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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): April 30, 2024
 
HOMESTREET, INC.
(Exact name of registrant as specified in its charter)
 
Washington   001-35424   91-0186600
(State or other jurisdiction
of incorporation)		   (Commission
File Number)		   (IRS Employer
Identification No.)
601 Union Street, Ste. 2000, Seattle, WA 98101
(Address of principal executive offices) (Zip Code)
(206) 623-3050
(Registrant’s telephone number, including area code)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☒
 Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, No Par Value HMST Nasdaq Global Select Market
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Act or Rule 12b-2 of the Exchange Act.
☐ Emerging growth company
☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 12(a) of the Exchange Act.



Item 2.02 Results of Operations and Financial Condition

On April 30, 2024, HomeStreet, Inc. issued a press release reporting results of operations for the first quarter of 2024. A copy of the earnings release is attached as Exhibit 99.1. A copy of the press release reporting summary results of operations is attached as Exhibit 99.2. This information shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, and is not incorporated by reference into any filing under the Securities Act of 1933, as amended, or Securities Exchange Act of 1934, as amended.



Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
Exhibit 99.1
Exhibit 99.2
Exhibit 104 Cover Page Interactive Data File (embedded within with Inline XBRL)

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This communication contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, regarding the proposed transaction between HomeStreet and FirstSun. In general, forward-looking statements can be identified through use of words such as “may,” “believe,” “expect,” “anticipate,” “intend,” “will,” “should,” “plan,” “estimate,” “predict,” “continue” and “potential” or the negative of these terms or other comparable terminology, and include statements related to the expected timing, completion, financial benefits, and other effects of the proposed mergers (the "Merger"). Forward‑looking statements are not historical facts and represent management’s beliefs, based upon information available at the time the statements are made, with regard to the matters addressed; they are not guarantees of future performance. Actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Forward-looking statements are subject to numerous assumptions, risks and uncertainties that change over time and could cause actual results or financial conditions to differ materially from those expressed in or implied by such statements.

Factors that could cause or contribute to such differences include, but are not limited to, (1) expected cost savings, synergies and other financial benefits from the Merger not being realized within the expected time frames or at all and costs or difficulties relating to integration matters being greater than expected, (2) the ability of HomeStreet to obtain the necessary approval by its shareholders, (3) the ability of FirstSun and HomeStreet to obtain required governmental and regulatory approvals of the Merger when expected or at all (and the risk that such approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the Merger), (4) the ability of FirstSun to consummate their investment agreements to obtain the necessary capital to support the transaction, (5) the failure of the closing conditions in the Merger Agreement, dated as of January 16, 2024, by and between HomeStreet and FirstSun to be satisfied, or any unexpected delay in closing the Merger, (6) the occurrence of any event, change or other circumstance that could give rise to the right of one or both of the parties to terminate the Merger Agreement, (7) the diversion of management's attention from ongoing business operations and opportunities, (8) potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement or completion of the Merger, and (9) the outcome of any legal proceedings that have been or may be instituted against FirstSun or HomeStreet. Further information regarding additional factors that could affect the forward-looking statements can be found in the cautionary language included under the headings “Cautionary Statement Regarding Forward-Looking Statements” and “Risk Factors” in FirstSun’s preliminary registration statement on Form S-4 that contains a preliminary HomeStreet proxy statement and a preliminary prospectus of FirstSun discussed below, and other documents subsequently filed by FirstSun and HomeStreet with the U.S. Securities and Exchange Commission (“SEC”).



ADDITIONAL INFORMATION AND WHERE TO FIND IT

IN CONNECTION WITH THE MERGER BETWEEN FIRSTSUN, A DELAWARE CORPORATION, AND HOMESTREET, A WASHINGTON CORPORATION, FIRSTSUN FILED WITH THE SEC A PRELIMINARY REGISTRATION STATEMENT ON FORM S-4 THAT INCLUDED A PRELIMINARY PROXY STATEMENT OF HOMESTREET AND A PRELIMINARY PROSPECTUS OF FIRSTSUN ON MARCH 8, 2024, WHICH IS NOT YET FINAL AND WILL BE AMENDED, AS WELL AS OTHER RELEVANT DOCUMENTS CONCERNING THE PROPOSED TRANSACTION. INVESTORS AND SECURITY HOLDERS, PRIOR TO MAKING ANY INVESTMENT OR VOTING DECISION, ARE URGED TO READ THE PRELIMINARY REGISTRATION STATEMENT AND PRELIMINARY PROXY STATEMENT/PROSPECTUS (AND ANY OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE MERGER OR INCORPORATED BY REFERENCE INTO THE PRELIMINARY PROXY STATEMENT/PROSPECTUS) AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS AND THE DEFINITIVE VERSIONS THEREOF (WHEN THEY BECOME AVAILABLE) BECAUSE SUCH DOCUMENTS CONTAIN AND WILL CONTAIN IMPORTANT INFORMATION REGARDING THE MERGER.

Investors and security holders may obtain free copies of these documents, including the preliminary proxy statement of HomeStreet and the preliminary prospectus of FirstSun, and other documents filed with the SEC on its website at www.sec.gov. Investors and security holders may also obtain free copies of the documents filed with the SEC from (i) FirstSun on its website at https://ir.firstsuncb.com/investor-relations/default.aspx, and (ii) HomeStreet on its website at https://ir.homestreet.com/sec-filings/all-filings/default.aspx.

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

PARTICIPANTS IN THE SOLICITATION

FirstSun, HomeStreet and certain of their directors and executive officers may be deemed participants in the solicitation of proxies from shareholders of HomeStreet in connection with the proposed Merger. Information regarding the directors and executive officers of FirstSun and HomeStreet and other persons who may be deemed participants in the solicitation of the shareholders of HomeStreet in connection with the proposed Merger are included in the preliminary proxy statement/prospectus for HomeStreet’s shareholder meeting, which was filed by FirstSun with the SEC on March 8, 2024. Information about the directors and officers of FirstSun and their ownership of FirstSun’s common stock can be found in FirstSun’s annual report on Form 10-K, as filed with the SEC on March 7, 2024, and other documents subsequently filed by FirstSun with the SEC. Information about the directors and officers of HomeStreet and their ownership of HomeStreet’s common stock can be found in HomeStreet’s preliminary proxy statement included in the preliminary registration statement on Form S-4, as filed by FirstSun with the SEC on March 8, 2024, HomeStreet’s annual report on Form 10-K, as filed by HomeStreet with the SEC on March 6, 2024, as amended by HomeStreet’s annual report on Form 10-K/A, as filed by HomeStreet with the SEC on April 29, 2024, and other documents subsequently filed by HomeStreet with the SEC. Additional information regarding the interests of such participants is included in the preliminary proxy statement/prospectus and other relevant documents regarding the proposed Merger filed with the SEC when they become available.


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: April 30, 2024
HomeStreet, Inc.
By:   /s/ John M. Michel
  John M. Michel
  Executive Vice President and Chief Financial Officer
 


EX-99.1 2 a1q2024earningsrelease.htm Q1 2024 EARNINGS RELEASE Document



image2a.jpg
HomeStreet Reports First Quarter 2024 Results

SEATTLE –April 30, 2024 – (BUSINESS WIRE) – HomeStreet, Inc. (Nasdaq: HMST) (including its consolidated subsidiaries, the "Company", "HomeStreet" or "we"), the parent company of HomeStreet Bank, today announced the financial results for the quarter ended March 31, 2024. As we present non-GAAP measures in this release, the reader should refer to the non-GAAP reconciliations set forth below under the section “Non-GAAP Financial Measures.”

Operating Results
                  First quarter 2024 compared to fourth quarter 2023
Reported Results:
•Net loss: $7.5 million compared to $3.4 million
•Loss per fully diluted share: $0.40 compared to $0.18
•Net interest margin: 1.44% compared to 1.59%
       Core Results (1):
•Loss: $5.5 million compared to $2.2 million
•Loss per fully diluted share: $0.29 compared to $0.12
                     
(1) Core loss and core loss per fully diluted share are non-GAAP measures. For a reconciliation of these measures to the nearest comparable GAAP measure see "Non-GAAP financial measures" in this earnings release.
“In the first quarter, we recognized a net loss of $7.5 million as our net interest margin decreased to 1.44% due to increased funding costs as lower cost deposits continued to migrate to higher yielding products,” said Mark Mason, Chairman of the Board, President, and Chief Executive Officer. "During the first quarter, our noninterest expenses include the impacts of seasonally higher employee benefit costs, the impact of wage increases effective in March, lower levels of full time equivalent employees and $2.6 million of costs incurred related to the merger process. While interest rates have stabilized and are projected to decline later in the year, we expect our operating results will continue to be adversely impacted by high funding costs relative to earning assets yields in the near term."

