Form 8-K for 1Q13 Earnings Release

0001518715-13-000101.txt : 20130429 0001518715-13-000101.hdr.sgml : 20130427 20130429085626 ACCESSION NUMBER: 0001518715-13-000101 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20130429 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20130429 DATE AS OF CHANGE: 20130429 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HomeStreet, Inc. CENTRAL INDEX KEY: 0001518715 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTIONS, NOT FEDERALLY CHARTERED [6036] IRS NUMBER: 910186600 STATE OF INCORPORATION: WA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-35424 FILM NUMBER: 13789239 BUSINESS ADDRESS: STREET 1: 2000 TWO UNION SQUARE STREET 2: 601 UNION STREET, STE. 2000 CITY: SEATTLE STATE: WA ZIP: 98101 BUSINESS PHONE: 206-623-3050 MAIL ADDRESS: STREET 1: 2000 TWO UNION SQUARE STREET 2: 601 UNION STREET, STE. 2000 CITY: SEATTLE STATE: WA ZIP: 98101 8-K 1 form8-kfor1q13earningsrele.htm FORM 8-K Form 8-K for 1Q13 Earnings Release

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 29, 2013

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))



Item 2.02	Results of Operations and Financial Condition

On April 29, 2013, HomeStreet, Inc. issued a press release reporting financial results for the quarter ended March 31, 2013. A copy of the press release is attached as Exhibit 99.1.

The information in this report, including the press release furnished as Exhibit 99.1 hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, and shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.



Item 9.01	Financial Statements and Exhibits

(d) Exhibits.

Exhibit 99.1 Press Release issued by HomeStreet, Inc. dated April 29, 2013, regarding its financial results.

SIGNATURES

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 29, 2013.




HomeStreet, Inc.

By:		/s/ Godfrey B. Evans
		Godfrey B. Evans
		Executive Vice President, Chief Administrative
		Officer, General Counsel and Corporate Secretary

EX-99.1 2 a1q13earningsrelease.htm EARNINGS RELEASE ISSUED BY HOMESTREET, INC. DATED APRIL 29, 2013 1Q13 Earnings Release

HomeStreet, Inc. Reports First Quarter 2013 Results

Net Income of $10.9 Million; Return on Equity of 16.0%

SEATTLE – April 29, 2013 – (BUSINESS WIRE) – HomeStreet, Inc. (NASDAQ:HMST) (the “Company” or “HomeStreet”), the parent company of HomeStreet Bank (the “Bank”), today announced net income of $10.9 million, or $0.74 per diluted share, for the first quarter of 2013, compared to net income of $21.5 million, or $1.46 per share, for the fourth quarter of 2012 and $20.0 million, or $1.86 per share, for the first quarter of 2012.


•	Financial performance for first quarter 2013:


▪	Pre-tax income of $16.4 million, down 42.6% from the fourth quarter of 2012 and down 10.2% from the first quarter of 2012.


▪	Net interest margin, excluding the impact of a $1.4 million prior period interest expense correction, was 3.06%, unchanged from the fourth quarter of 2012 and improved from 2.51% in the first quarter of 2012. Including the impact of the interest expense correction, net interest margin was 2.81% for the quarter.


▪	The Company's estimated annual effective income tax rate for the quarter was 33.2% as compared to 20.8% for 2012. The prior year effective income tax rate reflected the benefit of the full reversal of deferred tax asset valuation allowances.


▪	Return on average equity of 16.0% and return on average assets of 1.75%.


•	Mortgage banking results for first quarter 2013:


▪	Single family mortgage closed loan production of $1.19 billion, down 21.5% from the fourth quarter of 2012 and up 67.4% from the first quarter of 2012. Sequential quarter decrease in closed loan production due to reduced regional market origination activity partially offset by continued growth in production personnel.


▪	Net gain on mortgage origination and sale activities of $53.9 million, down 21.6% from the fourth quarter of 2012 and up 82.8% from the first quarter of 2012.


•	Other highlights:


▪	Loans held for investment were $1.36 billion at March 31, 2013, a net increase of $50.0 million, or 3.8%, from December 31, 2012 with $114.8 million of new loan commitments and originations in all of HomeStreet's lending product lines: commercial and industrial, commercial real estate, residential construction and single family mortgage.


▪	Transaction and savings deposits grew to $1.16 billion, or 60.1% of total deposits, up from $1.05 billion, or 52.9% of total deposits, at December 31, 2012.


▪	During the quarter, HomeStreet added 32 mortgage production personnel and opened three new mortgage loan production offices, including opening a stand-alone lending center in Pasadena, California.


▪	As a result of the overall improvement in the Company’s financial condition, results of operations and risk profile, in March 2013 the Federal Reserve Board terminated the cease and desist order that had been imposed on the Company in May 2009.


▪	In March 2013, the Company paid all deferred interest due on its outstanding Trust Preferred Securities (TruPS) and the current interest payment due on March 15, 2013.


▪	On April 22, 2013, the Company paid a common stock dividend of $0.11 per share payable to shareholders of record as of April 11, 2013.

“We were very pleased to declare a dividend in the first quarter, our first since 2008, reflecting our strong profitability and financial condition and the recent removal of the final regulatory order instituted during the recession,” said President and Chief Executive Officer Mark K. Mason. "HomeStreet's loan portfolio grew for the third consecutive quarter with new lending in each of our traditional lending lines. To support this growth, we continued to expand our branch network with the addition of three new mortgage lending offices and our third commercial lending center. As the mortgage market transitions, we will continue to focus on the purchase mortgage business, growing our mortgage production capacity and personnel, and working toward our long-term goal of business diversification.”

Mortgage Banking

Mortgage Production

Single family mortgage interest rate lock commitments, net of estimated fall out, totaled $1.04 billion in the first quarter of 2013, down $219.1 million, or 17.5%, from $1.25 billion in the fourth quarter of 2012 and up $120.7 million, or 13.2%, from the first quarter of 2012. The decline in interest rate lock commitments in the first quarter of 2013 as compared to the fourth quarter of 2012 reflected an overall decrease in regional mortgage origination activity in part due to expected seasonal weakness, as well as historically low housing inventories that constrained the purchase market. The overall decline was partially offset by the continued expansion of our mortgage production personnel which grew by 9.4% in the first quarter.

