, no par value | |||||||||||
Authorized 160,000,000 | |||||||||||
Issued and outstanding, 14,856,611 shares and 14,799,991 shares | 511 | 511 | — | ||||||||
Additional paid-in capital | 96,615 | 94,474 | 2 | ||||||||
Retained earnings | 203,566 | 182,935 | 11 | ||||||||
Accumulated other comprehensive loss | 1,546 | (11,994 | ) | (113 | ) | ||||||
Total shareholders’ equity | 302,238 | 265,926 | 14 | ||||||||
Total liabilities and shareholders’ equity | $ | 3,535,090 | $ | 3,066,054 | 15 |
13
HomeStreet, Inc. and Subsidiaries
Five Quarter Consolidated Statements of Financial Condition
(in thousands, except share data) | Dec. 31, 2014 | Sept. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | |||||||||||||||
Assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 30,502 | $ | 34,687 | $ | 74,991 | $ | 47,714 | $ | 33,908 | ||||||||||
Investment securities | 455,332 | 449,948 | 454,966 | 446,639 | 498,816 | |||||||||||||||
Loans held for sale | 621,235 | 698,111 | 549,440 | 588,465 | 279,941 | |||||||||||||||
Loans held for investment, net | 2,099,129 | 1,964,762 | 1,812,895 | 1,662,623 | 1,871,813 | |||||||||||||||
Mortgage servicing rights | 123,324 | 124,593 | 117,991 | 158,741 | 162,463 | |||||||||||||||
Other real estate owned | 9,448 | 10,478 | 11,083 | 12,089 | 12,911 | |||||||||||||||
Federal Home Loan Bank stock, at cost | 33,915 | 34,271 | 34,618 | 34,958 | 35,288 | |||||||||||||||
Premises and equipment, net | 45,251 | 44,476 | 43,896 | 40,894 | 36,612 | |||||||||||||||
Goodwill | 11,945 | 11,945 | 11,945 | 12,063 | 12,063 | |||||||||||||||
Other assets | 105,009 | 101,385 | 123,851 | 120,626 | 122,239 | |||||||||||||||
Total assets | $ | 3,535,090 | $ | 3,474,656 | $ | 3,235,676 | $ | 3,124,812 | $ | 3,066,054 | ||||||||||
Liabilities and shareholders’ equity: | ||||||||||||||||||||
Liabilities: | ||||||||||||||||||||
Deposits | $ | 2,445,430 | $ | 2,425,458 | $ | 2,417,712 | $ | 2,371,358 | $ | 2,210,821 | ||||||||||
Federal Home Loan Bank advances | 597,590 | 598,590 | 384,090 | 346,590 | 446,590 | |||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 50,000 | 14,225 | 14,681 | — | — | |||||||||||||||
Accounts payable and other liabilities | 77,975 | 79,958 | 69,087 | 71,498 | 77,906 | |||||||||||||||
Long-term debt | 61,857 | 61,857 | 61,857 | 61,856 | 64,811 | |||||||||||||||
Total liabilities | 3,232,852 | 3,180,088 | 2,947,427 | 2,851,302 | 2,800,128 | |||||||||||||||
Shareholders’ equity: | ||||||||||||||||||||
Preferred stock, no par value | ||||||||||||||||||||
Authorized 10,000 shares | — | — | — | — | — | |||||||||||||||
Common stock, no par value | ||||||||||||||||||||
Authorized 160,000,000 | 511 | 511 | 511 | 511 | 511 | |||||||||||||||
Additional paid-in capital | 96,615 | 96,650 | 95,923 | 95,271 | 94,474 | |||||||||||||||
Retained earnings | 203,566 | 197,945 | 192,972 | 183,610 | 182,935 | |||||||||||||||
Accumulated other comprehensive (loss) income | 1,546 | (538 | ) | (1,157 | ) | (5,882 | ) | (11,994 | ) | |||||||||||
Total shareholders’ equity | 302,238 | 294,568 | 288,249 | 273,510 | 265,926 | |||||||||||||||
Total liabilities and shareholders’ equity | $ | 3,535,090 | $ | 3,474,656 | $ | 3,235,676 | $ | 3,124,812 | $ | 3,066,054 |
14
HomeStreet, Inc. and Subsidiaries
Average Balances, Yields and Rates Paid (Taxable-equivalent basis)
Quarter Ended December 31, | ||||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||||
(in thousands) | Average Balance | Interest | Average Yield/Cost | Average Balance | Interest | Average Yield/Cost | ||||||||||||||||
Assets: | ||||||||||||||||||||||
Interest-earning assets: (1) | ||||||||||||||||||||||
Cash and cash equivalents | $ | 32,157 | $ | 13 | 0.04 | % | $ | 46,718 | $ | 27 | 0.23 | % | ||||||||||
Investment securities | 454,127 | 2,940 | 2.57 | % | 565,869 | 3,433 | 2.43 | % | ||||||||||||||
Loans held for sale | 609,551 | 5,706 | 3.71 | % | 278,745 | 2,962 | 4.25 | % | ||||||||||||||
Loans held for investment | 2,044,873 | 22,570 | 4.38 | % | 1,732,955 | 18,589 | 4.28 | % | ||||||||||||||
Total interest-earning assets | 3,140,708 | 31,229 | 3.94 | % | 2,624,287 | 25,011 | 3.80 | % | ||||||||||||||
Noninterest-earning assets (2) | 304,795 | 298,965 | ||||||||||||||||||||
Total assets | $ | 3,445,503 | $ | 2,923,252 | ||||||||||||||||||
Liabilities and shareholders’ equity: | ||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||
Interest-bearing demand accounts | $ | 277,612 | 282 | 0.40 | % | $ | 266,226 | 269 | 0.42 | % | ||||||||||||
Savings accounts | 193,802 | 280 | 0.57 | % | 148,029 | 187 | 0.50 | % | ||||||||||||||
Money market accounts | 1,012,043 | 1,136 | 0.45 | % | 912,739 | 1,009 | 0.44 | % | ||||||||||||||
Certificate accounts | 408,942 | 653 | 0.63 | % | 510,467 | 873 | 0.68 | % | ||||||||||||||
Total interest-bearing deposits | 1,892,399 | 2,351 | 0.49 | % | 1,837,461 | 2,338 | 0.50 | % | ||||||||||||||
FHLB advances | 606,753 | 614 | 0.40 | % | 343,366 | 419 | 0.48 | % | ||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 23,338 | 15 | 0.25 | % | — | — | —% | |||||||||||||||
Long-term debt | 61,857 | 269 | 1.73 | % | 63,784 | 272 | 1.67 | % | ||||||||||||||
Other borrowings | — | 29 | — | % | 413 | 11 | 10.53 | % | ||||||||||||||
Total interest-bearing liabilities | 2,584,347 | 3,278 | 0.50 | % | 2,245,024 | 3,040 | 0.54 | % | ||||||||||||||
Noninterest-bearing liabilities | 556,088 | 409,900 | ||||||||||||||||||||
Total liabilities | 3,140,435 | 2,654,924 | ||||||||||||||||||||
Shareholders’ equity | 305,068 | 268,328 | ||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 3,445,503 | $ | 2,923,252 | ||||||||||||||||||
Net interest income (3) | $ | 27,951 | $ | 21,971 | ||||||||||||||||||
Net interest spread | 3.44 | % | 3.26 | % | ||||||||||||||||||