Financial Position
                    As of and for the quarter ended March 31, 2024
•Noninterest-bearing deposits increased by $5 million
•Excluding brokered deposits, total deposits increased by $25 million
•Uninsured deposits were $494 million, or 8% of total deposits
•Loans held for investment ("LHFI"), remained stable
•Nonperforming assets to total assets: 0.56%
•Allowance for credit losses to LHFI: 0.54%
•Book value per share: $27.96
•Tangible book value per share: $27.49 (2)
(2) Tangible book value per share is a non-GAAP measure. For a reconciliation of this measure to the nearest comparable GAAP measure see "Non-GAAP financial measures" in this earnings release.

"Our deposit balances, excluding brokered deposits, were stable during the first quarter, and our noninterest-bearing balances increased slightly," continued Mark Mason. "While we continue to be impacted by the migration of deposits to higher yielding products, the pace of migration is slowing and the rates paid on higher yielding accounts by competitors have started to decline. We anticipate that if these trends continue, our funding costs will become more stable."

1



"Our loan balances have remained stable as they continue to be impacted by historically low levels of prepayments. We continue to focus on variable rate loan products with appropriate margins over incremental funding costs," added Mark Mason. " In the first quarter our nonaccrual loans and nonperforming assets increased due to the downgrade of a $10.4 million construction-bridge loan to nonperforming status. The completion and leasing of this 27% loan to value multifamily and mixed-use project has been delayed. The project is substantially complete but unable to lease as there is a dispute over an alleged minor building code violation. Our credit quality, however, remains strong and we have not identified any potentially significant credit issues in our loan portfolio."




2

About HomeStreet

HomeStreet, Inc. (Nasdaq: HMST) is a diversified financial services company headquartered in Seattle, Washington, serving consumers and businesses in the Western United States and Hawaii. The Company is principally engaged in real estate lending, including mortgage banking activities, and commercial and consumer banking. Its principal subsidiary is HomeStreet Bank. HomeStreet Bank is the winner of the 2022 "Best Small Bank" in Washington Newsweek magazine award. Certain information about our business can be found on our investor relations web site, located at http://ir.homestreet.com. HomeStreet Bank is a member of the FDIC and is an Equal Housing Lender.



Contact:    Executive Vice President and Chief Financial Officer
HomeStreet, Inc.
   John Michel (206) 515-2291
   john.michel@homestreet.com
   http://ir.homestreet.com





3



HomeStreet, Inc. and Subsidiaries
Summary Financial Data
  For the Quarter Ended
(in thousands, except per share data and FTE data) March 31,
2024		 December 31,
2023		 September 30,
2023		 June 30,
2023		 March 31,
2023
Select Income Statement Data:
Net interest income $ 32,151  $ 34,989  $ 38,912  $ 43,476  $ 49,376 
Provision for credit losses —  445  (1,110) (369) 593 
Noninterest income 9,454  10,956  10,464  10,311  10,190 
Noninterest expense 52,164  49,511  49,089  90,781  52,491 
Income (loss) before income taxes
 (10,559) (4,011) 1,397  (36,625) 6,482 
Net income (loss)
 (7,497) (3,419) 2,295  (31,442) 5,058 
Net income (loss) per fully diluted share
 (0.40) (0.18) 0.12  (1.67) 0.27 
Core net income (loss): (1)
Total (5,469) (2,249) 2,295  3,180  5,058 
Core net income (loss) per fully diluted share
(0.29) (0.12) 0.12  0.17  0.27 
Select Performance Ratios:
Return on average equity - annualized (5.6) % (2.6) % 1.7  % (21.7) % 3.5  %
Return on average tangible equity - annualized (1)
 (3.8) % (1.3) % 2.2  % 2.9  % 4.1  %
Return on average assets - annualized
Net income (loss) (0.32) % (0.15) % 0.10  % (1.32) % 0.22  %
Core (1)
 (0.23) % (0.10) % 0.10  % 0.13  % 0.22  %
Efficiency ratio (1)
 118.0  % 105.9  % 98.3  % 93.7  % 87.2  %
Net interest margin 1.44  % 1.59  % 1.74  % 1.93  % 2.23  %
Other data:
Full-time equivalent employees ("FTE") 858  875  901  910  920 
(1)Core net income (loss), core net income (loss) per fully diluted share, return on average tangible equity, core return on average assets and the efficiency ratio are non-GAAP financial measures. For a reconciliation of these measures to the nearest comparable GAAP financial measure or the computation of the measure see “Non-GAAP Financial Measures” in this earnings release.





4



HomeStreet, Inc. and Subsidiaries
Summary Financial Data (continued)
  As of
(in thousands, except share and per share data) March 31,
2024		 December 31,
2023		 September 30,
2023		 June 30,
2023		 March 31,
2023
Select Balance Sheet Data:
Loans held for sale
 $ 21,102  $ 19,637  $ 33,879  $ 31,873  $ 24,253 
Loans held for investment, net
 7,405,052  7,382,404  7,400,501  7,395,151  7,444,882 
Allowance for credit losses ("ACL")
 39,677  40,500  40,000  41,500  41,500 
Investment securities
 1,191,108  1,278,268  1,294,634  1,397,051  1,477,004 
Total assets
 9,455,182  9,392,450  9,458,751  9,501,475  9,858,889 
Deposits
 6,491,102  6,763,378  6,745,551  6,670,033  7,056,603 
Borrowings
 2,094,000  1,745,000  1,873,000  1,972,000  1,878,000 
Long-term debt
 224,857  224,766  224,671  224,583  224,492 
Total shareholders' equity
 527,333  538,387  502,487  527,623  574,994 
Other Data:
Book value per share
 $ 27.96  $ 28.62  $ 26.74  $ 28.10  $ 30.64 
Tangible book value per share (1)
 $ 27.49  $ 28.11  $ 26.18  $ 27.50  $ 27.87 
Total equity to total assets 5.6  % 5.7  % 5.3  % 5.6  % 5.8  %
Tangible common equity to tangible assets (1)
 5.5  % 5.6  % 5.2  % 5.4  % 5.3  %
Shares outstanding at end of period
 18,857,566 18,810,055 18,794,030 18,776,597 18,767,811
Loans to deposit ratio (Bank)
 114.3  % 109.4  % 110.0  % 111.3  % 105.9  %
Credit Quality:
ACL to total loans (2)
 0.54  % 0.55  % 0.55  % 0.57  % 0.56  %
ACL to nonaccrual loans 80.2  % 103.9  % 103.2  % 104.3  % 318.1  %
Nonaccrual loans to total loans 0.66  % 0.53  % 0.52  % 0.54  % 0.17  %
Nonperforming assets to total assets
 0.56  % 0.45  % 0.42  % 0.44  % 0.15  %
Nonperforming assets
$ 52,584  $ 42,643  $ 39,749  $ 41,469  $ 14,886 
Regulatory Capital Ratios:
Bank
Tier 1 leverage 8.34  % 8.50  % 8.49  % 8.43  % 8.47  %
Total risk-based capital
 13.34  % 13.49  % 13.32  % 12.95  % 11.91  %
Common equity Tier 1 capital 12.67  % 12.79  % 12.64  % 12.27  % 11.28  %
Company
Tier 1 leverage 6.90  % 7.04  % 7.01  % 6.93  % 6.92  %
Total risk-based capital
 12.70  % 12.84  % 12.62  % 12.16  % 11.16  %
Common equity Tier 1 capital 9.55  % 9.66  % 9.52  % 9.14  % 8.36  %

(1)Tangible book value per share and tangible common equity to tangible assets are non-GAAP financial measures. For a reconciliation to the nearest comparable GAAP financial measure, see “Non-GAAP Financial Measures” in this earnings release.
(2)This ratio excludes balances insured by the FHA or guaranteed by the VA or SBA.