The Company has historically pursued an origination strategy focused on the purchase mortgage market, while retaining its customers through refinancing their mortgages as well as through repeat purchase transactions. Consequently, our originations have historically had a higher composition of purchase mortgages than peer institutions. We expect to grow our purchase mortgage and overall market share as total mortgage market originations decline and the market transitions away from one dominated by mortgage refinancing. First quarter interest rate lock commitments were comprised of 50% purchases and 50% refinance transactions compared to 33% purchases and 67% refinances in the fourth quarter 2012.

Single family closed loan volume designated for sale was $1.19 billion in the first quarter of 2013, down $326.8 million, or 21.5%, from $1.52 billion in the fourth quarter of 2012 and up $479.9 million, or 67.4%, from $712.3 million in the first quarter of 2012. At March 31, 2013, the combined pipeline of outstanding rate lock commitments, net of estimated fallout, and mortgage loans held for sale was $909.5 million, compared to a total of $1.18 billion at December 31, 2012.

Net gain on mortgage loan origination and sale activities in the first quarter of 2013 was $53.9 million, a decrease of $14.8 million, or 21.6%, from the fourth quarter of 2012 and up $24.4 million, or 82.8%, from the first quarter of 2012. The results for the first quarter of 2013 include an adjustment of $4.3 million related to a change in accounting estimate that resulted from a change in the application of our methodology used to value the Company's interest rate lock commitments. This refinement of the Company's valuation methodology was effective on March 31, 2013.

Due to differences in the timing of revenue recognition between components of the gain on loan origination and sale activities, the Company analyzes the profitability of these activities using a 'Composite Margin,' which is comprised of the ratios of the components to their respective populations of interest rate lock

commitments, loans closed and loans sold. The Composite Margin for the first quarter of 2013 was 412 basis points, down from 494 basis points in the prior quarter (see the Mortgage Banking Activity table for details).

Mortgage Servicing

Mortgage servicing income of $3.1 million in the first quarter of 2013 increased $2.4 million, or 371.9% from the fourth quarter of 2012 and decreased $4.8 million, or 61.0% from the first quarter of 2012. The increase from the fourth quarter of 2012 was primarily driven by the impact in the prior quarter of changes in the fair value of the Company's mortgage servicing rights (MSRs) due to changes in model inputs and assumptions related to changes to the Federal Housing Administration (FHA) streamlined refinance program and expected increases in housing values, both of which generally lead to higher projected prepayment speeds, which are not within the scope of the Company's MSR hedging strategy. Additionally, during the first quarter of 2013 actual prepayment speeds were lower due to seasonality and reduced refinance activities.

The decrease from the prior year period largely reflected a reduction in sensitivity to interest rates for MSRs, which has enabled the Company to reduce the notional amount of derivative instruments used to economically hedge MSRs. The lower notional amount of derivative instruments, along with lower effective yields on derivative instruments utilized to hedge MSRs, resulted in lower net gains from MSR risk management, which negatively impacted mortgage servicing income.

Mortgage servicing fees collected in the first quarter of 2013 increased $84 thousand, or 1.1%, from the fourth quarter of 2012 and increased $1.2 million, or 18.2%, from the first quarter of 2012. The total loans serviced for others portfolio increased to $10.49 billion compared to $9.65 billion at December 31, 2012, primarily due to the increase in single family loans serviced for others.

Asset Quality

Classified assets of $90.1 million, or 3.59% of total assets at March 31, 2013, increased by $3.8 million, or 4%, from $86.3 million, or 3.28% of total assets, at December 31, 2012. Nonperforming assets (NPAs) of $53.8 million, or 2.14% of total assets at March 31, 2013, were relatively unchanged from nonperforming asset balances at December 31, 2012.

Nonaccrual loans of $32.1 million, or 2.31% of total loans at March 31, 2013, increased from $29.9 million, or 2.23% of total loans at December 31, 2012, primarily driven by an increase in nonaccrual single family loans. Other real estate owned (OREO) balances of $21.7 million at March 31, 2013 declined from $23.9 million at December 31, 2012, primarily as a result of valuation adjustments on certain commercial real estate properties. Loan delinquencies of $92.6 million, or 6.66% of total loans at March 31, 2013, were relatively unchanged from delinquencies of $88.2 million, or 6.58% of total loans at December 31, 2012. Excluding FHA-insured and Department of Veterans' Affairs (VA)-guaranteed single family mortgage loans, loan delinquencies were $38.5 million, or 2.94% of total non-FHA/VA loans at March 31, 2013 as compared to 2.93% at December 31, 2012.

The allowance for credit losses was $28.6 million at March 31, 2013 as compared to $27.8 million at December 31, 2012. The marginal increase in the allowance for credit losses primarily resulted from the continued growth of the Company's loan portfolio. The allowance for loan losses (which excludes the allowance for unfunded commitments) as a percentage of loans held for investment declined slightly to 2.04% of total loans at March 31, 2013 compared to 2.06% of total loans at December 31, 2012. A provision for credit losses of $2.0 million was recorded for the first quarter of 2013, compared to $4.0 million recorded in the fourth quarter of 2012 and zero in the first quarter of 2012. Net charge-offs in the quarter decreased to $1.2 million, down from $3.9 million in the fourth quarter of 2012 and $7.4 million in the first quarter of 2012.

Branch Banking

Deposit balances were $1.93 billion at March 31, 2013 as compared to $1.98 billion at December 31, 2012 and $2.00 billion at March 31, 2012. Certificates of deposit decreased $132.3 million, or 20%, from the prior quarter and $367.5 million, or 41%, from a year ago as a result of the managed reduction of these higher-cost deposits and replacement with transaction and savings deposits, which increased $117.1 million, or 11%, from the prior quarter and $301.3 million, or 35%, from a year ago. The improvement in the composition of deposits was primarily the result of our successful efforts to attract transaction and savings deposit balances through our branch network and convert customers with maturing certificates of deposit to transaction and savings deposits.