Impact of noninterest-bearing sources | 0.09 | % | 0.08 | % | ||||||||||||||||||
Net interest margin | 3.53 | % | 3.34 | % |
(1) | The average balances of nonaccrual assets and related income, if any, are included in their respective categories. |
(2) | Includes loan balances that have been foreclosed and are now reclassified to other real estate owned. |
(3) | Includes taxable-equivalent adjustments primarily related to tax-exempt income on certain loans and securities of $449 thousand and $589 thousand for the quarters ended December 31, 2014 and December 31, 2013, respectively. The estimated federal statutory tax rate was 35% for the periods presented. |
15
HomeStreet, Inc. and Subsidiaries
Average Balances, Yields and Rates Paid (Taxable-equivalent basis)
Year Ended December 31, | |||||||||||||||||||||||
2014 | 2013 | ||||||||||||||||||||||
(in thousands) | Average Balance | Interest | Average Yield/Cost | Average Balance | Interest | Average Yield/Cost | |||||||||||||||||
Assets: | |||||||||||||||||||||||
Interest-earning assets: (1) | |||||||||||||||||||||||
Cash and cash equivalents | $ | 31,137 | $ | 58 | 0.18 | % | $ | 29,861 | $ | 73 | 0.24 | % | |||||||||||
Investment securities | 459,060 | 12,945 | 2.82 | % | 515,000 | 14,608 | 2.84 | % | |||||||||||||||
Loans held for sale | 488,680 | 18,569 | 3.80 | % | 381,129 | 14,180 | 3.72 | % | |||||||||||||||
Loans held for investment | 1,890,537 | 81,659 | 4.32 | % | 1,496,146 | 62,384 | 4.17 | % | |||||||||||||||
Total interest-earning assets | 2,869,414 | 113,231 | 3.95 | % | 2,422,136 | 91,245 | 3.77 | % | |||||||||||||||
Noninterest-earning assets (2) | 335,037 | 296,078 | |||||||||||||||||||||
Total assets | $ | 3,204,451 | $ | 2,718,214 | |||||||||||||||||||
Liabilities and shareholders’ equity: | |||||||||||||||||||||||
Deposits: | |||||||||||||||||||||||
Interest-bearing demand accounts | $ | 270,634 | 939 | 0.35 | % | $ | 238,552 | 925 | 0.38 | % | |||||||||||||
Savings accounts | 173,678 | 937 | 0.54 | % | 122,602 | 545 | 0.44 | % | |||||||||||||||
Money market accounts | 980,045 | 4,361 | 0.45 | % | 810,666 | 3,899 | 0.48 | % | |||||||||||||||
Certificate accounts | 459,265 | 3,195 | 0.70 | % | 489,748 | 5,053 | 1.03 | % | |||||||||||||||
Total interest-bearing deposits | 1,883,622 | 9,432 | 0.50 | % | 1,661,568 | 10,422 | 0.64 | % | |||||||||||||||
FHLB advances | 431,623 | 1,990 | 0.46 | % | 293,871 | 1,532 | 0.52 | % | |||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 8,977 | 22 | 0.25 | % | 2,721 | 11 | 0.40 | % | |||||||||||||||
Long-term debt | 62,315 | 1,121 | 1.80 | % | 62,349 | 2,546 | (3) | 4.03 | % | (3) | |||||||||||||
Other borrowings | — | 49 | — | % | 104 | 20 | 19.23 | % | |||||||||||||||
Total interest-bearing liabilities | 2,386,537 | 12,614 | 0.53 | % | 2,020,613 | 14,531 | 0.72 | % | |||||||||||||||
Noninterest-bearing liabilities | 528,494 | 448,520 | |||||||||||||||||||||
Total liabilities | 2,915,031 | 2,469,133 | |||||||||||||||||||||
Shareholders’ equity | 289,420 | 249,081 | |||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 3,204,451 | $ | 2,718,214 | |||||||||||||||||||
Net interest income (4) | $ | 100,617 | $ | 76,714 | |||||||||||||||||||
Net interest spread | 3.42 | % | 3.05 | % | |||||||||||||||||||
Impact of noninterest-bearing sources | 0.09 | % | 0.12 | % | |||||||||||||||||||
Net interest margin | 3.51 | % | 3.17 | % | (3) |
(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) | Interest expense for the first quarter of 2013 includes $1.4 million related to the correction of the cumulative effect of an immaterial error in prior years, resulting from the under accrual of interest due on the TruPS for which the Company had deferred the payment of interest. Excluding the impact of the prior period interest expense correction, the net interest margin was 3.23% for the year ended December 31, 2013. |
(4) | Includes taxable-equivalent adjustments primarily related to tax-exempt income on certain loans and securities of $1.9 million and $2.3 million for the year ended December 31, 2014 and December 31, 2013, respectively. The estimated federal statutory tax rate was 35% for the periods presented. |
16
HomeStreet, Inc. and Subsidiaries
Commercial and Consumer Banking Segment
Quarter ended | ||||||||||||||||||||
(in thousands) | Dec. 31, 2014 | Sept. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | |||||||||||||||
Net interest income | $ | 22,187 | $ | 20,163 | $ | 19,403 | $ | 20,233 | $ | 18,160 | ||||||||||
Provision (reversal of provision) for loan losses | 500 | — | — | (1,500 | ) | — | ||||||||||||||
Noninterest income | 5,434 | 3,660 | 6,614 | 2,958 | 5,501 | |||||||||||||||
Noninterest expense | 21,155 | 18,930 | 20,434 | 19,293 | 21,729 | |||||||||||||||
Income before income taxes | 5,966 | 4,893 | 5,583 | 5,398 | 1,932 | |||||||||||||||
Income tax expense | 2,621 | 1,359 | 1,830 | 1,282 | 497 | |||||||||||||||
Net income | $ | 3,345 | $ | 3,534 | $ | 3,753 | $ | 4,116 | $ | 1,435 | ||||||||||
Net income, excluding acquisition-related expenses (1) | $ | 3,923 | $ | 4,003 | $ | 4,147 | $ | 4,661 | $ | 4,087 | ||||||||||
Efficiency ratio (2) | 76.59 | % | 79.46 | % | 78.54 | % | 83.19 | % | 91.83 | % | ||||||||||
Full-time equivalent employees (ending) | 608 | 605 | 599 | 588 | 577 | |||||||||||||||
Net gain on mortgage loan origination and sale activities: | ||||||||||||||||||||
Multifamily | 2,704 | 930 | 693 | 396 | 559 | |||||||||||||||
Other | (16 | ) | (101 | ) | 4,087 | 794 | 964 | |||||||||||||
$ | 2,688 | $ | 829 | $ | 4,780 | $ | 1,190 | $ | 1,523 | |||||||||||
Production volumes for sale to the secondary market: | ||||||||||||||||||||
Multifamily mortgage originations | $ | 57,135 | $ | 60,699 | $ | 23,105 | $ | 11,343 | $ | 16,325 | ||||||||||
Multifamily mortgage loans sold | 99,285 | 20,409 | 15,902 | 6,263 | 15,775 |
