HomeStreet, Inc. (Nasdaq:HMST):
Fourth Quarter 2021
Fully diluted EPS
$1.43
ROAE: 16.1%
ROATE: 17.0%
ROAA: 1.59%
Full Year 2021
Fully diluted EPS
$5.46
ROAE: 15.9%
ROATE: 16.8%
ROAA: 1.58%
HomeStreet, Inc. (Nasdaq:HMST) (including its consolidated
subsidiaries, the "Company" or "HomeStreet"), the parent company of
HomeStreet Bank, today announced the financial results for the
quarter and year ended December 31, 2021. 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.”
“In 2021, which was our 100th anniversary, HomeStreet reported
earnings in excess of $100 million for the first time ever. Our
record earnings of $115 million were driven by record loan
originations, strong core deposit growth and the benefits of our
past efficiency and profitability improvement initiatives,” said
Mark K. Mason, HomeStreet’s Chairman of the Board, President, and
Chief Executive Officer. “Portfolio loan originations totaled $3.3
billion in 2021 and noninterest-bearing deposits increased 21%. As
reflected in our stable efficiency ratio year over year, we believe
the strategic changes we implemented in prior years, including the
restructuring of our single family mortgage business, have provided
meaningful operating leverage and more consistent and less volatile
earnings. We anticipate continuing improvements as our operating
leverage should provide us the opportunity to grow revenues without
commensurate additions to personnel or other operating expenses.
Finally, I want to thank all of our employees for their great work
this year which has allowed HomeStreet to be so successful in spite
of the ongoing challenges of the pandemic.”
Fourth Quarter Operating
Results
Fourth quarter 2021 compared
to third quarter 2021
- Net income: $29.4 million compared to $27.2 million
- Earnings per fully diluted share: $1.43 compared to $1.31
- Net interest margin: 3.34% compared to 3.42%
- Return on Average Equity ('ROAE"): 16.1% compared to 14.8%
- Return on Average Tangible Equity ("ROATE"): 17.0% compared to
15.6%
- Return on average assets ("ROAA"): 1.59% compared to 1.48%
- Efficiency ratio: 62.2% compared to 62.8%
Full Year Operating
Results
2021 compared to 2020
- Net income: $115.4 million compared to $80.0 million
- Core net income: $115.4 million compared to $88.8 million
- Earnings per fully diluted share: $5.46 compared to $3.47
- Core earnings per fully diluted share: $5.46 compared to
$3.85
- Net interest margin: 3.38% compared to 3.13%
- ROAE: 15.9% compared to 11.3%
- ROATE: 16.8% compared to 12.1%
- Core ROATE: 16.8% compared to 13.4%
- ROAA: 1.58% compared to 1.10%
- Core ROAA: 1.58% compared to 1.23%
- Efficiency Ratio: 61.9% compared to 61.4%
Financial Position
Fourth quarter 2021 compared
to third quarter 2021
- Loan portfolio originations: $795 million in the fourth
quarter
- Single family loans held for sale originations: $361 million, a
13% decrease
- Commercial and consumer noninterest-bearing deposits decreased
5%
- Period ending cost of deposits: 0.15%, unchanged
- Tangible book value per share: $34.04 compared to $33.18
2021 Activity
- Loan portfolio originations: $3.3 billion
- Single family loans held for sale originations: $2.0
billion
- Commercial and consumer noninterest-bearing deposits increased
21%
- Tangible book value per share increased from $31.42 to
$34.04
“Loan origination levels remained strong with $795 million of
loan originations in the current quarter and $3.3 billion in 2021,”
added Mr. Mason. “Excluding the impact of the Paycheck Protection
Program ("PPP") loans, and despite continuing high levels of
prepayments, our loans held for investment grew 11% during 2021.
During the fourth quarter, we completed a $244 million sale of
permanent multifamily loans, realizing a net gain of 2.73%. Total
deposits increased by 6% during 2021 and noninterest bearing
deposits increased to 26% of total deposits. We recognized $6
million and $15 million of recoveries of pandemic related allowance
for credit losses in the fourth quarter and in 2021, respectively.