Results of Operations

Net Interest Income

Net interest income in the first quarter of 2013 was $15.2 million, down $1.4 million, or 8%, from the fourth quarter of 2012 and up $2.4 million, or 19%, from the first quarter of 2012. Interest expense for the first quarter of 2013 included $1.4 million related to the correction of the cumulative effect of an error in prior years, resulting from the under accrual of interest due on the TruPS for which the Company had deferred the payment of interest. The first quarter of 2013 net interest margin, on a tax equivalent basis, decreased to 2.81% from 3.06% in the fourth quarter of 2012, but was up from 2.51% in the first quarter of 2012. The Company's net interest margin for the first quarter of 2013 excluding the impact of the $1.4 million prior period interest expense correction was 3.06%.

Total average interest earning assets increased from the first quarter of 2012 primarily as a result of higher mortgage production volumes resulting in a higher average balance of loans held for sale, partially offset by a decrease in cash and cash equivalents which had been used to fund loans held for sale. Total average interest bearing deposit balances declined from the prior periods mostly as a result of a decline in higher-cost certificates of deposit, partially offset by an increase in transaction and savings deposits.

Noninterest Income

Noninterest income in the first quarter of 2013 was $58.9 million, down $12.8 million, or 18%, from $71.7 million in the fourth quarter of 2012 and up $18.8 million, or 47%, from $40.1 million in the first quarter of 2012. The decrease from the prior quarter was primarily driven by lower mortgage loan origination and sale revenue, being partially offset by higher mortgage servicing income.

The increase from the first quarter of 2012 was primarily driven by increased mortgage loan origination and sale revenue, primarily resulting from increased single family loan production volume and higher secondary market profit margins. Partially offsetting this increase to noninterest income was a decrease in mortgage servicing income, primarily resulting from a reduction in income recognized from MSR risk management activities.

Noninterest Expense

Noninterest expense of $55.8 million in the first quarter of 2013 was unchanged from the fourth quarter of 2012, and was up $21.1 million, or 61%, from $34.7 million in the first quarter of 2012. During the first quarter of 2013, a decrease in salaries and related costs resulting from lower incentive bonuses and mortgage origination commissions was partially offset by higher salary and benefits costs of new employees, seasonally higher payroll taxes, and increased general and administrative expenses resulting from higher marketing, collection and loan expenses when compared to the fourth quarter of 2012.

The increase in noninterest expense compared to a year ago was primarily due to an increase in salaries and related costs, including commissions to lending personnel, and higher general and administrative expenses, reflecting the Company's growth and increased mortgage production capacity.

Income Taxes

The Company's income tax expense was $5.4 million for the quarter. The Company's estimated annual effective income tax rate for the quarter was 33.2% as compared to 20.8% for 2012. The prior year effective income tax rate reflected the benefit of the full reversal of deferred tax asset valuation allowances.

Capital

Regulatory capital ratios for the Bank are as follows:



	Mar. 31, 2013		Dec. 31, 2012		Mar. 31, 2012		Well-capitalized ratios
Tier 1 leverage capital (to average assets)	11.97	%	11.78	%	9.33	%	5.00	%
Tier 1 risk-based capital (to risk-weighted assets)	19.21	%	18.05	%	14.23	%	6.00	%
Total risk-based capital (to risk-weighted assets)	20.47	%	19.31	%	15.50	%	10.00	%

The Bank continues to meet the capital requirements of a "well-capitalized" institution.

Conference Call

HomeStreet, Inc. will conduct a quarterly earnings conference call on Monday, April 29, 2013 at 10:00 a.m. PST (1:00 p.m. EST). The Company will discuss first quarter 2013 results and provide an update on recent activities. A question and answer session will follow the presentation. Shareholders, analysts and other interested parties may join the call by dialing 1-888-317-6016 shortly before 10:00 a.m. PST. A rebroadcast will be available approximately one hour after the conference call by dialing 1-877-344-7529 and entering passcode 10023354.

About HomeStreet, Inc.

HomeStreet, Inc. (NASDAQ:HMST) is a diversified financial services company headquartered in Seattle, Washington, and the holding company for HomeStreet Bank, a state-chartered, FDIC-insured savings bank. HomeStreet Bank offers consumer and commercial banking, investment and insurance products and services in Washington, Oregon and Hawaii. HomeStreet Bank conducts lending activities in Washington, Oregon, Hawaii, Idaho, California, Arizona, Utah and Alaska. For more information, visit http://ir.homestreet.com. Information contained in or linked from our website is not incorporated into, and does not form a part of, this release.

Forward-Looking Statements

This report to shareholders contains forward-looking statements concerning HomeStreet, Inc. and HomeStreet Bank and their operations, performance, financial conditions and likelihood of success. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements are based on many beliefs, assumptions, estimates and expectations of our future performance, taking into account information currently available to us, and include statements about the competitiveness of the banking industry. When used in this press release, the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “should,” “will” and “would” and similar expressions (including the negative of these terms) may help identify forward-looking statements. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company. Forward-looking statements speak only as of the date made, and we do not undertake to update them to reflect changes or events that occur after that date.

We caution readers that a number of factors could cause actual results to differ materially from those expressed in, implied or projected by, such forward-looking statements. Among other things, our ability to expand our banking operations geographically and across market sectors, grow our franchise and capitalize on market opportunities, and generate positive net income and cash flow, may be limited due to future risks and uncertainties including, but not limited to, changes in general economic conditions that impact our markets and our business, actions by the Federal Reserve affecting monetary and fiscal policy, regulatory and legislative actions that may constrain our ability to do business, significant increases in the competition we face in our industry and market and the extent of our success in problem asset resolution efforts. In addition, we may not recognize all or a substantial portion of the value of our rate-lock loan activity due to challenges our customers may face in meeting current underwriting standards, a decrease in interest rates, an increase in competition for such loans, unfavorable changes in general economic conditions, including housing prices, the job market, consumer confidence and spending habits either nationally or in the regional and local market areas in which the Company does business and legislative or regulatory actions or reform (including, without limitation, the Dodd-Frank Wall Street Reform and Consumer Protection Act). Further, our ability to pay cash dividends in the future is dependent upon a variety of factors, including our net income, liquidity, capital resources, regulatory and financial condition, and our compliance with the terms of our trust preferred securities and applicable banking laws and regulations. A discussion of the factors that we recognize to pose risk to the achievement of our business goals and our operational and financial objectives is contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012. These factors are updated from time to time in our filings with the Securities and Exchange Commission, and readers of this release are cautioned to review those disclosures in conjunction with the discussions herein.