5



HomeStreet, Inc. and Subsidiaries
Consolidated Balance Sheets
 
(in thousands, except share data)
 March 31, 2024 December 31, 2023
ASSETS
Cash and cash equivalents
 $ 320,327  $ 215,664 
Investment securities
 1,191,108  1,278,268 
Loans held for sale
 21,102  19,637 
Loans held for investment ("LHFI") (net of allowance for credit losses of $39,677 and $40,500)
 7,405,052  7,382,404 
Mortgage servicing rights
 102,919  104,236 
Premises and equipment, net
 56,171  53,582 
Other real estate owned
 3,117  3,667 
Intangible assets
 9,016  9,641 
Other assets
 346,370  325,351 
Total assets $ 9,455,182  $ 9,392,450 
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits
 $ 6,491,102  $ 6,763,378 
Borrowings
 2,094,000  1,745,000 
Long-term debt
 224,857  224,766 
Accounts payable and other liabilities
 117,890  120,919 
Total liabilities 8,927,849  8,854,063 
Shareholders' equity:
Common stock, no par value; 160,000,000 shares authorized
18,857,566 and 18,810,055 shares issued and outstanding
 230,814  229,889 
Retained earnings
 387,860  395,357 
Accumulated other comprehensive income (loss) (91,341) (86,859)
Total shareholders' equity 527,333  538,387 
Total liabilities and shareholders' equity $ 9,455,182  $ 9,392,450 


6



HomeStreet, Inc. and Subsidiaries
Consolidated Income Statements
Quarter Ended March 31,
(in thousands, except share and per share data) 2024 2023
Interest income:
Loans $ 86,256  $ 82,538 
Investment securities 10,714  12,763 
Cash, Fed Funds and other 5,571  1,750 
Total interest income
 102,541  97,051 
Interest expense:
Deposits 42,607  29,370 
Borrowings 27,783  18,305 
Total interest expense
 70,390  47,675 
Net interest income
 32,151  49,376 
Provision for credit losses —  593 
Net interest income after provision for credit losses
 32,151  48,783 
Noninterest income:
Net gain on loan origination and sale activities 2,306  2,410 
Loan servicing income 3,032  3,039 
Deposit fees 2,241  2,658 
Other 1,875  2,083 
Total noninterest income
 9,454  10,190 
Noninterest expense:
Compensation and benefits 28,011  29,253 
Information services 7,342  7,145 
Occupancy 5,434  5,738 
General, administrative and other 11,377  10,355 
Total noninterest expense
 52,164  52,491 
Income (loss) before income taxes (10,559) 6,482 
Income tax (benefit) expense (3,062) 1,424 
Net income (loss) $ (7,497) $ 5,058 
Net income (loss) per share:
Basic $ (0.40) $ 0.27 
Diluted $ (0.40) $ 0.27 
Weighted average shares outstanding:
Basic
 18,856,870 18,755,453
Diluted
18,856,870 18,771,899


7



HomeStreet, Inc. and Subsidiaries
Five Quarter Consolidated Income Statements
  Quarter Ended
(in thousands, except share and per share data) March 31,
2024		 December 31,
2023		 September 30,
2023		 June 30,
2023		 March 31,
2023
Interest income:
Loans $ 86,256  $ 87,005  $ 85,899  $ 85,813  $ 82,538 
Investment securities 10,714  11,671  12,309  12,872  12,763 
Cash, Fed Funds and other 5,571  2,603  2,498  2,022  1,750 
Total interest income 102,541  101,279  100,706  100,707  97,051 
Interest expense:
Deposits 42,607  39,317  33,840  35,393  29,370 
Borrowings 27,783  26,973  27,954  21,838  18,305 
Total interest expense 70,390  66,290  61,794  57,231  47,675 
Net interest income
 32,151  34,989  38,912  43,476  49,376 
Provision for credit losses —  445  (1,110) (369) 593 
Net interest income after provision for credit losses 32,151  34,544  40,022  43,845  48,783 
Noninterest income:
Net gain on loan origination and sale activities 2,306  2,108  2,372  2,456  2,410 
Loan servicing income 3,032  3,258  3,092  3,259  3,039 
Deposit fees 2,241  2,331  2,455  2,704  2,658 
Other 1,875  3,259  2,545  1,892  2,083 
Total noninterest income 9,454  10,956  10,464  10,311  10,190 
Noninterest expense:
Compensation and benefits 28,011  27,033  27,002  27,776  29,253 
Information services 7,342  7,694  7,579  7,483  7,145 
Occupancy 5,434  5,407  5,306  5,790  5,738 
General, administrative and other 11,377  9,377  9,202  9,875  10,355 
Goodwill impairment —  —  —  39,857  — 
Total noninterest expense 52,164  49,511  49,089  90,781  52,491 
Income (loss) before income taxes (10,559) (4,011) 1,397  (36,625) 6,482 
Income tax (benefit) expense (3,062) (592) (898) (5,183) 1,424 
Net income (loss) $ (7,497) $ (3,419) $ 2,295  $ (31,442) $ 5,058 
Net income (loss) per share:
Basic $ (0.40) $ (0.18) $ 0.12  $ (1.67) $ 0.27 
Diluted $ (0.40) $ (0.18) $ 0.12  $ (1.67) $ 0.27 
Weighted average shares outstanding:
Basic 18,856,870 18,807,965 18,792,893 18,775,022 18,755,453
Diluted 18,856,870 18,807,965 18,792,893 18,775,022 18,771,899
8



HomeStreet, Inc. and Subsidiaries
Average Balances, Yields (Taxable-equivalent basis) and Rates
(in thousands, except yield/rate) Quarter Ended
Average Balances: March 31,
2024		 December 31,
2023		 September 30,
2023		 June 30,
2023		 March 31,
2023
Investment securities
 $ 1,239,093  $ 1,278,344  $ 1,356,410  $ 1,444,819  $ 1,452,137 
Loans
 7,460,650  7,465,375  7,461,220  7,499,800  7,471,456 
Total interest earning assets
 9,088,205  8,923,338  9,007,360  9,109,807  9,050,484 
Total assets 9,502,189  9,351,866  9,433,648  9,562,817  9,530,705 
Deposits: Interest-bearing
 5,232,637  5,187,242  5,092,025  5,584,825  5,701,701 
Deposits: Noninterest-bearing
 1,319,309  1,343,043  1,430,834  1,437,133  1,511,437 
Borrowings
 2,074,527  1,975,536  2,051,584  1,630,102  1,342,347 
Long-term debt
 224,812  224,722  224,614  224,523  224,435 
Total interest-bearing liabilities
 7,531,976  7,387,500  7,368,223  7,439,450  7,268,483 
Average Yield/Rate:
Investment securities
 3.75  % 3.94  % 3.90  % 3.82  % 3.78  %
Loans
 4.60  % 4.60  % 4.54  % 4.56  % 4.44  %
Total interest earning assets
 4.54  % 4.52  % 4.46  % 4.45  % 4.35  %
Deposits: Interest-bearing
 3.27  % 3.00  % 2.63  % 2.54  % 2.09  %
Total deposits
 2.61  % 2.39  % 2.06  % 2.02  % 1.65  %
Borrowings
 4.73  % 4.74  % 4.81  % 4.62  % 4.57  %
Long-term debt
 5.51  % 5.52  % 5.49  % 5.34  % 5.28  %
Total interest-bearing liabilities
 3.74  % 3.55  % 3.33  % 3.08  % 2.64  %
Net interest rate spread
 0.80  % 0.98  % 1.13  % 1.37  % 1.71  %
Net interest margin
 1.44  % 1.59  % 1.74  % 1.93  % 2.23  %


9

Results of Operations

First Quarter of 2024 Compared to the Fourth Quarter of 2023

Non-core amounts: For the first quarter of 2024 and fourth quarter of 2023 non-core items include $2.6 million and $1.5 million of merger related expenses, respectively.

Our net loss and loss before income taxes were $(7.5) million and $(10.6) million, respectively, in the first quarter of 2024, as compared to $(3.4) million and $(4.0) million, respectively, in the fourth quarter of 2023. The $6.5 million increase in loss before income taxes was due to lower net interest income, lower noninterest income and an increase in noninterest expense which was partially offset by a lower provision for credit losses.