(1) | Commercial and Consumer Banking segment net income, excluding acquisition-related expenses, is a non-GAAP financial disclosure. The Company uses this non-GAAP financial measure to provide meaningful supplemental information regarding the Company's operational performance and to enhance investors' overall understanding of such financial performance. For corresponding reconciliations to GAAP financial measures, see Non-GAAP Financial Measures beginning on page 29 of this earnings release. |
(2) | Noninterest expense divided by total net revenue (net interest income and noninterest income). |
Commercial Mortgage Servicing Income
Quarter ended | ||||||||||||||||||||
(in thousands) | Dec. 31, 2014 | Sept. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | |||||||||||||||
Servicing income, net: | ||||||||||||||||||||
Servicing fees and other | $ | 970 | $ | 1,289 | $ | 1,017 | $ | 890 | $ | 834 | ||||||||||
Amortization of multifamily MSRs | (429 | ) | (425 | ) | (434 | ) | (424 | ) | (457 | ) | ||||||||||
Commercial mortgage servicing income | $ | 541 | $ | 864 | $ | 583 | $ | 466 | $ | 377 |
17
HomeStreet, Inc. and Subsidiaries
Commercial and Consumer Banking Segment (continued)
Commercial Loans Serviced for Others
(in thousands) | Dec. 31, 2014 | Sept. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | |||||||||||||||
Commercial | ||||||||||||||||||||
Multifamily | $ | 752,640 | $ | 703,197 | $ | 704,997 | $ | 721,464 | $ | 720,429 | ||||||||||
Other | 82,354 | 86,589 | 97,996 | 99,340 | 95,673 | |||||||||||||||
Total commercial loans serviced for others | $ | 834,994 | $ | 789,786 | $ | 802,993 | $ | 820,804 | $ | 816,102 |
Commercial Multifamily Capitalized Mortgage Servicing Rights
Quarter ended | ||||||||||||||||||||
(in thousands) | Dec. 31, 2014 | Sept. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | |||||||||||||||
Beginning balance | $ | 9,116 | $ | 9,122 | $ | 9,095 | $ | 9,335 | $ | 9,403 | ||||||||||
Originations | 2,198 | 418 | 461 | 183 | 375 | |||||||||||||||
Amortization | (429 | ) | (424 | ) | (434 | ) | (423 | ) | (443 | ) | ||||||||||
Ending balance | $ | 10,885 | $ | 9,116 | $ | 9,122 | $ | 9,095 | $ | 9,335 | ||||||||||
Ratio of MSR carrying value to related loans serviced for others | 1.38 | % | 1.23 | % | 1.21 | % | 1.18 | % | 1.21 | % | ||||||||||
MSR servicing fee multiple (1) | 3.20 | 2.87 | 2.83 | 2.81 | 2.91 | |||||||||||||||
Weighted-average note rate (loans serviced for others) | 5.02 | % | 5.12 | % | 5.15 | % | 5.20 | % | 5.12 | % | ||||||||||
Weighted-average servicing fee (loans serviced for others) | 0.43 | % | 0.43 | % | 0.43 | % | 0.42 | % | 0.42 | % |
(1) | Represents the ratio of MSR carrying value to related loans serviced for others divided by the weighted-average servicing fee for loans serviced for others. |
18
HomeStreet, Inc. and Subsidiaries
Commercial and Consumer Banking Segment (continued)
Five Quarter Investment Securities
(in thousands, except for duration data) | Dec. 31, 2014 | Sept. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | |||||||||||||||
Available for sale: | ||||||||||||||||||||
Mortgage-backed securities: | ||||||||||||||||||||
Residential | $ | 107,280 | $ | 110,837 | $ | 110,266 | $ | 120,103 | $ | 133,910 | ||||||||||
Commercial | 13,671 | 13,571 | 13,674 | 13,596 | 13,433 | |||||||||||||||
Municipal bonds | 122,334 | 123,041 | 125,813 | 124,860 | 130,850 | |||||||||||||||
Collateralized mortgage obligations: | ||||||||||||||||||||
Residential | 43,166 | 54,887 | 56,767 | 60,537 | 90,327 | |||||||||||||||
Commercial | 20,486 | 15,633 | 16,021 | 11,639 | 16,845 | |||||||||||||||
Corporate debt securities | 79,400 | 72,114 | 72,420 | 70,805 | 68,866 | |||||||||||||||
U.S. Treasury | 40,989 | 42,013 | 42,010 | 26,996 | 27,452 | |||||||||||||||
Total available for sale | $ | 427,326 | $ | 432,096 | $ | 436,971 | $ | 428,536 | $ | 481,683 | ||||||||||
Held to maturity | 28,006 | 17,852 | 17,995 | 18,103 | 17,133 | |||||||||||||||
$ | 455,332 | $ | 449,948 | $ | 454,966 | $ | 446,639 | $ | 498,816 | |||||||||||
Weighted average duration in years | ||||||||||||||||||||
Available for sale | 4.6 | 5.0 | 4.5 | 5.0 | 5.1 |
Five Quarter Loans Held for Investment
(in thousands) | Dec. 31, 2014 | Sept. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | |||||||||||||||
Consumer loans | ||||||||||||||||||||
Single family | $ | 896,665 | $ | 788,232 | $ | 749,204 | $ | 668,277 | $ | 904,913 | ||||||||||
Home equity | 135,598 | 138,276 | 136,181 | 134,882 | 135,650 | |||||||||||||||
1,032,263 | 926,508 | 885,385 | 803,159 | 1,040,563 | ||||||||||||||||
Commercial loans | ||||||||||||||||||||
Commercial real estate | 523,464 | 530,335 | 476,411 | 480,200 | 477,642 | |||||||||||||||
Multifamily | 55,088 | 62,498 | 72,327 | 71,278 | 79,216 | |||||||||||||||
Construction/land development | 367,934 | 297,790 | 219,282 | 162,717 | 130,465 | |||||||||||||||
Commercial business | 147,449 | 173,226 | 185,177 | 171,080 | 171,054 | |||||||||||||||
1,093,935 | 1,063,849 | 953,197 | 885,275 | 858,377 | ||||||||||||||||
2,126,198 | 1,990,357 | 1,838,582 | 1,688,434 | 1,898,940 | ||||||||||||||||
Net deferred loan fees, costs and discounts | (5,048 | ) | (3,748 | ) | (3,761 | ) | (3,684 | ) | (3,219 | ) | ||||||||||
2,121,150 | 1,986,609 | 1,834,821 | 1,684,750 | 1,895,721 | ||||||||||||||||
Allowance for loan losses | (22,021 | ) | (21,847 | ) | (21,926 | ) | (22,127 | ) | (23,908 | ) | ||||||||||
$ | 2,099,129 | $ | 1,964,762 | $ | 1,812,895 | $ | 1,662,623 | $ | 1,871,813 |
19
HomeStreet, Inc. and Subsidiaries
Commercial and Consumer Banking Segment (continued)
Five Quarter Credit Quality Activity
Allowance for Credit Losses (roll-forward)
Quarter ended | ||||||||||||||||||||
(in thousands) | Dec. 31, 2014 | Sept. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | |||||||||||||||
