HomeStreet (HMST) Reports In-Line Q4 EPS

HomeStreet (NASDAQ: HMST) reported Q4 EPS of $0.36, in-line with the analyst estimate of $0.36.

• Achieved record net income in our Commercial and Consumer Banking segment of $56.8 million, or $52.9 million excluding the impact of tax reform, acquisition, and restructuring related items
• Grew loans held for investment to $5.09 billion, an increase of $564.1 million, or 12% from $4.53 billion at December 31, 2017
• Increased deposits to $5.05 billion, an increase of $290.5 million, or 6% from $4.76 billion at December 31, 2017
• Implemented cost savings initiatives, excluding the impact of restructuring and acquisition related charges, that reduced expenses by $14.0 million in base salaries, $11.3 million in general and administrative expenses and $2.6 million in occupancy expense in 2018
• Reduced headcount 16 % from 2,419 at year-end 2017 to 2,036 at year-end 2018
• Recognized non-cash tax benefits of $4.9 million in 2018 and $23.3 million in 2017 related to the Tax Cuts and Jobs Act legislation ("Tax Reform Act") enacted in December 2017
• The ratio of non-performing assets to total assets fell to 0.17% at December 31, 2018, from 0.23% at December 31, 2017
• Announced agreement to acquire a retail branch, with approximately $123 million in deposits, along with $123 million of loans and a commercial lending team in San Diego County, which is expected to close in March 2019
• Opened three de novo retail branches and consolidated two other retail branches into two nearby locations
• Sold $4.90 billion in unpaid balance of our single family mortgage servicing rights, improving our regulatory capital ratios
• Appointed Sandra Cavanaugh and Mark Patterson to our Board of Directors and appointed Donald R. Voss as Lead Independent Director

“Notwithstanding the impact of a challenging period in the mortgage banking cycle, I’m proud of what we accomplished at HomeStreet during 2018,” said Mark K. Mason, Chairman, President, and Chief Executive Officer. “Our Commercial and Consumer Banking segment reported record net income for 2018 driven primarily by a 12% increase in loans held for investment, all of which was from organic growth. While rapidly increasing short-term interest rates during 2018 and a persistently flat yield curve have adversely impacted our interest rate sensitive deposit balances and our net interest margin; our overall growth, fueled by the increase in our loan portfolio, significantly increased our net interest income. At the same time, we reduced our ratio of nonperforming assets to 0.17% of total assets as our asset quality remained strong.”

“During the past year we also made substantial improvements to the cost structure of our business, particularly in the Mortgage Banking segment. We believe that these cost saving initiatives will position the business for profitability as the cycle improves. We continue to consider both operational and strategic changes to further improve the profitability of our mortgage banking business.”

For earnings history and earnings-related data on HomeStreet (HMST) click here.

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