Information contained herein, other than information at December 31, 2012 and for the twelve months then ended, is unaudited. All financial data should be read in conjunction with the notes to the consolidated financial statements of HomeStreet, Inc., and subsidiaries as of and for the fiscal year ended December 31, 2012, as contained in the Company's Annual Report on Form 10-K for such fiscal year.

Source: HomeStreet, Inc.



Contact:		Investor Relations & Media:
		HomeStreet, Inc.
		Terri Silver, 206-389-6303
		terri.silver@homestreet.com
		http://ir.homestreet.com

HomeStreet, Inc. and Subsidiaries

Summary Financial Data



	Quarter ended
(dollars in thousands, except share data)	Mar. 31, 2013		Dec. 31, 2012		Sept. 30, 2012		Jun. 30, 2012		Mar. 31, 2012
Operations Data (for the period ended):
Net interest income⁽¹⁾	$	15,235	$	16,591	$	16,520	$	14,799	$	12,833
Provision for loan losses	2,000		4,000		5,500		2,000		—
Noninterest income	58,901		71,720		68,976		56,743		40,097
Noninterest expense	55,757		55,754		45,819		46,847		34,687
Net income before taxes	16,379		28,557		34,177		22,695		18,243
Income taxes	5,439		7,060		12,186		4,017		(1,716		)
Net income	$	10,940	$	21,497	$	21,991	$	18,678	$	19,959
Basic earnings per common share ⁽²⁾	$	0.76	$	1.50	$	1.53	$	1.31	$	1.94
Diluted earnings per common share ⁽²⁾	$	0.74	$	1.46	$	1.50	$	1.26	$	1.86
Common shares outstanding ⁽²⁾	14,400,206		14,382,638		14,354,972		14,325,214		14,325,214
Weighted average common shares
Basic	14,359,691		14,371,120		14,335,950		14,252,120		10,292,566
Diluted	14,804,129		14,714,166		14,699,032		14,824,064		10,720,330
Shareholders’ equity per share	$	18.78	$	18.34	$	16.82	$	15.05	$	13.41

Financial position (at period end):
Cash and cash equivalents	$	18,709	$	25,285	$	22,051	$	75,063	$	92,953
Investment securities available for sale	415,238		416,329		414,050		415,610		446,198
Loans held for sale	430,857		620,799		535,908		415,189		291,868
Loans held for investment, net	1,358,982		1,308,974		1,268,703		1,235,253		1,295,471
Mortgage servicing rights	111,828		95,493		81,512		78,240		86,801
Other real estate owned	21,664		23,941		17,003		40,618		31,640
Total assets	2,508,251		2,631,230		2,511,269		2,427,203		2,368,729
Deposits	1,934,704		1,976,835		1,981,814		1,904,749		2,000,633
FHLB advances	183,590		259,090		131,597		65,590		57,919
Repurchase agreements	—		—		—		100,000		—
Shareholders’ equity	270,405		263,762		241,499		215,614		192,139

Financial position (averages):
Investment securities available for sale	$	422,761	$	418,261	$	411,916	$	431,875	$	381,129
Loans held for investment	1,346,100		1,297,615		1,270,652		1,304,740		1,338,552
Total interest-earning assets	2,244,563		2,244,727		2,187,059		2,143,380		2,090,190
Total interest-bearing deposits	1,543,645		1,609,075		1,625,437		1,640,159		1,705,371
FHLB advances	147,097		122,516		112,839		79,490		57,919
Repurchase agreements	—		558		18,478		52,369		—
Total interest-bearing liabilities	1,752,599		1,794,006		1,818,611		1,833,875		1,825,147
Shareholders’ equity	274,355		262,163		231,361		207,344		140,794

HomeStreet, Inc. and Subsidiaries

Summary Financial Data (continued)



	Quarter ended
(dollars in thousands, except share data)	Mar. 31, 2013				Dec. 31, 2012			Sept. 30, 2012			Jun. 30, 2012			Mar. 31, 2012
Financial performance:
Return on average common shareholders’ equity ⁽³⁾	15.95		%		32.80		%	38.02		%	36.03		%	56.70		%
Return on average assets	1.75		%		3.46		%	3.60		%	3.15		%	3.45		%
Net interest margin ⁽¹⁾⁽⁴⁾	2.81		%	⁽⁵⁾	3.06		%	3.12		%	2.85		%	2.51		%
Efficiency ratio ⁽⁶⁾	75.21		%		63.13		%	53.59		%	65.48		%	65.53		%
Asset quality:
Allowance for credit losses	$	28,594			$	27,751		$	27,627		$	27,125		$	35,402
Allowance for loan losses/total loans	2.04		%		2.06		%	2.11		%	2.13		%	2.64		%
Allowance for loan losses/nonaccrual loans	88.40		%		92.20		%	71.80		%	81.28		%	46.58		%
Total classified assets	$	90,076			$	86,270		$	102,385		$	137,165		$	208,792
Classified assets/total assets	3.59		%		3.28		%	4.08		%	5.66		%	8.82		%
Total nonaccrual loans ⁽⁷⁾	$	32,133			$	29,892		$	38,247		$	33,107		$	75,575
Nonaccrual loans/total loans	2.31		%		2.23		%	2.94		%	2.62		%	5.66		%
Other real estate owned	$	21,664			$	23,941		$	17,003		$	40,618		$	31,640
Total nonperforming assets	$	53,797			$	53,833		$	55,250		$	73,725		$	107,215
Nonperforming assets/total assets	2.14		%		2.05		%	2.20		%	3.04		%	4.53		%
Net charge-offs	$	1,157			$	3,876		$	4,998		$	10,277		$	7,398
Regulatory capital ratios for the Bank:
Tier 1 leverage capital (to average assets)	11.97		%		11.78		%	10.86		%	10.20		%	9.33		%
Tier 1 risk-based capital (to risk-weighted assets)	19.21		%		18.05		%	16.76		%	15.83		%	14.23		%
Total risk-based capital (to risk-weighted assets)	20.47		%		19.31		%	18.01		%	17.09		%	15.50		%
Other data:
Full-time equivalent employees (ending)	1,218				1,099			998			913			821


(1)	Certain prior period amounts have been reclassified between net interest income and noninterest income to conform to the current period presentation in all tables provided.