Beginning balance | $ | 22,111 | $ | 22,168 | $ | 22,317 | $ | 24,089 | $ | 24,894 | ||||||||||
Provision (reversal of provision) for credit losses | 500 | — | — | (1,500 | ) | — | ||||||||||||||
(Charge-offs), net of recoveries | (87 | ) | (57 | ) | (149 | ) | (272 | ) | (805 | ) | ||||||||||
Ending balance | $ | 22,524 | $ | 22,111 | $ | 22,168 | $ | 22,317 | $ | 24,089 | ||||||||||
Components: | ||||||||||||||||||||
Allowance for loan losses | $ | 22,021 | $ | 21,847 | $ | 21,926 | $ | 22,127 | $ | 23,908 | ||||||||||
Allowance for unfunded commitments | 503 | 264 | 242 | 190 | 181 | |||||||||||||||
Allowance for credit losses | $ | 22,524 | $ | 22,111 | $ | 22,168 | $ | 22,317 | $ | 24,089 | ||||||||||
Allowance as a % of loans held for investment(1) | 1.04 | % | 1.10 | % | 1.19 | % | 1.31 | % | 1.26 | % | ||||||||||
Allowance as a % of nonaccrual loans | 137.51 | % | 109.75 | % | 103.44 | % | 96.95 | % | 93.00 | % |
(1) | Includes loans acquired with bank acquisitions. Excluding acquired loans, allowance for loan losses/total loans was 1.10%, 1.18%, 1.31%, 1.46% and 1.40% at December 31, 2014, September 30, 2014, June 30, 2014, March 31, 2014 and December 31, 2013, respectively. |
Nonperforming Assets (NPAs) roll-forward
Quarter ended | |||||||||||||||||||||
(in thousands) | Dec. 31, 2014 | Sept. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | ||||||||||||||||
Beginning balance | $ | 30,384 | $ | 32,280 | $ | 34,912 | $ | 38,618 | $ | 39,019 | |||||||||||
Additions | 1,754 | 3,414 | 4,533 | 1,811 | 9,959 | (1) | |||||||||||||||
Reductions: | |||||||||||||||||||||
Charge-offs | (87 | ) | (57 | ) | (149 | ) | (272 | ) | (805 | ) | |||||||||||
OREO sales | (2,220 | ) | (1,183 | ) | (1,639 | ) | (2,482 | ) | (1,442 | ) | |||||||||||
OREO writedowns and other adjustments | — | (93 | ) | — | (4 | ) | (108 | ) | |||||||||||||
Principal paydown, payoff advances and other adjustments | (2,269 | ) | (948 | ) | (2,753 | ) | (1,520 | ) | (4,131 | ) | |||||||||||
Transferred back to accrual status | (2,100 | ) | (3,029 | ) | (2,624 | ) | (1,239 | ) | (3,874 | ) | |||||||||||
Total reductions | (6,676 | ) | (5,310 | ) | (7,165 | ) | (5,517 | ) | (10,360 | ) | |||||||||||
Net reductions | (4,922 | ) | (1,896 | ) | (2,632 | ) | (3,706 | ) | (401 | ) | |||||||||||
Ending balance(2) | $ | 25,462 | $ | 30,384 | $ | 32,280 | $ | 34,912 | $ | 38,618 |
(1) | Additions to NPAs included $7.9 million of acquired nonperforming assets during the quarter ended December 31, 2013. |
(2) | Includes $4.4 million, $6.3 million, $6.5 million, $6.6 million and $6.5 million of nonperforming loans at December 31, 2014, September 30, 2014, June 30, 2014 and December 31, 2013, respectively, that are guaranteed by the SBA. |
20
HomeStreet, Inc. and Subsidiaries
Commercial and Consumer Banking Segment (continued)
Five Quarter Nonperforming Assets by Loan Class
(in thousands) | Dec. 31, 2014 | Sept. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | |||||||||||||||
Loans accounted for on a nonaccrual basis: | ||||||||||||||||||||
Consumer | ||||||||||||||||||||
Single family | $ | 8,368 | $ | 8,350 | $ | 6,988 | $ | 6,942 | $ | 8,861 | ||||||||||
Home equity | 1,526 | 1,700 | 1,166 | 1,078 | 1,846 | |||||||||||||||
9,894 | 10,050 | 8,154 | 8,020 | 10,707 | ||||||||||||||||
Commercial | ||||||||||||||||||||
Commercial real estate | 4,843 | 7,058 | 9,871 | 12,192 | 12,257 | |||||||||||||||
Commercial business | 1,277 | 2,798 | 3,172 | 2,611 | 2,743 | |||||||||||||||
6,120 | 9,856 | 13,043 | 14,803 | 15,000 | ||||||||||||||||
Total loans on nonaccrual | $ | 16,014 | $ | 19,906 | $ | 21,197 | $ | 22,823 | $ | 25,707 | ||||||||||
Nonaccrual loans as a % of total loans | 0.75 | % | 1.00 | % | 1.16 | % | 1.35 | % | 1.36 | % | ||||||||||
Other real estate owned: | ||||||||||||||||||||
Consumer | ||||||||||||||||||||
Single family | $ | 1,613 | $ | 2,818 | $ | 3,205 | $ | 4,211 | $ | 5,246 | ||||||||||
Commercial | ||||||||||||||||||||
Commercial real estate | 1,996 | 1,822 | 2,040 | 2,040 | 1,688 | |||||||||||||||
Construction/land development | 5,839 | 5,838 | 5,838 | 5,838 | 5,977 | |||||||||||||||
7,835 | 7,660 | 7,878 | 7,878 | 7,665 | ||||||||||||||||
Total other real estate owned | $ | 9,448 | $ | 10,478 | $ | 11,083 | $ | 12,089 | $ | 12,911 | ||||||||||
Nonperforming assets: | ||||||||||||||||||||
Consumer | ||||||||||||||||||||
Single family | $ | 9,981 | $ | 11,168 | $ | 10,193 | $ | 11,153 | $ | 14,107 | ||||||||||
Home equity | 1,526 | 1,700 | 1,166 | 1,078 | 1,846 | |||||||||||||||
11,507 | 12,868 | 11,359 | 12,231 | 15,953 | ||||||||||||||||
Commercial | ||||||||||||||||||||
Commercial real estate | 6,839 | 8,880 | 11,911 | 14,232 | 13,945 | |||||||||||||||
Construction/land development | 5,839 | 5,838 | 5,838 | 5,838 | 5,977 | |||||||||||||||
Commercial business | 1,277 | 2,798 | 3,172 | 2,611 | 2,743 | |||||||||||||||
13,955 | 17,516 | 20,921 | 22,681 | 22,665 | ||||||||||||||||
Total nonperforming assets(1) | $ | 25,462 | $ | 30,384 | $ | 32,280 | $ | 34,912 | $ | 38,618 | ||||||||||
Nonperforming assets as a % of total assets | 0.72 | % | 0.87 | % | 1.00 | % | 1.12 | % | 1.26 | % |
(1) | Includes $4.4 million, $6.3 million, $6.5 million, $6.6 million and $6.5 million of nonperforming loans at December 31, 2014, September 30, 2014, June 30, 2014, March 31, 2014 and December 31, 2013, respectively, which are guaranteed by the SBA. |
21
HomeStreet, Inc. and Subsidiaries
Commercial and Consumer Banking Segment (continued)
Delinquencies by Loan Class
(in thousands) | 30-59 days past due | 60-89 days past due | 90 days or more past due | Total past due | Current | Total loans | ||||||||||||||||||
December 31, 2014 | ||||||||||||||||||||||||