The income tax benefit realized in the first quarter of 2024 resulted in an effective tax rate of 29.0% as compared to an effective tax rate of 14.8% in the fourth quarter of 2023. Our effective tax rate in the first quarter of 2024 was higher than our statutory rate of 24.6% due to the impact of tax advantaged investments which creates a higher benefit due to our loss. Our effective tax rate of 14.8% in the fourth quarter of 2023 was significantly impacted by the goodwill impairment charge taken in 2023, a portion of which was not deductible for tax purposes, the effect of which was partially offset by benefits of tax advantaged investments.

Our net interest income in the first quarter of 2024 was $2.8 million lower than the fourth quarter of 2023 due to a decrease in our net interest margin from 1.59% to 1.44%. The decrease in our net interest margin was due to a 19 basis point increase in the cost of interest-bearing liabilities which was due primarily to a 22 basis point increase in the cost of deposits. The increase in the rates paid on deposits was due to the migration of noninterest-bearing and lower cost interest-bearing accounts to higher cost certificates of deposit and money market accounts.

There was no provision for credit losses recognized during the first quarter of 2024 as compared to a $0.4 million provision in the fourth quarter of 2023. These low levels of provisions for credit losses reflect the stable balance of our loan portfolio, a minimal level of identified credit issues in our loan portfolio and the lack of significant expected credit issues arising in future periods.

Noninterest income in the first quarter of 2024 decreased from the fourth quarter of 2023 primarily due to higher levels of income realized in the fourth quarter of 2023 from our investments in small business investment companies.

The increase in noninterest expenses in the first quarter of 2024, as compared to the fourth quarter of 2023 was primarily due to seasonally higher compensation costs and a $1.1 million increase in merger related expenses.



10

First Quarter of 2024 Compared to First Quarter of 2023

Non-core amounts: For the first quarter of 2024, non-core items include $2.6 million of merger related expenses.

Our net income (loss) and income (loss) before income taxes were $(7.5) million and $(10.6) million, respectively, in the first quarter of 2024, as compared to $5.1 million and $6.5 million, respectively, in the first quarter of 2023. Our core net income (loss) and core income (loss) before income taxes in the first quarter of 2024, which excludes the impact of merger related expenses, was $(5.5) million and $(8.0) million, as compared to $5.1 million and $6.5 million, respectively, in the first quarter of 2023. The $14.4 million decrease in core income before taxes was primarily due to lower net interest income, partially offset by a lower provision for credit losses.

The income tax benefit realized in the first quarter of 2024 resulted in an effective tax rate of 29.0% which was higher than our statutory rate of 24.6% due to the impact of tax advantaged investments which creates a higher benefit to our loss. Our effective tax rate in the first quarter of 2023 of 22.0% was lower than the statutory rate due to the benefits of tax advantaged investments.

Net interest income in the first quarter of 2024 decreased $17.2 million as compared to the first quarter of 2023 due primarily to a decrease in our net interest margin. Our net interest margin decreased from 2.23% in the first quarter of 2023 to 1.44% in the first quarter of 2024 due to a 110 basis point increase in the rates paid on interest-bearing liabilities which was partially offset by a 19 basis point increase in the yield on interest earning assets. Yields on interest-earning assets increased as yields on adjustable rate loans increased due to increases in the indexes on which their pricing is based. The increase in the rates paid on our interest-bearing liabilities was due to an increase in the proportion of higher cost borrowings and a decrease in the proportion of noninterest-bearing deposits to the total balance of interest-bearing liabilities and higher deposit costs and higher borrowing costs. The increases in the rates paid on deposits were due to increases in market interest rates over the prior year and the migration of noninterest-bearing and lower cost interest-bearing accounts to higher cost certificates of deposit and money market accounts.

There was no provision for credit losses recognized during the first quarter of 2024 as compared to a $0.6 million provision in the first quarter of 2023. These low levels of provisions for credit losses reflect the stable balance of our loan portfolio, a minimal level of identified credit issues in our loan portfolio and the lack of significant expected credit issues arising in future periods.

The $0.3 million decrease in noninterest expenses in the first quarter of 2024 as compared to the first quarter of 2023 was primarily due to lower compensation and benefit costs, partially offset by higher general, administrative and other costs. The decrease in compensation and benefit costs was primarily due to lower staffing levels, which was partially offset by wage increases given in the first quarter of 2024. FTEs decreased from 920 at the quarter ended March 31, 2023 compared to 858 at the quarter ended March 31, 2024. The increase in general, administrative and other costs was primarily due to $2.6 million in merger related costs.

Financial Position

During the first quarter of 2024, our total assets increased $63 million due primarily to a $105 million increase in cash, partially offset by a decrease in investment securities. During the first quarter of 2024 total liabilities increased $74 million due to an increase in borrowings, partially offset by a decrease in deposits. The $272 million decrease in deposits was primarily due to a $297 million decrease in brokered certificates of deposit. The $349 million of additional borrowings were used to replace maturing brokered deposits and increase our on-balance sheet cash balances.
11


Loans Held for Investment 
(in thousands) March 31,
2024		 December 31,
2023		 September 30,
2023		 June 30,
2023		 March 31,
2023
Commercial real estate ("CRE")
Non-owner occupied CRE $ 633,401  $ 641,885  $ 633,083  $ 650,710  $ 652,284 
Multifamily 3,929,679  3,940,189  3,957,209  3,966,894  3,975,654 
Construction/land development 575,152  565,916  566,289  576,432  607,559 
Total 5,138,232  5,147,990  5,156,581  5,194,036  5,235,497 
Commercial and industrial loans
Owner occupied CRE 381,943  391,285  428,253  434,400  438,147 
Commercial business 387,464  359,049  385,148  371,779  392,837 
Total 769,407  750,334  813,401  806,179  830,984 
Consumer loans
Single family (1)
 1,149,940  1,140,279  1,099,644  1,068,229  1,057,579 
Home equity and other 387,150  384,301  370,875  368,207  362,322 
Total 1,537,090  1,524,580  1,470,519  1,436,436  1,419,901 
Total LHFI 7,444,729  7,422,904  7,440,501  7,436,651  7,486,382 
    Allowance for credit losses ("ACL") (39,677) (40,500) (40,000) (41,500) (41,500)
Total LHFI less ACL $ 7,405,052  $ 7,382,404  $ 7,400,501  $ 7,395,151  $ 7,444,882 
(1)Includes $1.3 million, $1.3 million, $1.2 million, $1.3 million and $5.2 million of single family loans that are carried at fair value at March 31, 2024, December 31, 2023, September 30, 2023, June 30, 2023, and March 31, 2023, respectively.

12


Loan Roll-forward
(in thousands) March 31,
2024		 December 31,
2023		 September 30,
2023		 June 30,
2023		 March 31,
2023
Loans - beginning balance $ 7,422,904  $ 7,440,501  $ 7,436,651  $ 7,486,382  $ 7,426,320 
Originations and advances 287,568  297,867  329,294  327,949  345,461 
Transfers (to) from loans held for sale (273) —  466  (2,973) — 
Payoffs, paydowns and other (264,876) (312,265) (325,312) (374,484) (284,725)
Charge-offs and transfers to OREO (594) (3,199) (598) (223) (674)
Loans - ending balance $ 7,444,729  $ 7,422,904  $ 7,440,501  $ 7,436,651  $ 7,486,382 


Loan Originations and Advances
(in thousands) March 31,
2024		 December 31,
2023		 September 30,
2023		 June 30,
2023
March 31,
2023 (1)
CRE
Non-owner occupied CRE $ 1,146  $ 12,405  $ 2,315  $ 2,371  $ 2,934 
Multifamily 489  1,482  44,356  65,635  18,239 
Construction/land development 157,453  158,755  155,460  152,907  153,458 
Total 159,088  172,642  202,131  220,913  174,631 
Commercial and industrial loans
Owner occupied CRE 949  7,883  2,242  8,622  7,133 
Commercial business 61,400  21,115  34,255  14,722  57,698 
Total 62,349  28,998  36,497  23,344  64,831 
Consumer loans
Single family (2)
 31,769  62,167  57,483  45,055  67,410 
Home equity and other 34,362  34,060  33,183  38,637  38,589 
Total 66,131  96,227  90,666  83,692  105,999 
Total loan originations and advances $ 287,568  $ 297,867  $ 329,294  $ 327,949  $ 345,461 
(1)    Includes $17.1 million and $3.4 million of consumer loans and commercial and industrial loans, respectively, purchased in our first quarter 2023 branch acquisition.
(2) Includes loans transferred from construction loans to permanent single family loans upon completion of construction of $30.8 million, $57.6 million, $55.1 million, $32.5 million and $46.6 million for the quarters ended March 31, 2024, December 31, 2023, September 30, 2023, June 30, 2023, and March 31, 2023, respectively.