As we continue to have more clarity of the minimal impact COVID is
having on our loan portfolio, and with projected improvements in
our economies and anticipated changes in the composition of our
loan portfolio, we expect to recover additional amounts of our
allowance for credit losses in future periods.”
Other
- Completed $100 million subordinated notes offering in January
2022
- Repurchased a total of 374,320 shares of our common stock at an
average price of $51.17 per share during the fourth quarter
- Repurchased 1,873,294 shares at an average price of $44.92 per
share during 2021, representing 8.6% of the outstanding shares at
December 31, 2020
- Declared and paid a cash dividend of $0.25 per share in the
fourth quarter
Mr. Mason concluded, “With the completion of our $100 million
subordinated notes offering in January 2022, we accessed lower cost
capital to expand our share repurchase program and support our
future growth. Relative to the outstanding stock at the beginning
of each period, we have repurchased 12%, 9% and 9% of our
outstanding common stock in 2019, 2020 and 2021, respectively. We
anticipate continuing to efficiently retain capital for growth
while returning excess capital to shareholders."
Conference Call
HomeStreet, Inc. (Nasdaq:HMST), the parent company of HomeStreet
Bank, will conduct a quarterly earnings conference call on Tuesday,
January 25, 2022 at 1:00 p.m. ET. Mark K. Mason, CEO and President,
and John M. Michel, CFO, will discuss fourth quarter and year to
date 2021 results and provide an update on recent events. A
question and answer session will follow the presentation.
Shareholders, analysts and other interested parties may register in
advance at http://dpregister.com/sreg/10162678/f0537aee8a or may
join the call by dialing 1-877-508-9589 (1-855-669-9657 in Canada
and 1-412-317-1075 internationally) shortly before 1:00 p.m.
ET.
A rebroadcast will be available approximately one hour after the
conference call by dialing 1-877-344-7529 and entering passcode
10162678.
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 subsidiaries are HomeStreet Bank and
HomeStreet Capital Corporation. 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.
Forward-Looking Statements
This press 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 the negation thereof, or similar expressions. In
addition, all statements that address and/or include beliefs,
assumptions, estimates, projections and expectations of our future
performance, financial condition, long-term value creation, capital
management, reduction in volatility, reliability of earnings,
provisions and allowances for credit losses, cost reduction
initiatives, performance of our continued operations relative to
our past operations, and restructuring activities 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) the continued impact of COVID-19 on the U.S. and
global economies, including business disruptions, reductions in
employment and an increase in business failures, specifically among
our clients; (2) the continued impact of COVID-19 on our employees
and our ability to provide services to our customers and respond to
their needs as more cases of COVID-19 may arise in our primary
markets; (3) the timing and occurrence or non-occurrence of events
may be subject to circumstances beyond our control; (4) there may
be increases in competitive pressure among financial institutions
or from non-financial institutions; (5) changes in the interest
rate environment may reduce interest margins; (6) changes in
deposit flows, loan demand or real estate values may adversely
affect the business of our primary subsidiary, the Bank, through
which substantially all of our operations are carried out; (7) our
ability to control operating costs and expenses; (8) our credit
quality and the effect of credit quality on our credit losses
expense and allowance for credit losses; (9) the adequacy of our
allowance for credit losses; (10) changes in accounting principles,
policies or guidelines may cause our financial condition to be
perceived differently; (11) 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;
(12) 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; (13) 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; (14) technological changes may be more
difficult or expensive than what we anticipate; (15) 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; (16) success or
consummation of new business initiatives may be more difficult or
expensive than what we anticipate; (17) our ability to grow
efficiently both organically and through acquisitions and to manage
our growth and integration costs; (18) our ability to attract and
retain key members of our senior management team; (19) staffing
fluctuations in response to product demand or the implementation of
corporate strategies that affect our work force and potential
associated charges; (20) litigation 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 (21) 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 press 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 excluded intangible assets from the calculation of
capital ratios; (ii) core earnings which exclude certain charges
primarily related to our discontinued operations and restructuring
activities 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 expenses 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 expenses 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.