Total loans held for investment | $ | 8,814 | $ | 3,797 | $ | 51,001 | $ | 63,612 | $ | 2,062,586 | $ | 2,126,198 | ||||||||||||
Less: FHA/VA loans(1) | 4,121 | 2,200 | 34,737 | 41,058 | $ | 50,778 | 91,836 | |||||||||||||||||
Total loans, excluding FHA/VA loans | $ | 4,693 | $ | 1,597 | $ | 16,264 | $ | 22,554 | $ | 2,011,808 | $ | 2,034,362 | ||||||||||||
Loans by segment and class, excluding FHA/VA loans: | ||||||||||||||||||||||||
Consumer loans | ||||||||||||||||||||||||
Single family residential | $ | 3,711 | $ | 252 | $ | 8,368 | $ | 12,331 | 792,498 | $ | 804,829 | |||||||||||||
Home equity | 371 | 81 | 1,526 | 1,978 | 133,620 | 135,598 | ||||||||||||||||||
4,082 | 333 | 9,894 | 14,309 | 926,118 | 940,427 | |||||||||||||||||||
Commercial loans | ||||||||||||||||||||||||
Commercial real estate | — | — | 4,843 | 4,843 | 518,621 | 523,464 | ||||||||||||||||||
Multifamily residential | — | — | — | — | 55,088 | 55,088 | ||||||||||||||||||
Construction/land development | — | 1,261 | — | 1,261 | 366,673 | 367,934 | ||||||||||||||||||
Commercial business | 611 | 3 | 1,527 | 2,141 | 145,308 | 147,449 | ||||||||||||||||||
611 | 1,264 | 6,370 | 8,245 | 1,085,690 | 1,093,935 | |||||||||||||||||||
$ | 4,693 | $ | 1,597 | $ | 16,264 | (2) | $ | 22,554 | (2) | $ | 2,011,808 | $ | 2,034,362 | |||||||||||
As a % of total loans, excluding FHA/VA loans | 0.23 | % | 0.08 | % | 0.80 | % | 1.11 | % | 98.89 | % | 100.00 | % | ||||||||||||
December 31, 2013 | ||||||||||||||||||||||||
Total loans held for investment | $ | 6,841 | $ | 4,976 | $ | 72,518 | $ | 84,335 | $ | 1,814,605 | $ | 1,898,940 | ||||||||||||
Less: FHA/VA loans(1) | 4,286 | 3,730 | 46,811 | 54,827 | 37,177 | 92,004 | ||||||||||||||||||
Total loans, excluding FHA/VA loans | $ | 2,555 | $ | 1,246 | $ | 25,707 | $ | 29,508 | $ | 1,777,428 | $ | 1,806,936 | ||||||||||||
Loans by segment and class, excluding FHA/VA loans: | ||||||||||||||||||||||||
Consumer loans | ||||||||||||||||||||||||
Single family | $ | 2,180 | $ | 1,171 | $ | 8,861 | $ | 12,212 | $ | 800,697 | $ | 812,909 | ||||||||||||
Home equity | 375 | 75 | 1,846 | 2,296 | 133,354 | 135,650 | ||||||||||||||||||
2,555 | 1,246 | 10,707 | 14,508 | 934,051 | 948,559 | |||||||||||||||||||
Commercial loans | ||||||||||||||||||||||||
Commercial real estate | — | — | 12,257 | 12,257 | 465,385 | 477,642 | ||||||||||||||||||
Multifamily | — | — | — | — | 79,216 | 79,216 | ||||||||||||||||||
Construction/land development | — | — | — | — | 130,465 | 130,465 | ||||||||||||||||||
Commercial business | — | — | 2,743 | 2,743 | 168,311 | 171,054 | ||||||||||||||||||
— | — | 15,000 | 15,000 | 843,377 | 858,377 | |||||||||||||||||||
$ | 2,555 | $ | 1,246 | $ | 25,707 | (2) | $ | 29,508 | (2) | $ | 1,777,428 | $ | 1,806,936 | |||||||||||
As a % of total loans, excluding FHA/VA loans | 0.14 | % | 0.07 | % | 1.42 | % | 1.63 | % | 98.37 | % | 100.00 | % |
(1) | Represents loans whose repayments are insured by the FHA or guaranteed by the VA. |
(2) | Includes $4.4 million and $6.5 million of nonperforming loans at December 31, 2014 and December 31, 2013, respectively, which are guaranteed by the SBA. |
22
HomeStreet, Inc. and Subsidiaries
Commercial and Consumer Banking Segment (continued)
Troubled Debt Restructurings (TDRs) by Accrual and Nonaccrual Status
(in thousands) | Dec. 31, 2014 | Sept. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | |||||||||||||||
Accrual | ||||||||||||||||||||
Consumer loans | ||||||||||||||||||||
Single family(1) | $ | 73,585 | $ | 72,663 | $ | 69,779 | $ | 70,958 | $ | 70,304 | ||||||||||
Home equity | 2,430 | 2,501 | 2,394 | 2,538 | 2,558 | |||||||||||||||
76,015 | 75,164 | 72,173 | 73,496 | 72,862 | ||||||||||||||||
Commercial loans | ||||||||||||||||||||
Commercial real estate | 21,703 | 23,964 | 21,401 | 19,451 | 19,620 | |||||||||||||||
Multifamily | 3,077 | 3,101 | 3,125 | 3,145 | 3,163 | |||||||||||||||
Construction/land development | 5,447 | 5,693 | 5,843 | 5,907 | 6,148 | |||||||||||||||
Commercial business | 1,573 | 658 | 302 | 104 | 112 | |||||||||||||||
31,800 | 33,416 | 30,671 | 28,607 | 29,043 | ||||||||||||||||
$ | 107,815 | $ | 108,580 | $ | 102,844 | $ | 102,103 | $ | 101,905 | |||||||||||
Nonaccrual | ||||||||||||||||||||
Consumer loans | ||||||||||||||||||||
Single family | $ | 2,482 | $ | 1,379 | $ | 1,461 | $ | 2,569 | $ | 4,017 | ||||||||||
Home equity | 231 | 20 | — | — | 86 | |||||||||||||||
2,713 | 1,399 | 1,461 | 2,569 | 4,103 | ||||||||||||||||
Commercial loans | ||||||||||||||||||||
Commercial real estate | 1,148 | 1,182 | 2,735 | 2,784 | 628 | |||||||||||||||
Commercial business | 249 | 9 | 9 | 117 | — | |||||||||||||||
1,397 | 1,191 | 2,744 | 2,901 | 628 | ||||||||||||||||
$ | 4,110 | $ | 2,590 | $ | 4,205 | $ | 5,470 | $ | 4,731 | |||||||||||
Total | ||||||||||||||||||||
Consumer loans | ||||||||||||||||||||
Single family(1) | $ | 76,067 | $ | 74,042 | $ | 71,240 | $ | 73,527 | $ | 74,321 | ||||||||||
Home equity | 2,661 | 2,521 | 2,394 | 2,538 | 2,644 | |||||||||||||||
78,728 | 76,563 | 73,634 | 76,065 | 76,965 | ||||||||||||||||
Commercial loans | ||||||||||||||||||||
Commercial real estate | 22,851 | 25,146 | 24,136 | 22,235 | 20,248 | |||||||||||||||
Multifamily | 3,077 | 3,101 | 3,125 | 3,145 | 3,163 | |||||||||||||||
Construction/land development | 5,447 | 5,693 | 5,843 | 5,907 | 6,148 | |||||||||||||||
Commercial business | 1,822 | 667 | 311 | 221 | 112 | |||||||||||||||
33,197 | 34,607 | 33,415 | 31,508 | 29,671 | ||||||||||||||||
$ | 111,925 | $ | 111,170 | $ | 107,049 | $ | 107,573 | $ | 106,636 |
(1) | Includes loan balances insured by the FHA or guaranteed by the VA of $26.8 million, $24.6 million, $19.0 million, $19.1 million and $17.8 million at December 31, 2014, September 30, 2014, June 30, 2014, March 31, 2014 and December 31, 2013, respectively. |
23
HomeStreet, Inc. and Subsidiaries