(2)	Per share data shown after giving effect to the 2-for-1 forward stock splits effective March 6, 2012 and November 5, 2012.


(3)	Net earnings available to common shareholders divided by average common shareholders’ equity.


(4)	Net interest income divided by total interest earning assets on a tax equivalent basis.

(5)

Net interest margin for the first quarter of 2013 includes $1.4 million in interest expense related to the correction of the cumulative effect of an immaterial error in prior years, resulting from the under accrual of interest due on the TruPS for which the Company had deferred the payment of interest. Excluding the impact of the prior period interest expense correction, the net interest margin was 3.06%.


(6)	The efficiency ratio is noninterest expense divided by total revenue (net interest income and noninterest income).


(7)	Generally, loans are placed on nonaccrual status when they are 90 or more days past due.

HomeStreet, Inc. and Subsidiaries

Consolidated Statements of Operations



	Three Months Ended March 31,						%
(in thousands, except share data)	2013			2012			Change
Interest income:
Loans	$	18,049		$	16,481		10	%
Investment securities available for sale	2,659			2,238			19
Other	30			137			(78	)
	20,738			18,856			10
Interest expense:
Deposits	3,489			4,879			(28	)
Federal Home Loan Bank advances	292			675			(57	)
Long-term debt	1,717			465			269
Other	5			4			25
	5,503			6,023			(9	)
Net interest income	15,235			12,833			19
Provision for credit losses	2,000			—			NM
Net interest income after provision for credit losses	13,235			12,833			3
Noninterest income:
Net gain on mortgage loan origination and sale activities	53,913			29,496			83
Mortgage servicing income	3,072			7,873			(61	)
Income from Windermere Mortgage Services Series LLC	620			1,166			(47	)
Depositor and other retail banking fees	721			735			(2	)
Insurance commissions	180			182			(1	)
(Loss) gain on sale of investment securities available for sale	(48		)	41			NM
Other	443			604			(27	)
	58,901			40,097			47
Noninterest expense:
Salaries and related costs	35,062			21,351			64
General and administrative	10,888			5,273			106
Legal	611			435			40
Consulting	696			355			96
Federal Deposit Insurance Corporation assessments	567			1,240			(54	)
Occupancy	2,802			1,790			57
Information services	2,996			1,723			74
Other real estate owned expense	2,135			2,520			(15	)
	55,757			34,687			61
Income before income taxes	16,379			18,243			(10	)
Income tax expense (benefit)	5,439			(1,716		)	NM
NET INCOME	$	10,940		$	19,959		(45	)

Basic income per share	$	0.76		$	1.94		(61	)
Diluted income per share	$	0.74		$	1.86		(60	)
Basic weighted average number of shares outstanding	14,359,691			10,292,566			40
Diluted weighted average number of shares outstanding	14,804,129			10,720,330			38

HomeStreet, Inc. and Subsidiaries

Five Quarter Consolidated Statements of Operation



	Quarter ended
(in thousands, except share data)	Mar. 31, 2013			Dec. 31, 2012		Sept. 30, 2012		Jun. 30, 2012			Mar. 31, 2012
Interest income:
Loans	$	18,049		$	18,713	$	18,512	$	17,351		$	16,481
Investment securities available for sale	2,659			2,186		2,517		2,449			2,238
Other	30			27		24		56			137
	20,738			20,926		21,053		19,856			18,856
Interest expense:
Deposits	3,489			3,756		3,908		4,198			4,879
Federal Home Loan Bank advances	292			282		297		535			675
Securities sold under agreements to repurchase	—			1		19		50			—
Long-term debt	1,717			292		305		271			465
Other	5			4		4		3			4
	5,503			4,335		4,533		5,057			6,023
Net interest income	15,235			16,591		16,520		14,799			12,833
Provision for credit losses	2,000			4,000		5,500		2,000			—
Net interest income after provision for credit losses	13,235			12,591		11,020		12,799			12,833
Noninterest income:
Net gain on mortgage loan origination and sale activities	53,913			68,753		65,233		46,727			29,496
Mortgage servicing income	3,072			651		506		7,091			7,873
Income from Windermere Mortgage Services Series LLC	620			516		1,188		1,394			1,166
Loss on debt extinguishment	—			—		—		(939		)	—
Depositor and other retail banking fees	721			800		756		771			735
Insurance commissions	180			193		192		177			182
Gain (loss) on sale of investment securities available for sale	(48		)	141		397		911			41
Other	443			666		704		611			604
	58,901			71,720		68,976		56,743			40,097
Noninterest expense:
Salaries and related costs	35,062			38,680		31,573		28,224			21,351
General and administrative	10,888			8,322		7,033		6,725			5,273
Legal	611			325		312		724			435
Consulting	696			1,291		1,069		322			355
Federal Deposit Insurance Corporation assessments	567			803		794		717			1,240
Occupancy	2,802			2,425		2,279		2,092			1,790
Information services	2,996			2,739		2,411		1,994			1,723
Other real estate owned expense	2,135			1,169		348		6,049			2,520
	55,757			55,754		45,819		46,847			34,687
Income before income tax expense	16,379			28,557		34,177		22,695			18,243
Income tax expense (benefit)	5,439			7,060		12,186		4,017			(1,716		)
NET INCOME	$	10,940		$	21,497	$	21,991	$	18,678		$	19,959