Credit Quality
During the first quarter of 2024, our ratios of nonperforming assets to total assets and total loans delinquent over 30 days, including nonaccrual loans increased but remained at low levels. As of March 31, 2024, our ratio of nonperforming assets to total assets was 0.56%, while our ratio of total loans delinquent over 30 days, including nonaccrual loans, to total loans was 0.82%.
13


Delinquencies
Past Due and Still Accruing
(in thousands) 30-59 days 60-89 days
90 days or
more (1)
 Nonaccrual
Total past
due and nonaccrual (2)
 Current Total
loans
March 31, 2024
Total loans held for investment $ 5,349  $ 2,630  $ 3,794  $ 49,467  $ 61,240  $ 7,383,489  $ 7,444,729 
% 0.07  % 0.04  % 0.05  % 0.66  % 0.82  % 99.18  % 100.00  %
December 31, 2023
Total loans held for investment $ 6,148  $ 4,133  $ 4,261  $ 38,976  $ 53,518  $ 7,369,386  $ 7,422,904 
% 0.08  % 0.05  % 0.06  % 0.53  % 0.72  % 99.28  % 100.00  %
(1) FHA-insured and VA-guaranteed single family loans that are 90 days or more past due are maintained on accrual status if they are determined to have little to no risk of loss.
(2) Includes loans whose repayments are insured by the FHA or guaranteed by the VA or SBA of $11.9 million and $12.4 million at March 31, 2024 and December 31, 2023, respectively.


Allowance for Credit Losses (roll-forward)
  Quarter Ended
(in thousands) March 31,
2024		 December 31,
2023		 September 30,
2023		 June 30,
2023		 March 31,
2023
Allowance for credit losses
Beginning balance $ 40,500  $ 40,000  $ 41,500  $ 41,500  $ 41,500 
Provision for credit losses 242  223  (990) 111  589 
Recoveries (charge-offs), net (1,065) 277  (510) (111) (589)
Ending balance
 $ 39,677  $ 40,500  $ 40,000  $ 41,500  $ 41,500 
Allowance for unfunded commitments:
Beginning balance $ 1,823  $ 1,601  $ 1,721  $ 2,201  $ 2,197 
Provision for credit losses (242) 222  (120) (480) 4 
Ending balance
 $ 1,581  $ 1,823  $ 1,601  $ 1,721  $ 2,201 
Provision for credit losses:
Allowance for credit losses - loans $ 242  $ 223  $ (990) $ 111  $ 589 
Allowance for unfunded commitments (242) 222  (120) (480) 4 
Total
 $ —  $ 445  $ (1,110) $ (369) $ 593 

14

Allocation of Allowance for Credit Losses by Product Type

March 31, 2024 December 31, 2023
(in thousands) Balance
Rate (1)
 Balance
 Rate (1)
Non-owner occupied CRE $ 2,131  0.34  % $ 2,610  0.41  %
Multifamily
 18,947  0.48  % 13,093  0.33  %
Construction/land development
   Multifamily construction
 1,621  0.84  % 3,983  2.37  %
   CRE construction 188  1.02  % 189  1.02  %
   Single family construction 5,578  2.00  % 7,365  2.69  %
   Single family construction to perm 435  0.51  % 672  0.64  %
         Total CRE 28,900  0.56  % 27,912  0.54  %
Owner occupied CRE 836  0.22  % 899  0.23  %
Commercial business
 2,646  0.69  % 2,950  0.83  %
Total commercial and industrial 3,482  0.46  % 3,849  0.52  %
Single family
 4,273  0.40  % 5,287  0.51  %
Home equity and other
 3,022  0.78  % 3,452  0.90  %
Total consumer 7,295  0.51  % 8,739  0.61  %
Total $ 39,677  0.54  % $ 40,500  0.55  %
(1) The ACL rate is calculated excluding balances related to loans that are insured by the FHA or guaranteed by the VA or SBA

Production Volumes for Sale to the Secondary Market
  Quarter Ended
(in thousands) March 31,
2024		 December 31,
2023		 September 30,
2023		 June 30,
2023		 March 31,
2023
Loan originations
Single family loans
 $ 76,528  $ 67,330  $ 95,917  $ 96,750  $ 72,814 
Commercial and industrial and CRE loans
 3,496  7,142  11,863  4,906  6,150 
Loans sold
Single family loans 70,379  77,916  101,575  92,787  63,473 
Commercial and industrial and CRE loans (1)
 8,196  10,619  2,821  4,649  8,750 
Net gain on loan origination and sale activities
Single family loans 1,986  1,844  2,267  2,171  2,218 
Commercial and industrial and CRE loans (1)
 320  264  105  285  192 
Total $ 2,306  $ 2,108  $ 2,372  $ 2,456  $ 2,410 
(1) May include loans originated as held for investment.

15


Loan Servicing Income
  Quarter Ended
(in thousands) March 31,
2024		 December 31,
2023		 September 30,
2023		 June 30,
2023		 March 31,
2023
Single family servicing income, net:
Servicing fees and other $ 3,839  $ 3,880  $ 3,852  $ 3,868  $ 3,923 
Changes - amortization (1)
 (1,428) (1,504) (1,564) (1,626) (1,684)
Net 2,411  2,376  2,288  2,242  2,239 
Risk management, single family MSRs:
Changes in fair value due to assumptions (2)
 618  (1,380) 785  1,320  (311)
Net gain (loss) from derivatives hedging (3)
 (1,110) 1,089  (1,160) (1,592) (81)
Subtotal (492) (291) (375) (272) (392)
Single family servicing income 1,919  2,085  1,913  1,970  1,847 
Commercial loan servicing income:
Servicing fees and other 2,515  2,588  2,553  2,724  2,746 
Amortization of capitalized MSRs (1,402) (1,415) (1,374) (1,435) (1,554)
Total 1,113  1,173  1,179  1,289  1,192 
Total loan servicing income $ 3,032  $ 3,258  $ 3,092  $ 3,259  $ 3,039 
(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)The interest income from US Treasury notes trading securities used for hedging purposes, which is included in interest income on the consolidated income statements, was $0.3 million, $0.3 million, $0.3 million, $0.5 million and $0.4 million for the quarters ended March 31, 2024, December 31, 2023, September 30, 2023, June 30, 2023 and March 31, 2023, respectively.


Capitalized Mortgage Servicing Rights ("MSRs")
  Quarter Ended
(in thousands) March 31,
2024		 December 31,
2023		 September 30,
2023		 June 30,
2023		 March 31,
2023
Single Family MSRs
Beginning balance $ 74,249  $ 76,470  $ 76,314  $ 75,701  $ 76,617 
Additions and amortization:
Originations
 617  663  935  919  619 
Purchases
 —  —  —  —  460 
Changes - amortization (1)
 (1,428) (1,504) (1,564) (1,626) (1,684)
Net additions and amortization
 (811) (841) (629) (707) (605)
Change in fair value due to assumptions (2)
 618  (1,380) 785  1,320  (311)
Ending balance $ 74,056  $ 74,249  $ 76,470  $ 76,314  $ 75,701 
Ratio to related loans serviced for others 1.40  % 1.40  % 1.43  % 1.42  % 1.40  %
Multifamily and SBA MSRs
Beginning balance $ 29,987  $ 31,141  $ 32,477  $ 33,839  35,256 
Originations
 278  261  38  73  137 
Amortization
 (1,402) (1,415) (1,374) (1,435) (1,554)
Ending balance $ 28,863  $ 29,987  $ 31,141  $ 32,477  $ 33,839 
Ratio to related loans serviced for others 1.52  % 1.58  % 1.64  % 1.70  % 1.77  %
(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.