Commercial and Consumer Banking Segment (continued)
Troubled Debt Restructurings (TDRs) - Re-Defaults
Quarter ended | ||||||||||||||||||||
(in thousands) | Dec. 31, 2014 | Sept. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | |||||||||||||||
Recorded investment of re-defaults(1) | ||||||||||||||||||||
Consumer loans | ||||||||||||||||||||
Single family | $ | — | $ | 282 | $ | 425 | $ | 303 | $ | 267 | ||||||||||
Home equity | — | — | — | 190 | — | |||||||||||||||
— | 282 | 425 | 493 | 267 | ||||||||||||||||
Commercial loans | ||||||||||||||||||||
Commercial real estate | — | — | — | — | — | |||||||||||||||
Multifamily | — | — | — | — | — | |||||||||||||||
Construction/land development | — | — | — | — | — | |||||||||||||||
Commercial business | — | — | — | — | — | |||||||||||||||
— | — | — | — | — | ||||||||||||||||
$ | — | $ | 282 | $ | 425 | $ | 493 | $ | 267 |
(1) | Represents TDRs that have defaulted in the current period within 12 months of their modification date. Defaulted TDRs are reported in the table above based on a payment default definition of 60 days past due for the consumer loans portfolio segment and 90 days past due for the commercial loans portfolio segment. |
24
HomeStreet, Inc. and Subsidiaries
Commercial and Consumer Banking Segment (continued)
Five Quarter Deposits
(in thousands) | Dec. 31, 2014 | Sept. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | |||||||||||||||
Deposits by Product: | ||||||||||||||||||||
Noninterest-bearing accounts - checking and savings | $ | 240,679 | $ | 271,669 | $ | 235,844 | $ | 219,677 | $ | 199,943 | ||||||||||
Interest-bearing transaction and savings deposits: | ||||||||||||||||||||
NOW accounts | 272,390 | 300,832 | 324,604 | 285,104 | 262,138 | |||||||||||||||
Statement savings accounts due on demand | 200,638 | 184,656 | 166,851 | 163,819 | 156,181 | |||||||||||||||
Money market accounts due on demand | 1,007,213 | 1,015,266 | 996,473 | 956,189 | 919,322 | |||||||||||||||
Total interest-bearing transaction and savings deposits | 1,480,241 | 1,500,754 | 1,487,928 | 1,405,112 | 1,337,641 | |||||||||||||||
Total transaction and savings deposits | 1,720,920 | 1,772,423 | 1,723,772 | 1,624,789 | 1,537,584 | |||||||||||||||
Certificates of deposit | 494,526 | 367,124 | 457,529 | 534,708 | 514,400 | |||||||||||||||
Noninterest-bearing accounts - other | 229,984 | 285,911 | 236,411 | 211,861 | 158,837 | |||||||||||||||
Total deposits | $ | 2,445,430 | $ | 2,425,458 | $ | 2,417,712 | $ | 2,371,358 | $ | 2,210,821 | ||||||||||
Percent of total deposits: | ||||||||||||||||||||
Noninterest-bearing accounts - checking and savings | 9.8 | % | 11.2 | % | 9.8 | % | 9.3 | % | 9.0 | % | ||||||||||
Interest-bearing transaction and savings deposits: | ||||||||||||||||||||
NOW accounts | 11.1 | 12.4 | 13.4 | 12.0 | 11.9 | |||||||||||||||
Statement savings accounts due on demand | 8.2 | 7.6 | 6.9 | 6.9 | 7.1 | |||||||||||||||
Money market accounts due on demand | 41.2 | 41.9 | 41.2 | 40.3 | 41.6 | |||||||||||||||
Total interest-bearing transaction and savings deposits | 60.5 | 61.9 | 61.5 | 59.2 | 60.6 | |||||||||||||||
Total transaction and savings deposits | 70.3 | 73.1 | 71.3 | 68.5 | 69.6 | |||||||||||||||
Certificates of deposit | 20.2 | 15.1 | 18.9 | 22.5 | 23.3 | |||||||||||||||
Noninterest-bearing accounts - other | 9.5 | 11.8 | 9.8 | 9.0 | 7.1 | |||||||||||||||
Total deposits | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
25
HomeStreet, Inc. and Subsidiaries
Mortgage Banking Segment
Quarter ended | ||||||||||||||||||||
(in thousands) | Dec. 31, 2014 | Sept. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | |||||||||||||||
Net interest income | $ | 5,315 | $ | 5,145 | $ | 3,744 | $ | 2,479 | $ | 3,222 | ||||||||||
Noninterest income | 46,053 | 42,153 | 47,036 | 31,749 | 30,571 | |||||||||||||||
Noninterest expense | 47,636 | 45,228 | 42,537 | 36,798 | 37,139 | |||||||||||||||
Income (loss) before income taxes | 3,732 | 2,070 | 8,243 | (2,570 | ) | (3,346 | ) | |||||||||||||
Income tax expense (benefit) | 1,456 | 629 | 2,634 | (755 | ) | (1,050 | ) | |||||||||||||
Net income (loss) | $ | 2,276 | $ | 1,441 | $ | 5,609 | $ | (1,815 | ) | $ | (2,296 | ) | ||||||||
Efficiency ratio (1) | 92.73 | % | 95.62 | % | 83.77 | % | 107.51 | % | 109.90 | % | ||||||||||
Full-time equivalent employees (ending) | 1,003 | 993 | 947 | 903 | 925 | |||||||||||||||
Production volumes for sale to the secondary market: | ||||||||||||||||||||
Single family mortgage closed loan volume (2)(3) | $ | 1,330,735 | $ | 1,294,895 | $ | 1,100,704 | $ | 674,283 | $ | 773,146 | ||||||||||
Single family mortgage interest rate lock commitments(2) | 1,171,598 | 1,167,677 | 1,201,665 | 803,308 | 662,015 | |||||||||||||||
Single family mortgage loans sold(2) | 1,273,679 | 1,179,464 | 906,342 | 619,913 | 816,555 |
(1) | Noninterest expense divided by total net revenue (net interest income and noninterest income). |
(2) | Includes loans originated by WMS Series LLC and purchased by HomeStreet. |
(3) | Represents single family mortgage production volume designated for sale to the secondary market during each respective period. |
Mortgage Banking Net Gain on Sale to the Secondary Market
Quarter ended | ||||||||||||||||||||
(in thousands) | Dec. 31, 2014 | Sept. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | |||||||||||||||
Net gain on mortgage loan origination and sale activities:(1) | ||||||||||||||||||||
Single family: | ||||||||||||||||||||
Servicing value and secondary market gains(2) | $ | 29,405 | $ | 29,866 | $ | 30,233 | $ | 19,559 | $ | 17,632 | ||||||||||
Loan origination and funding fees | 7,083 | 6,947 | 6,781 | 4,761 | 5,687 | |||||||||||||||
Total mortgage banking net gain on mortgage loan origination and sale activities(1) | $ | 36,488 | $ | 36,813 | $ | 37,014 | $ | 24,320 | $ | 23,319 | ||||||||||