Basic income per share	$	0.76		$	1.50	$	1.53	$	1.31		$	1.94
Diluted income per share	$	0.74		$	1.46	$	1.50	$	1.26		$	1.86
Basic weighted average number of shares outstanding	14,359,691			14,371,120		14,335,950		14,252,120			10,292,566
Diluted weighted average number of shares outstanding	14,804,129			14,714,166		14,699,032		14,824,064			10,720,330

HomeStreet, Inc. and Subsidiaries

Consolidated Statements of Financial Condition



(in thousands, except share data)	Mar. 31, 2013		Dec. 31, 2012		% Change
Assets:
Cash and cash equivalents (including interest-bearing instruments of $7,183 and $12,414)	$	18,709	$	25,285	(26	)%
Investment securities available for sale	415,238		416,329		—
Loans held for sale (includes $419,106 and $600,305 carried at fair value)	430,857		620,799		(31	)
Loans held for investment (net of allowance for loan losses of $28,405 and $27,561)	1,358,982		1,308,974		4
Mortgage servicing rights (includes $102,678 and $87,396 carried at fair value)	111,828		95,493		17
Other real estate owned	21,664		23,941		(10	)
Federal Home Loan Bank stock, at cost	36,037		36,367		(1	)
Premises and equipment, net	16,893		15,232		11
Accounts receivable and other assets	98,043		88,810		10
Total assets	$	2,508,251	$	2,631,230	(5	)
Liabilities and shareholders’ equity
Liabilities:
Deposits	$	1,934,704	$	1,976,835	(2	)
Federal Home Loan Bank advances	183,590		259,090		(29	)
Accounts payable and other liabilities	57,695		69,686		(17	)
Long-term debt	61,857		61,857		—
Total liabilities	2,237,846		2,367,468		(5	)
Shareholders’ equity:
Preferred stock, no par value
Authorized 10,000 shares
Issued and outstanding, 0 shares and 0 shares	—		—		—
Common stock, no par value
Authorized 160,000,000
Issued and outstanding, 14,400,206 shares and 14,382,638 shares	511		511		—
Additional paid-in capital	90,687		90,189		1
Retained earnings	173,229		163,872		6
Accumulated other comprehensive income	5,978		9,190		(35	)
Total shareholders’ equity	270,405		263,762		3
Total liabilities and shareholders’ equity	$	2,508,251	$	2,631,230	(5	)

HomeStreet, Inc. and Subsidiaries

Five Quarter Consolidated Statements of Financial Condition



(in thousands, except share data)	Mar. 31, 2013		Dec. 31, 2012		Sept. 30, 2012		Jun. 30, 2012		Mar. 31, 2012
Assets:
Cash and cash equivalents	$	18,709	$	25,285	$	22,051	$	75,063	$	92,953
Investment securities available for sale	415,238		416,329		414,050		415,610		446,198
Loans held for sale	430,857		620,799		535,908		415,189		291,868
Loans held for investment, net	1,358,982		1,308,974		1,268,703		1,235,253		1,295,471
Mortgage servicing rights	111,828		95,493		81,512		78,240		86,801
Other real estate owned	21,664		23,941		17,003		40,618		31,640
Federal Home Loan Bank stock, at cost	36,037		36,367		36,697		37,027		37,027
Premises and equipment, net	16,893		15,232		13,060		10,226		7,034
Accounts receivable and other assets	98,043		88,810		122,285		119,977		79,737
Total assets	$	2,508,251	$	2,631,230	$	2,511,269	$	2,427,203	$	2,368,729
Liabilities and shareholders’ equity
Liabilities:
Deposits	$	1,934,704	$	1,976,835	$	1,981,814	$	1,904,749	$	2,000,633
Federal Home Loan Bank advances	183,590		259,090		131,597		65,590		57,919
Securities sold under agreements to repurchase	—		—		—		100,000		—
Accounts payable and other liabilities	57,695		69,686		94,502		79,393		56,181
Long-term debt	61,857		61,857		61,857		61,857		61,857
Total liabilities	2,237,846		2,367,468		2,269,770		2,211,589		2,176,590
Shareholders’ equity:
Preferred stock, no par value
Authorized 10,000 shares	—		—		—		—		—
Common stock, no par value
Authorized 160,000,000	511		511		511		511		511
Additional paid-in capital	90,687		90,189		89,264		88,637		86,755
Retained earnings	173,229		163,872		142,375		120,384		101,705
Accumulated other comprehensive income	5,978		9,190		9,349		6,082		3,168
Total shareholders’ equity	270,405		263,762		241,499		215,614		192,139
Total liabilities and shareholders’ equity	$	2,508,251	$	2,631,230	$	2,511,269	$	2,427,203	$	2,368,729

HomeStreet, Inc. and Subsidiaries

Average Balances, Yields and Rates Paid (Taxable-equivalent basis)



	Quarter ended March 31,
	2013							2012
(in thousands)	Average Balance		Interest		Average Yield/Cost			Average Balance		Interest		Average Yield/Cost
Assets:
Interest-earning assets ⁽¹⁾:
Cash & cash equivalents	$	22,700	$	16	0.29	%		$	205,445	$	134	0.26	%
Investment securities	422,761		3,161		2.99	%		381,129		2,489		2.61	%
Loans held for sale	453,002		3,745		3.31	%		165,064		1,542		3.74	%
Loans held for investment	1,346,100		14,337		4.28	%		1,338,552		14,977		4.49	%
Total interest-earning assets	2,244,563		21,259		3.80	%		2,090,190		19,142		3.67	%
Noninterest-earning assets ⁽²⁾	250,695							221,344
Total assets	$	2,495,258						$	2,311,534
Liabilities and shareholders’ equity:
Deposits:
Interest-bearing demand accounts	$	181,421	158		0.35	%		$	138,124	115		0.33	%
Savings accounts	105,490		104		0.40	%		73,724		83		0.45	%
Money market accounts	695,688		857		0.50	%		525,191		719		0.55	%
Certificate accounts	561,046		2,370		1.71	%		968,332		3,961		1.64	%
Total interest-bearing deposits	1,543,645		3,489		0.92	%		1,705,371		4,878		1.15	%
FHLB advances	147,097		292		0.80	%		57,919		675		4.67	%
Long-term debt	61,857		1,717		11.10	%	⁽³⁾	61,857		465		3.01	%
Other borrowings	—		4		—	%		—		4		—	%
Total interest-bearing liabilities	1,752,599		5,502		1.27	%		1,825,147		6,022		1.33	%
Other noninterest-bearing liabilities	468,304							345,593
Total liabilities	2,220,903							2,170,740
Shareholders’ equity	274,355							140,794
Total liabilities and shareholders’ equity	$	2,495,258						$	2,311,534
Net interest income ⁽⁴⁾			$	15,757						$	13,120
Net interest spread					2.53	%						2.34	%
Impact of noninterest-bearing sources					0.28	%						0.17	%
Net interest margin					2.81	%	⁽³⁾					2.51	%