16



Deposits
(in thousands) March 31,
2024		 December 31,
2023		 September 30,
2023		 June 30,
2023		 March 31,
2023
Deposits by Product:
Noninterest-bearing demand deposits $ 1,311,559  $ 1,306,503  $ 1,437,057  $ 1,410,369  $ 1,479,428 
Interest-bearing:
Interest-bearing demand deposits 330,301  344,748  352,529  370,747  496,504 
Savings 256,383  261,508  284,663  300,007  323,373 
Money market 1,536,341  1,622,665  1,723,924  1,863,762  2,097,055 
Certificates of deposit:
Brokered deposits 921,103  1,218,008  973,314  760,826  885,314 
Other 2,135,415  2,009,946  1,974,064  1,964,322  1,774,929 
Total interest-bearing deposits 5,179,543  5,456,875  5,308,494  5,259,664  5,577,175 
Total deposits $ 6,491,102  $ 6,763,378  $ 6,745,551  $ 6,670,033  $ 7,056,603 

Percent of total deposits:
Noninterest-bearing demand deposits 20.2  % 19.3  % 21.3  % 21.1  % 21.0  %
Interest-bearing:
Interest-bearing demand deposits 5.1  % 5.1  % 5.2  % 5.6  % 7.0  %
Savings 3.9  % 3.9  % 4.2  % 4.5  % 4.6  %
Money market 23.7  % 24.0  % 25.6  % 27.9  % 29.7  %
Certificates of deposit
Brokered deposits 14.2  % 18.0  % 14.4  % 11.4  % 12.5  %
Other 32.9  % 29.7  % 29.3  % 29.5  % 25.2  %
Total interest-bearing deposits 79.8  % 80.7  % 78.7  % 78.9  % 79.0  %
Total deposits 100.0  % 100.0  % 100.0  % 100.0  % 100.0  %




17

HomeStreet, Inc. and Subsidiaries
Non-GAAP Financial Measures

To supplement our unaudited condensed consolidated financial statements presented in accordance with GAAP, we use certain non-GAAP measures of financial performance.

In this earnings release, we use the following non-GAAP measures: (i) tangible common equity and tangible assets as we believe this information is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of capital ratios; (ii) core income (loss) and effective tax rate on core income (loss) before taxes, which excludes goodwill impairment charges and merger related expenses and the related tax impact as we believe this measure is a better comparison to be used for projecting future results and (iii) an efficiency ratio which is the ratio of noninterest expense to the sum of net interest income and noninterest income, excluding certain items of income or expense and excluding taxes incurred and payable to the state of Washington as such taxes are not classified as income taxes and we believe including them in noninterest expense impacts the comparability of our results to those companies whose operations are in states where assessed taxes on business are classified as income taxes.

These supplemental performance measures may vary from, and may not be comparable to, similarly titled measures provided by other companies in our industry. Non-GAAP financial measures are not in accordance with, or an alternative for, GAAP. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. A non-GAAP financial measure may also be a financial metric that is not required by GAAP or other applicable requirements.

We believe that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding our performance by providing additional information used by management that is not otherwise required by GAAP or other applicable requirements. Our management uses, and believes that investors benefit from referring to, these non-GAAP financial measures in assessing our operating results and when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate a comparison of our performance to prior periods. We believe these measures are frequently used by securities analysts, investors and other parties in the evaluation of companies in our industry. These non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures prepared in accordance with GAAP. In the information below, we have provided reconciliations of, where applicable, the most comparable GAAP financial measures to the non-GAAP measures used in this earnings release, or the computation of the non-GAAP financial measure.





18

HomeStreet, Inc. and Subsidiaries
Non-GAAP Financial Measures

Reconciliations of non-GAAP results of operations to the nearest comparable GAAP measures or calculations of the non-GAAP measure:

As of or for the Quarter Ended
(in thousands, except share and per share data) March 31,
2024		 December 31,
2023		 September 30,
2023		 June 30,
2023		 March 31,
2023
Core net income (loss)
Net income (loss) $ (7,497) $ (3,419) $ 2,295  $ (31,442) $ 5,058 
Adjustments (tax effected)
Merger related expenses
 2,028  1,170  —  —  — 
Goodwill impairment charge —  —  —  34,622  — 
Total $ (5,469) $ (2,249) $ 2,295  $ 3,180  $ 5,058 
Core net income (loss) per fully diluted share
Fully diluted shares 18,856,870  18,807,965  18,792,893  18,775,022  18,771,899 
Computed amount
 $ (0.29) $ (0.12) $ 0.12  $ 0.17  $ 0.27 
Return on average tangible equity (annualized)
Average shareholders' equity
 $ 537,627  $ 513,758  $ 535,369  $ 582,172  $ 578,533 
Less: Average goodwill and other intangibles
 (9,403) (10,149) (10,917) (51,138) (30,969)
Average tangible equity $ 528,224  $ 503,609  $ 524,452  $ 531,034  $ 547,564 
Core net income (loss) (per above)
 (5,469) (2,249) 2,295  3,180  5,058 
Adjustments (tax effected)
Amortization of core deposit intangibles 488  615  614  614  459 
Tangible income (loss) applicable to shareholders
 $ (4,981) $ (1,634) $ 2,909  $ 3,794  $ 5,517 
Ratio
 (3.8) % (1.3) % 2.2  % 2.9  % 4.1  %
Efficiency ratio
Noninterest expense
Total
 $ 52,164  $ 49,511  $ 49,089  $ 90,781  $ 52,491 
Adjustments:
Merger related expenses
 (2,600) (1,500) —  —  — 
Goodwill impairment charge —  —  —  (39,857) — 
State of Washington taxes (452) 659  (572) (526) (555)
Adjusted total $ 49,112  $ 48,670  $ 48,517  $ 50,398  $ 51,936 
Total revenues
Net interest income
 $ 32,151  $ 34,989  $ 38,912  $ 43,476  $ 49,376 
Noninterest income
 9,454  10,956  10,464  10,311  10,190 
Adjusted total $ 41,605  $ 45,945  $ 49,376  $ 53,787  $ 59,566 
Ratio 118.0  % 105.9  % 98.3  % 93.7  % 87.2  %
19

As of or for the Quarter Ended
(in thousands, except share and per share data) March 31,
2024		 December 31,
2023		 September 30,
2023		 June 30,
2023		 March 31,
2023
Return on average assets (annualized) - Core
Average Assets $ 9,502,189  $ 9,351,866  $ 9,433,648  $ 9,562,817  $ 9,530,705 
Core net income (loss) (per above)
 (5,469) (2,249) 2,295  3,180  5,058 
Ratio (0.23) % (0.10) % 0.10  % 0.13  % 0.22  %
Effective tax rate used in computations above (1)
 22.0  % 22.0  % 22.0  % 22.0  % 22.0  %
Tangible book value per share
Shareholders' equity
 $ 527,333  $ 538,387  $ 502,487  $ 527,623  $ 574,994 
Less: Goodwill and other intangibles
 (9,016) (9,641) (10,429) (11,217) (51,862)
Tangible shareholders' equity $ 518,317  $ 528,746  $ 492,058  $ 516,406  $ 523,132 
Common shares outstanding 18,857,566  18,810,055  18,794,030  18,776,597  18,767,811 
Computed amount $ 27.49  $ 28.11  $ 26.18  $ 27.50  $ 27.87 
Tangible common equity to tangible assets
Tangible shareholders' equity (per above) $ 518,317  $ 528,746  $ 492,058  $ 516,406  $ 523,132 
Tangible assets
Total assets $ 9,455,182 $ 9,392,450 $ 9,458,751 $ 9,501,475 $ 9,858,889
Less: Goodwill and other intangibles (per above) (9,016) (9,641) (10,429) (11,217) (51,862)
Net $ 9,446,166 $ 9,382,809 $ 9,448,322 $ 9,490,258 $ 9,807,027
Ratio 5.5  % 5.6  % 5.2  % 5.4  % 5.3  %
(1) ) Effective tax rate indicated is used for all adjustments except the goodwill impairment charge as a portion of this charge was not deductible for tax purposes. Instead, a computed effective rate of 13.1% was used for the goodwill impairment charge.

20


Forward-Looking Statements

This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Generally, forward-looking statements include the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “goal,” “upcoming,” “outlook,” “guidance” or "project" or the negation thereof, or similar expressions. In addition, all statements in this earnings release (including but not limited to those found in the quotes of our Chief Executive Officer) that address and/or include beliefs, assumptions, estimates, projections and expectations of our future performance and financial condition and trends in product mixes and expected impact on costs are forward-looking statements within the meaning of the Reform Act. Forward-looking statements involve inherent risks, uncertainties and other factors, many of which are difficult to predict and are generally beyond management’s control. Forward-looking statements are based on the Company’s expectations at the time such statements are made and speak only as of the date made. The Company does not assume any obligation or undertake to update any forward-looking statements after the date of this release as a result of new information, future events or developments, except as required by federal securities or other applicable laws, although the Company may do so from time to time. The Company does not endorse any projections regarding future performance that may be made by third parties. For all forward-looking statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Reform Act.