Composite Margin (in basis points): | ||||||||||||||||||||
Servicing value and secondary market gains / interest rate lock commitments(3) | 251 | 256 | 252 | 243 | 266 | |||||||||||||||
Loan origination and funding fees / retail mortgage originations(4) | 59 | 60 | 69 | 80 | 84 | |||||||||||||||
Composite Margin | 310 | 316 | 321 | 323 | 350 |
(1) | Excludes inter-segment activities. |
(2) | Comprised of gains and losses on interest rate lock commitments (which considers the value of servicing), single family loans held for sale, forward sale commitments used to economically hedge secondary market activities, and the estimated fair value of the repurchase or indemnity obligation recognized on new loan sales. |
(3) | Servicing value and secondary marketing gains have been aggregated and are stated as a percentage of interest rate lock commitments. |
(4) | Loan origination and funding fees is stated as a percentage of mortgage originations from the retail channel and excludes mortgage loans purchased from WMS Series LLC. |
26
HomeStreet, Inc. and Subsidiaries
Mortgage Banking Segment (continued)
Mortgage Banking Servicing Income
Quarter ended | ||||||||||||||||||||
(in thousands) | Dec. 31, 2014 | Sept. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | |||||||||||||||
Servicing income, net: | ||||||||||||||||||||
Servicing fees and other | $ | 7,537 | $ | 8,061 | $ | 9,095 | $ | 8,959 | $ | 8,843 | ||||||||||
Changes in fair value of single family MSRs due to modeled amortization (1) | (6,823 | ) | (6,212 | ) | (7,109 | ) | (5,968 | ) | (6,016 | ) | ||||||||||
714 | 1,849 | 1,986 | 2,991 | 2,827 | ||||||||||||||||
Risk management, single family MSRs: | ||||||||||||||||||||
Changes in fair value of MSR due to changes in model inputs and/or assumptions (2) | (7,793 | ) | 899 | (3,326 | ) | (3) | (5,409 | ) | 12,643 | |||||||||||
Net gain (loss) from derivatives economically hedging MSR | 16,346 | 2,543 | 10,941 | 9,897 | (8,040 | ) | ||||||||||||||
8,553 | 3,442 | 7,615 | 4,488 | 4,603 | ||||||||||||||||
Mortgage Banking servicing income | $ | 9,267 | $ | 5,291 | $ | 9,601 | $ | 7,479 | $ | 7,430 |
(1) | Represents changes due to collection/realization of expected cash flows and curtailments. |
(2) | Principally reflects changes in model assumptions, including prepayment speed assumptions, which are primarily affected by changes in mortgage interest rates. |
(3) | Includes pre-tax income of $4.7 million, net of transaction costs, resulting from the sale of single family MSRs during the quarter ended June 30, 2014. |
Single Family Loans Serviced for Others
(in thousands) | Dec. 31, 2014 | Sept. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | |||||||||||||||
Single family | ||||||||||||||||||||
U.S. government and agency | $ | 10,630,864 | $ | 10,007,872 | $ | 9,308,096 | $ | 11,817,857 | $ | 11,467,853 | ||||||||||
Other | 585,344 | 585,393 | 586,978 | 380,622 | 327,768 | |||||||||||||||
Total single family loans serviced for others | $ | 11,216,208 | $ | 10,593,265 | $ | 9,895,074 | $ | 12,198,479 | $ | 11,795,621 |
27
HomeStreet, Inc. and Subsidiaries
Mortgage Banking Segment (continued)
Single Family Capitalized Mortgage Servicing Rights
Quarter ended | ||||||||||||||||||||
(in thousands) | Dec. 31, 2014 | Sept. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | |||||||||||||||
Beginning balance | $ | 115,477 | $ | 108,869 | $ | 149,646 | $ | 153,128 | $ | 136,897 | ||||||||||
Additions and amortization: | ||||||||||||||||||||
Originations | 11,567 | 11,944 | 11,827 | 7,893 | 9,602 | |||||||||||||||
Purchases | 11 | 3 | 3 | 2 | 2 | |||||||||||||||
Sale of servicing rights | — | — | (43,248 | ) | — | — | ||||||||||||||
Changes due to modeled amortization (1) | (6,823 | ) | (6,212 | ) | (7,109 | ) | (5,968 | ) | (6,016 | ) | ||||||||||
Net additions and amortization | 4,755 | 5,735 | (38,527 | ) | 1,927 | 3,588 | ||||||||||||||
Changes in fair value due to changes in model inputs and/or assumptions (2) | (7,793 | ) | 873 | (2,250 | ) | (5,409 | ) | 12,643 | ||||||||||||
Ending balance | $ | 112,439 | $ | 115,477 | $ | 108,869 | $ | 149,646 | $ | 153,128 | ||||||||||
Ratio of MSR carrying value to related loans serviced for others | 1.00 | % | 1.09 | % | 1.10 | % | 1.23 | % | 1.30 | % | ||||||||||
MSR servicing fee multiple (3) | 3.42 | 3.68 | 3.67 | 4.17 | 4.39 | |||||||||||||||
Weighted-average note rate (loans serviced for others) | 4.18 | % | 4.19 | % | 4.19 | % | 4.09 | % | 4.08 | % | ||||||||||
Weighted-average servicing fee (loans serviced for others) | 0.29 | % | 0.30 | % | 0.30 | % | 0.29 | % | 0.30 | % |
(1) | Represents changes due to collection/realization of expected cash flows and curtailments. |
(2) | Principally reflects changes in model assumptions, including prepayment speed assumptions, which are primarily affected by changes in mortgage interest rates. Includes fair value adjustment of $5.7 million related to the sale of single family MSRs during the quarter ended June 30, 2014. |
(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. |
28
HomeStreet, Inc. and Subsidiaries
Non-GAAP Financial Measures
Tangible common shareholders' equity is calculated by deducting goodwill and intangible assets (excluding mortgage servicing rights) from shareholders' equity. Tangible common shareholders' equity is considered a non-GAAP financial measure and should be viewed in conjunction with shareholders' equity. Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although we believe these non-GAAP financial measures are frequently used by stakeholders in the evaluation of a company, they have limitations as analytical tools, and should not be considered in isolation or as a substitute for analyses of results as reported under GAAP.