(1)	The average balances of nonaccrual assets and related income, if any, are included in their respective categories.


(2)	Includes loan balances that have been foreclosed and are now reclassified to other real estate owned.


(3)	Interest expense for the first quarter of 2013 includes $1.4 million related to the correction of the cumulative effect of an immaterial error in prior years, resulting from the under accrual of interest due on the TruPS for which the Company had deferred the payment of interest. Excluding the impact of the prior period interest expense correction, the net interest margin was 3.06%.


(4)	Includes taxable-equivalent adjustments primarily related to tax-exempt income on certain loans and securities of $522 thousand and $287 thousand for the quarters ended March 31, 2013 and March 31, 2012, respectively. The estimated federal statutory tax rate was 35% for the periods presented.

HomeStreet, Inc. and Subsidiaries

Five Quarter Investment Securities Available for Sale



(in thousands, except for duration data)	Mar. 31, 2013		Dec. 31, 2012		Sept. 30, 2012		Jun. 30, 2012		Mar. 31, 2012
Mortgage-backed securities:
Residential	$	69,448	$	62,853	$	63,365	$	48,136	$	40,575
Commercial	14,407		14,380		14,532		14,602		14,410
Municipal bonds	131,047		129,175		128,595		126,681		79,051
Collateralized mortgage obligations:
Residential	150,113		170,199		167,513		185,970		245,889
Commercial	19,795		9,043		9,110		9,165		10,019
Agency	—		—		—		—		25,007
U.S. Treasury	30,428		30,679		30,935		31,056		31,247
	$	415,238	$	416,329	$	414,050	$	415,610	$	446,198
Weighted average duration in years	5.0		4.9		5.0		5.1		5.1

Five Quarter Loans Held for Investment



(in thousands)	Mar. 31, 2013			Dec. 31, 2012			Sept. 30, 2012			Jun. 30, 2012			Mar. 31, 2012
Consumer loans
Single family	$	730,553		$	673,865		$	602,164		$	537,174		$	506,103
Home equity	132,537			136,746			141,343			147,587			152,924
	863,090			810,611			743,507			684,761			659,027
Commercial loans
Commercial real estate	387,819			361,879			360,919			370,064			391,727
Multifamily	21,859			17,012			36,912			47,069			56,328
Construction/land development	43,600			71,033			77,912			83,797			158,552
Commercial business	73,851			79,576			80,056			79,980			68,932
	527,129			529,500			555,799			580,910			675,539
	1,390,219			1,340,111			1,299,306			1,265,671			1,334,566
Net deferred loan fees and discounts	(2,832		)	(3,576		)	(3,142		)	(3,508		)	(3,891		)
	1,387,387			1,336,535			1,296,164			1,262,163			1,330,675
Allowance for loan losses	(28,405		)	(27,561		)	(27,461		)	(26,910		)	(35,204		)
	$	1,358,982		$	1,308,974		$	1,268,703		$	1,235,253		$	1,295,471

HomeStreet, Inc. and Subsidiaries

Five Quarter Credit Quality Activity

Allowance for Credit Losses (roll-forward)



	Quarter ended
(in thousands)	Mar. 31, 2013			Dec. 31, 2012			Sept. 30, 2012			Jun. 30, 2012			Mar. 31, 2012

Allowance for credit losses (roll-forward):
Beginning balance	$	27,751		$	27,627		$	27,125		$	35,402		$	42,800
Provision for credit losses	2,000			4,000			5,500			2,000			—
(Charge-offs), net of recoveries	(1,157		)	(3,876		)	(4,998		)	(10,277		)	(7,398		)
Ending balance	$	28,594		$	27,751		$	27,627		$	27,125		$	35,402
Components:
Allowance for loan losses	$	28,405		$	27,561		$	27,461		$	26,910		$	35,204
Allowance for unfunded commitments	189			190			166			215			198
Allowance for credit losses	$	28,594		$	27,751		$	27,627		$	27,125		$	35,402

Allowance as a % of loans held for investment	2.04		%	2.06		%	2.11		%	2.13		%	2.64		%
Allowance as a % of nonaccrual loans	88.40		%	92.20		%	71.80		%	81.28		%	46.58		%

Nonperforming assets (NPAs) roll-forward



	Quarter ended
(in thousands)	Mar. 31, 2013			Dec. 31, 2012			Sept. 30, 2012			Jun. 30, 2012			Mar. 31, 2012

Beginning balance	$	53,833		$	55,250		$	73,725		$	107,215		$	115,056
Additions	6,511			9,973			20,703			13,208			18,776
Reductions:
Charge-offs	(1,157		)	(3,876		)	(4,441		)	(10,277		)	(7,398		)
OREO sales	(2,117		)	(2,028		)	(25,946		)	(9,804		)	(8,878		)
OREO writedowns	(638		)	(1,216		)	(2,623		)	(5,578		)	(2,754		)
Principal paydown, payoff advances and other adjustments	(2,529		)	(1,807		)	(4,794		)	(12,037		)	(1,321		)
Transferred back to accrual status	(106		)	(2,463		)	(1,374		)	(9,002		)	(6,266		)
Total reductions	(6,547		)	(11,390		)	(39,178		)	(46,698		)	(26,617		)
Net additions/(reductions)	(36		)	(1,417		)	(18,475		)	(33,490		)	(7,841		)
Ending balance	$	53,797		$	53,833		$	55,250		$	73,725		$	107,215