We caution readers that actual results may differ materially from those expressed in or implied by the Company’s forward-looking statements. Rather, more important factors could affect the Company’s future results, including but not limited to the following: (1) our ability to successfully consummate the pending merger (the "Merger") with FirstSun Capital Bancorp ("FirstSun"), (2) the ability of HomeStreet to obtain the necessary approval by shareholders with respect to the Merger, (3) the ability of HomeStreet and FirstSun to obtain required governmental approvals of the Merger, (4) the failure to satisfy the closing conditions in the definitive Agreement and Plan of Merger (the “Merger Agreement”), dated as of January 16, 2024, by and between HomeStreet and FirstSun, or any unexpected delay in closing the Merger, (5) the ability to achieve expected cost savings, synergies and other financial benefits from the Merger within the expected time frames and costs or difficulties relating to integration matters being greater than expected, (6) the diversion of management time from core banking functions due to Merger-related issues; (7) potential difficulty in maintaining relationships with customers, associates or business partners as a result of the announced Merger, (8) changes in the U.S. and global economies, including business disruptions, reductions in employment, inflationary pressures and an increase in business failures, specifically among our customers; (9) changes in the interest rate environment may reduce interest margins; (10) changes in deposit flows, loan demand or real estate values may adversely affect the business of our primary subsidiary, HomeStreet Bank (the “Bank”), through which substantially all of our operations are carried out; (11) there may be increases in competitive pressure among financial institutions or from non-financial institutions; (12) our ability to attract and retain key members of our senior management team; (13) the timing and occurrence or non-occurrence of events may be subject to circumstances beyond our control; (14) our ability to control operating costs and expenses; (15) our credit quality and the effect of credit quality on our credit losses expense and allowance for credit losses; (16) the adequacy of our allowance for credit losses; (17) changes in accounting principles, policies or guidelines may cause our financial condition to be perceived or interpreted differently; (18) legislative or regulatory changes that may adversely affect our business or financial condition, including, without limitation, changes in corporate and/or individual income tax laws and policies, changes in privacy laws, and changes in regulatory capital or other rules, and the availability of resources to address or respond to such changes; (19) general economic conditions, either nationally or locally in some or all areas in which we conduct business, or conditions in the securities markets or banking industry, may be less favorable than what we currently anticipate; (20) challenges our customers may face in meeting current underwriting standards may adversely impact all or a substantial portion of the value of our rate-lock loan activity we recognize; (21) technological changes may be more difficult or expensive than what we anticipate; (22) a failure in or breach of our operational or security systems or information technology infrastructure, or those of our third-party providers and vendors, including due to cyber-attacks; (23) success or consummation of new business initiatives may be more difficult or expensive than what we anticipate; (24) our ability to grow efficiently both organically and through acquisitions and to manage our growth and integration costs; (25) staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our work force and potential associated charges; (26) litigation, investigations or other matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than what we anticipate; and (27) our ability to obtain regulatory approvals or non-objection to take various capital actions, including the payment of dividends by us or the Bank, or repurchases of our common stock.
21

A discussion of the factors, risks and uncertainties that could affect our financial results, business goals and operational and financial objectives cited in this release, other releases, public statements and/or filings with the Securities and Exchange Commission (“SEC”) is also contained in the “Risk Factors” sections of the Company's Forms 10-K and 10-Q. We strongly recommend readers review those disclosures in conjunction with the discussions herein.

All future written and oral forward-looking statements attributable to the Company or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements contained or referred to above. New risks and uncertainties arise from time to time, and factors that the Company currently deems immaterial may become material, and it is impossible for the Company to predict these events or how they may affect the Company.

Subsequent Event

As announced and further described in a separate press release jointly issued by HomeStreet and FirstSun Capital Bancorp (“FirstSun”) today, HomeStreet and FirstSun have entered into an amendment to their merger agreement.




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EX-99.2 3 a992q12024earningsreleases.htm Q1 2024 SUMMARY EARNINGS RELEASE Document

image2.jpg
HomeStreet Reports First Quarter 2024 Results

SEATTLE –April 30, 2024 – (BUSINESS WIRE) – HomeStreet, Inc. (Nasdaq: HMST) (including its consolidated subsidiaries, the "Company", "HomeStreet" or "we"), the parent company of HomeStreet Bank, today announced the financial results for the quarter ended March 31, 2024. As we present non-GAAP measures in this release, the reader should refer to the non-GAAP reconciliations set forth below under the section “Non-GAAP Financial Measures.”

Operating Results
                  First quarter 2024 compared to fourth quarter 2023
Reported Results:
•Net loss: $7.5 million compared to $3.4 million
•Loss per fully diluted share: $0.40 compared to $0.18
•Net interest margin: 1.44% compared to 1.59%
       Core Results (1):
•Loss: $5.5 million compared to $2.2 million
•Loss per fully diluted share: $0.29 compared to $0.12
(1) Core loss and core loss per fully diluted share are non-GAAP measures. For a reconciliation of these measures to the nearest comparable GAAP measure see "Non-GAAP financial measures" in this earnings release.
“In the first quarter, we recognized a net loss of $7.5 million as our net interest margin decreased to 1.44% due to increased funding costs as lower cost deposits continued to migrate to higher yielding products,” said Mark Mason, Chairman of the Board, President, and Chief Executive Officer. "During the first quarter, our noninterest expenses include the impacts of seasonally higher employee benefit costs, the impact of wage increases effective in March, lower levels of full time equivalent employees and $2.6 million of costs incurred related to the merger process. While interest rates have stabilized and are projected to decline later in the year, we expect our operating results will continue to be adversely impacted by high funding costs relative to earning assets yields in the near term."

Financial Position
                    As of and for the quarter ended March 31, 2024
•Noninterest-bearing deposits increased by $5 million
•Excluding brokered deposits, total deposits increased by $25 million
•Uninsured deposits were $494 million, or 8% of total deposits
•Loans held for investment ("LHFI"), remained stable
•Nonperforming assets to total assets: 0.56%
•Allowance for credit losses to LHFI: 0.54%
•Book value per share: $27.96
•Tangible book value per share: $27.49 (2)
(2) Tangible book value per share is a non-GAAP measure. For a reconciliation of this measure to the nearest comparable GAAP measure see "Non-GAAP financial measures" in this earnings release.

"Our deposit balances, excluding brokered deposits, were stable during the first quarter, and our noninterest-bearing balances increased slightly," continued Mark Mason. "While we continue to be impacted by the migration of deposits to higher yielding products, the pace of migration is slowing and the rates paid on higher yielding accounts by competitors have started to decline.


We anticipate that if these trends continue, our funding costs will become more stable."

"Our loan balances have remained stable as they continue to be impacted by historically low levels of prepayments. We continue to focus on variable rate loan products with appropriate margins over incremental funding costs," added Mark Mason. " In the first quarter our nonaccrual loans and nonperforming assets increased due to the downgrade of a $10.4 million construction-bridge loan to nonperforming status. The completion and leasing of this 27% loan to value multifamily and mixed-use project has been delayed. The project is substantially complete but unable to lease as there is a dispute over an alleged minor building code violation. Our credit quality, however, remains strong and we have not identified any potentially significant credit issues in our loan portfolio."



About HomeStreet

HomeStreet, Inc. (Nasdaq: HMST) is a diversified financial services company headquartered in Seattle, Washington, serving consumers and businesses in the Western United States and Hawaii. The Company is principally engaged in real estate lending, including mortgage banking activities, and commercial and consumer banking. Its principal subsidiary is HomeStreet Bank. HomeStreet Bank is the winner of the 2022 "Best Small Bank" in Washington Newsweek magazine award. Certain information about our business can be found on our investor relations web site, located at http://ir.homestreet.com. HomeStreet Bank is a member of the FDIC and is an Equal Housing Lender.