Tangible book value is calculated by dividing tangible common shareholders' equity by the number of common shares outstanding. The return on average tangible common shareholders' equity is calculated by dividing net earnings available to common shareholders (annualized) by average tangible common shareholders' equity.
Quarter Ended | Year Ended | |||||||||||||||||||||||||||
(dollars in thousands, except share data) | Dec. 31, 2014 | Sept. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |||||||||||||||||||||
Shareholders' equity | $ | 302,238 | $ | 294,568 | $ | 288,249 | $ | 273,510 | $ | 265,926 | $ | 302,238 | $ | 265,926 | ||||||||||||||
Less: Goodwill and other intangibles | (14,211 | ) | (14,444 | ) | (14,690 | ) | (14,098 | ) | (14,287 | ) | (14,211 | ) | (14,287 | ) | ||||||||||||||
Tangible shareholders' equity | $ | 288,027 | $ | 280,124 | $ | 273,559 | $ | 259,412 | $ | 251,639 | $ | 288,027 | $ | 251,639 | ||||||||||||||
Book value per share | $ | 20.34 | $ | 19.83 | $ | 19.41 | $ | 18.42 | $ | 17.97 | $ | 20.34 | $ | 17.97 | ||||||||||||||
Impact of goodwill and other intangibles | (0.95 | ) | (0.97 | ) | (0.99 | ) | (0.95 | ) | (0.97 | ) | (0.95 | ) | (0.97 | ) | ||||||||||||||
Tangible book value per share | $ | 19.39 | $ | 18.86 | $ | 18.42 | $ | 17.47 | $ | 17.00 | $ | 19.39 | $ | 17.00 | ||||||||||||||
Average shareholders' equity | $ | 305,068 | $ | 295,229 | $ | 284,365 | $ | 272,596 | $ | 268,328 | $ | 289,420 | $ | 249,081 | ||||||||||||||
Less: Average goodwill and other intangibles | (14,363 | ) | (14,604 | ) | (14,049 | ) | (14,215 | ) | (9,927 | ) | (14,309 | ) | (2,819 | ) | ||||||||||||||
Average tangible shareholders' equity | $ | 290,705 | $ | 280,625 | $ | 270,316 | $ | 258,381 | $ | 258,401 | $ | 275,111 | $ | 246,262 | ||||||||||||||
Return on average shareholders’ equity | 7.37 | % | 6.74 | % | 13.17 | % | 3.38 | % | (1.28 | )% | 7.69 | % | 9.56 | % | ||||||||||||||
Impact of goodwill and other intangibles | 0.36 | % | 0.35 | % | 0.68 | % | 0.18 | % | (0.05 | )% | 0.40 | % | 0.11 | % | ||||||||||||||
Return on average tangible shareholders' equity | 7.73 | % | 7.09 | % | 13.85 | % | 3.56 | % | (1.33 | )% | 8.09 | % | 9.67 | % |
29
The press release contains certain non-GAAP financial disclosures for consolidated net income, excluding acquisition-related expenses, diluted earnings per share, excluding acquisition-related expenses, and Commercial and Consumer Banking segment net income, excluding acquisition-related expenses. The Company uses certain non-GAAP financial measures to provide meaningful supplemental information regarding the Company's operational performance and to enhance investors' overall understanding of such financial performance.
Quarter Ended | Year Ended | |||||||||||||||||||||||||||
(in thousands) | Dec. 31, 2014 | Sept. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | |||||||||||||||||||||
Net income (loss) | $ | 5,621 | $ | 4,975 | $ | 9,362 | $ | 2,301 | $ | (861 | ) | $ | 22,259 | $ | 23,809 | |||||||||||||
Add back: Acquisition-related expenses, net of tax | 578 | 469 | 394 | 545 | 2,652 | 1,986 | 2,957 | |||||||||||||||||||||
Net income, excluding acquisition-related expenses | $ | 6,199 | $ | 5,444 | $ | 9,756 | $ | 2,846 | $ | 1,791 | $ | 24,245 | $ | 26,766 | ||||||||||||||
Noninterest expense | $ | 68,791 | $ | 64,158 | $ | 62,971 | $ | 56,091 | $ | 58,868 | $ | 252,011 | $ | 229,495 | ||||||||||||||
Deduct: acquisition-related expenses | (889 | ) | (722 | ) | (606 | ) | (838 | ) | (4,080 | ) | (3,055 | ) | (4,549 | ) | ||||||||||||||
Noninterest expense, excluding acquisition-related expenses | $ | 67,902 | $ | 63,436 | $ | 62,365 | $ | 55,253 | $ | 54,788 | $ | 248,956 | $ | 224,946 | ||||||||||||||
Diluted earnings (loss) per common share | $ | 0.38 | $ | 0.33 | $ | 0.63 | $ | 0.15 | $ | (0.06 | ) | $ | 1.49 | $ | 1.61 | |||||||||||||
Impact of acquisition-related expenses | 0.03 | 0.03 | 0.02 | 0.04 | 0.18 | 0.13 | 0.20 | |||||||||||||||||||||
Diluted earnings per common share, excluding acquisition-related expenses | $ | 0.41 | $ | 0.36 | $ | 0.65 | $ | 0.19 | $ | 0.12 | $ | 1.62 | $ | 1.81 | ||||||||||||||
Commercial and Consumer Banking Segment: | ||||||||||||||||||||||||||||
Net income | $ | 3,345 | $ | 3,534 | $ | 3,753 | $ | 4,116 | $ | 1,435 | $ | 14,748 | $ | 5,973 | ||||||||||||||
Impact of acquisition-related expenses, net of tax | 578 | 469 | 394 | 545 | 2,652 | 1,986 | 2,957 | |||||||||||||||||||||
Net income, excluding acquisition-related expenses | $ | 3,923 | $ | 4,003 | $ | 4,147 | $ | 4,661 | $ | 4,087 | $ | 16,734 | $ | 8,930 |
30