Rather, 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 press release, or a reconciliation of the non-GAAP
calculation of the financial measure.
HomeStreet, Inc. and Subsidiaries Non-GAAP Financial
Measures
Reconciliations of non-GAAP results of operations to the nearest
comparable GAAP measures:
As of or for the Quarter
Ended
Year Ended
(in thousands, except share and per share
data)
December 31, 2021
September 30, 2021
December 31, 2021
December 31, 2020
Tangible book value per share
Shareholders' equity
$
715,339
$
710,376
$
715,339
$
717,750
Less: Goodwill and other intangibles
(31,709
)
(32,002
)
(31,709
)
(32,880
)
Tangible shareholders' equity
$
683,630
$
678,374
$
683,630
$
684,870
Common shares outstanding
20,085,336
20,446,648
20,085,336
21,796,904
Computed amount
$
34.04
$
33.18
$
34.04
$
31.42
Core net income
Net income
$
29,432
$
27,170
$
115,422
$
79,990
Adjustments (tax effected)
Restructuring related charges
—
—
—
9,298
Contingent payout
—
—
—
(446
)
Total
$
29,432
$
27,170
$
115,422
$
88,842
Return on average tangible equity
(annualized)
Average shareholders' equity
$
726,014
$
726,823
$
725,802
$
706,160
Less: Average goodwill and other
intangibles
(31,901
)
(32,195
)
(32,337
)
(33,613
)
Average tangible equity
$
694,113
$
694,628
$
693,465
$
672,547
Net income
$
29,432
$
27,170
$
115,422
$
79,990
Adjustments (tax effected)
Amortization on core deposit
intangibles
229
229
923
1,082
Tangible income applicable to
shareholders
$
29,661
$
27,399
$
116,345
$
81,072
Ratio
17.0
%
15.6
%
16.8
%
12.1
%
(in thousands, except share and per share
data)
December 31, 2021
September 30, 2021
December 31, 2021
December 31, 2020
Return on average tangible equity
(annualized) - Core
Average tangible equity (per above)
$
694,113
$
694,628
$
693,465
$
672,547
Core net income (per above)
29,432
27,170
115,422
88,842
Adjustments (tax effected):
Amortization on core deposit
intangibles
229
229
923
1,082
Tangible income applicable to
shareholders
$
29,661
$
27,399
$
116,345
$
89,924
Ratio
17.0
%
15.6
%
16.8
%
13.4
%
Return on average assets (annualized) -
Core
Average assets
$
7,356,957
$
7,264,933
$
7,318,505
$
7,250,634
Core net income (per above)
29,432
27,170
115,422
88,842
Ratio
1.59
%
1.48
%
1.58
%
1.23
%
Efficiency ratio
Noninterest expense
Total
$
53,971
$
51,949
$
215,343
$
235,663
Adjustments:
Restructuring related charges
—
—
—
(11,837
)
Legal fees recovery
—
—
1,900
—
Prepayment fee on FHLB advances
—
—
—
(1,492
)
State of Washington taxes
(664
)
(578
)
(2,423
)
(2,920
)
Adjusted total
$
53,307
$
51,371
$
214,820
$
219,414
Total revenues
Net interest income
$
57,084
$
57,484
$
227,057
$
208,662
Noninterest income
28,620
24,298
119,975
149,364
Adjustments:
Contingent payout
—
—
—
(566
)
Adjusted total
$
85,704
$
81,782
$
347,032
$
357,460
Ratio
62.2
%
62.8
%
61.9
%
61.4
%
Core diluted earnings per share
Core net income (per above)
$
29,432
$
27,170
$
115,422
$
88,842
Fully diluted shares
20,522,475
20,819,601
21,143,414
23,076,822
Ratio
$
1.43
$
1.31
$
5.46
$
3.85
Effective tax rate used in computations
above
22.0
%
22.0
%
21.3
%
21.5
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220124005725/en/
Executive Vice President and Chief Financial Officer
HomeStreet, Inc. John Michel (206) 515-2291
john.michel@homestreet.com http://ir.homestreet.com
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