Contact:    Executive Vice President and Chief Financial Officer
HomeStreet, Inc.
   John Michel (206) 515-2291
   john.michel@homestreet.com
   http://ir.homestreet.com





















Forward-Looking Statements

This earnings release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Generally, forward-looking statements include the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “goal,” “upcoming,” “outlook,” “guidance” or "project" or the negation thereof, or similar expressions. In addition, all statements in this earnings release (including but not limited to those found in the quotes of our Chief Executive Officer) that address and/or include beliefs, assumptions, estimates, projections and expectations of our future performance and financial condition and trends in product mixes and expected impact on costs are forward-looking statements within the meaning of the Reform Act. Forward-looking statements involve inherent risks, uncertainties and other factors, many of which are difficult to predict and are generally beyond management’s control. Forward-looking statements are based on the Company’s expectations at the time such statements are made and speak only as of the date made. The Company does not assume any obligation or undertake to update any forward-looking statements after the date of this release as a result of new information, future events or developments, except as required by federal securities or other applicable laws, although the Company may do so from time to time. The Company does not endorse any projections regarding future performance that may be made by third parties. For all forward-looking statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Reform Act.

We caution readers that actual results may differ materially from those expressed in or implied by the Company’s forward-looking statements. Rather, more important factors could affect the Company’s future results, including but not limited to the following: (1) our ability to successfully consummate the pending merger (the "Merger") with FirstSun Capital Bancorp ("FirstSun"), (2) the ability of HomeStreet to obtain the necessary approval by shareholders with respect to the Merger, (3) the ability of HomeStreet and FirstSun to obtain required governmental approvals of the Merger, (4) the failure to satisfy the closing conditions in the definitive Agreement and Plan of Merger (the “Merger Agreement”), dated as of January 16, 2024, by and between HomeStreet and FirstSun, or any unexpected delay in closing the Merger, (5) the ability to achieve expected cost savings, synergies and other financial benefits from the Merger within the expected time frames and costs or difficulties relating to integration matters being greater than expected, (6) the diversion of management time from core banking functions due to Merger-related issues; (7) potential difficulty in maintaining relationships with customers, associates or business partners as a result of the announced Merger, (8) changes in the U.S. and global economies, including business disruptions, reductions in employment, inflationary pressures and an increase in business failures, specifically among our customers; (9) changes in the interest rate environment may reduce interest margins; (10) changes in deposit flows, loan demand or real estate values may adversely affect the business of our primary subsidiary, HomeStreet Bank (the “Bank”), through which substantially all of our operations are carried out; (11) there may be increases in competitive pressure among financial institutions or from non-financial institutions; (12) our ability to attract and retain key members of our senior management team; (13) the timing and occurrence or non-occurrence of events may be subject to circumstances beyond our control; (14) our ability to control operating costs and expenses; (15) our credit quality and the effect of credit quality on our credit losses expense and allowance for credit losses; (16) the adequacy of our allowance for credit losses; (17) changes in accounting principles, policies or guidelines may cause our financial condition to be perceived or interpreted differently; (18) legislative or regulatory changes that may adversely affect our business or financial condition, including, without limitation, changes in corporate and/or individual income tax laws and policies, changes in privacy laws, and changes in regulatory capital or other rules, and the availability of resources to address or respond to such changes; (19) general economic conditions, either nationally or locally in some or all areas in which we conduct business, or conditions in the securities markets or banking industry, may be less favorable than what we currently anticipate; (20) challenges our customers may face in meeting current underwriting standards may adversely impact all or a substantial portion of the value of our rate-lock loan activity we recognize; (21) technological changes may be more difficult or expensive than what we anticipate; (22) a failure in or breach of our operational or security systems or information technology infrastructure, or those of our third-party providers and vendors, including due to cyber-attacks; (23) success or consummation of new business initiatives may be more difficult or expensive than what we anticipate; (24) our ability to grow efficiently both organically and through acquisitions and to manage our growth and integration costs; (25) staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our work force and potential associated charges; (26) litigation, investigations or other matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than what we anticipate; and (27) our ability to obtain regulatory approvals or non-objection to take various capital actions, including the payment of dividends by us or the Bank, or repurchases of our common stock.


A discussion of the factors, risks and uncertainties that could affect our financial results, business goals and operational and financial objectives cited in this release, other releases, public statements and/or filings with the Securities and Exchange Commission (“SEC”) is also contained in the “Risk Factors” sections of the Company's Forms 10-K and 10-Q. We strongly recommend readers review those disclosures in conjunction with the discussions herein.

All future written and oral forward-looking statements attributable to the Company or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements contained or referred to above. New risks and uncertainties arise from time to time, and factors that the Company currently deems immaterial may become material, and it is impossible for the Company to predict these events or how they may affect the Company.




HomeStreet, Inc. and Subsidiaries
Non-GAAP Financial Measures

To supplement our unaudited condensed consolidated financial statements presented in accordance with GAAP, we use certain non-GAAP measures of financial performance.

In this earnings release, we use the following non-GAAP measures: (i) tangible common equity and tangible assets as we believe this information is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of capital ratios; (ii) core income (loss) and effective tax rate on core income (loss) before taxes, which excludes goodwill impairment charges and merger related expenses and the related tax impact as we believe this measure is a better comparison to be used for projecting future results and (iii) an efficiency ratio which is the ratio of noninterest expense to the sum of net interest income and noninterest income, excluding certain items of income or expense and excluding taxes incurred and payable to the state of Washington as such taxes are not classified as income taxes and we believe including them in noninterest expense impacts the comparability of our results to those companies whose operations are in states where assessed taxes on business are classified as income taxes.

These supplemental performance measures may vary from, and may not be comparable to, similarly titled measures provided by other companies in our industry. Non-GAAP financial measures are not in accordance with, or an alternative for, GAAP. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. A non-GAAP financial measure may also be a financial metric that is not required by GAAP or other applicable requirements.

We believe that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provide meaningful supplemental information regarding our performance by providing additional information used by management that is not otherwise required by GAAP or other applicable requirements. Our management uses, and believes that investors benefit from referring to, these non-GAAP financial measures in assessing our operating results and when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate a comparison of our performance to prior periods. We believe these measures are frequently used by securities analysts, investors and other parties in the evaluation of companies in our industry. These non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures prepared in accordance with GAAP. In the information below, we have provided reconciliations of, where applicable, the most comparable GAAP financial measures to the non-GAAP measures used in this earnings release, or the computation of the non-GAAP financial measure.



HomeStreet, Inc. and Subsidiaries
Non-GAAP Financial Measures

Reconciliations of non-GAAP results of operations to the nearest comparable GAAP measures or calculations of the non-GAAP measure:
As of or for the Quarter Ended
(in thousands, except share and per share data) March 31,
2024		 December 31,
2023
Core net income (loss)
Net income (loss) $ (7,497) $ (3,419)
Adjustments (tax effected)
Merger related expenses 2,028  1,170 
Total $ (5,469) $ (2,249)
Core net income (loss) per fully diluted share
Fully diluted shares 18,856,870  18,807,965 
Computed amount $ (0.29) $ (0.12)
Return on average tangible equity (annualized)
Average shareholders' equity $ 537,627  $ 513,758 
Less: Average goodwill and other intangibles (9,403) (10,149)
Average tangible equity $ 528,224  $ 503,609 
Core net income (loss) (per above) $ (5,469) $ (2,249)
Adjustments (tax effected)
Amortization of core deposit intangibles 488  615 
Tangible income (loss) applicable to shareholders $ (4,981) $ (1,634)
Ratio (3.8) % (1.3) %
Efficiency ratio
Noninterest expense
Total $ 52,164  $ 49,511 
Adjustments:
Merger related expenses (2,600) (1,500)
State of Washington taxes (452) 659 
Adjusted total $ 49,112  $ 48,670 
Total revenues
Net interest income $ 32,151  $ 34,989 
Noninterest income 9,454  10,956 
Adjusted total $ 41,605  $ 45,945 
Ratio 118.0  % 105.9  %
Return on average assets (annualized) - Core
Average Assets $ 9,502,189  $ 9,351,866 
Core net income (loss) (per above) (5,469) (2,249)
Ratio (0.23) % (0.10) %
Tangible book value per share
Shareholders' equity $ 527,333  $ 538,387 
Less: Goodwill and other intangibles (9,016) (9,641)
Tangible shareholders' equity $ 518,317  $ 528,746 
Common shares outstanding 18,857,566  18,810,055 
Computed amount $ 27.49  $ 28.11