HomeStreet, Inc. and Subsidiaries

Five Quarter Nonperforming Assets by Loan Class



(in thousands)	Mar. 31, 2013			Dec. 31, 2012			Sept. 30, 2012			Jun. 30, 2012			Mar. 31, 2012

Loans accounted for on a nonaccrual basis:
Consumer
Single family	$	15,282		$	13,304		$	12,900		$	7,530		$	14,290
Home equity	2,917			2,970			1,024			1,910			1,853
	18,199			16,274			13,924			9,440			16,143
Commercial
Commercial real estate	6,122			6,403			16,186			14,265			9,222
Construction/land development	5,974			5,042			5,848			9,373			49,708
Commercial business	1,838			2,173			2,289			29			502
	13,934			13,618			24,323			23,667			59,432
Total loans on nonaccrual	$	32,133		$	29,892		$	38,247		$	33,107		$	75,575
Nonaccrual loans as a percentage of total loans	2.31		%	2.23		%	2.94		%	2.62		%	5.66		%

Other real estate owned:
Consumer
Single family	$	4,069		$	4,071		$	2,787		$	3,142		$	3,243
	4,069			4,071			2,787			3,142			3,243
Commercial
Commercial real estate	8,440			10,283			3,489			3,184			284
Construction/land development	9,155			9,587			10,727			34,292			28,113
	17,595			19,870			14,216			37,476			28,397
Total other real estate owned	$	21,664		$	23,941		$	17,003		$	40,618		$	31,640

Nonperforming assets:
Consumer
Single family	$	19,351		$	17,375		$	15,687		$	10,672		$	17,533
Home equity	2,917			2,970			1,024			1,910			1,853
	22,268			20,345			16,711			12,582			19,386
Commercial
Commercial real estate	14,562			16,686			19,675			17,449			9,506
Construction/land development	15,129			14,629			16,575			43,665			77,821
Commercial business	1,838			2,173			2,289			29			502
	31,529			33,488			38,539			61,143			87,829
Total nonperforming assets	$	53,797		$	53,833		$	55,250		$	73,725		$	107,215
Nonperforming assets as a percentage of total assets	2.14		%	2.05		%	2.20		%	3.04		%	4.53		%

HomeStreet, Inc. and Subsidiaries

Delinquencies by Loan Class



(in thousands)	30-59 days past due		60-89 days past due		90 days or more past due		Total past due		Current		Total loans

March 31, 2013
Total loans held for investment	$	11,913	$	5,765	$	74,918	$	92,596	$	1,297,623	$	1,390,219
Less: FHA/VA loans⁽¹⁾	7,458		3,865		42,785		54,108		27,075		81,183
Total loans, excluding FHA/VA loans	$	4,455	$	1,900	$	32,133	$	38,488	$	1,270,548	$	1,309,036

Loans by segment and class, excluding FHA/VA loans:
Consumer loans
Single family	$	3,713	$	1,673	$	15,281	$	20,667	$	628,703	$	649,370
Home equity	742		227		2,917		3,886		128,651		132,537
	4,455		1,900		18,198		24,553		757,354		781,907
Commercial loans
Commercial real estate	—		—		6,123		6,123		381,696		387,819
Multifamily	—		—		—		—		21,859		21,859
Construction/land development	—		—		5,974		5,974		37,626		43,600
Commercial business	—		—		1,838		1,838		72,013		73,851
	—		—		13,935		13,935		513,194		527,129
	$	4,455	$	1,900	$	32,133	$	38,488	$	1,270,548	$	1,309,036

December 31, 2012
Total loans held for investment	$	12,703	$	4,974	$	70,550	$	88,227	$	1,251,884	$	1,340,111
Less: FHA/VA loans⁽¹⁾	6,839		3,700		40,658		51,197		24,257		75,454
Total loans, excluding FHA/VA loans	$	5,864	$	1,274	$	29,892	$	37,030	$	1,227,627	$	1,264,657

Loans by segment and class, excluding FHA/VA loans:
Consumer loans
Single family⁽¹⁾	$	5,077	$	1,032	$	13,304	$	19,413	$	578,998	$	598,411
Home equity	787		242		2,970		3,999		132,747		136,746
	5,864		1,274		16,274		23,412		711,745		735,157
Commercial loans
Commercial real estate	—		—		6,403		6,403		355,476		361,879
Multifamily	—		—		—		—		17,012		17,012
Construction/land development	—		—		5,042		5,042		65,991		71,033
Commercial business	—		—		2,173		2,173		77,403		79,576
	—		—		13,618		13,618		515,882		529,500
	$	5,864	$	1,274	$	29,892	$	37,030	$	1,227,627	$	1,264,657


(1)	Represents loans whose repayments are insured by the FHA or guaranteed by the VA.

HomeStreet, Inc. and Subsidiaries

Troubled Debt Restructurings (TDRs)

Troubled Debt Restructurings by Accrual and Nonaccrual Status



(in thousands)	Mar. 31, 2013		Dec. 31, 2012		Sept. 30, 2012		Jun. 30, 2012		Mar. 31, 2012
Accrual
Consumer loans
Single family	$	69,792	$	67,483	$	67,647	$	73,743	$	70,977
Home equity	2,338		2,288		2,705		2,538		2,145
	72,130		69,771		70,352		76,281		73,122
Commercial loans
Commercial real estate	21,046		21,071		16,540		16,539		25,778
Multifamily	3,211		3,221		6,030		6,038		6,045
Construction/land development	4,487		6,365		13,802		7,875		7,978
Commercial business	137		147		154		162		287
	28,881		30,804		36,526		30,614		40,088
	$	101,011	$	100,575	$	106,878	$	106,895	$	113,210
Nonaccrual
Consumer loans
Single family	$	4,593	$	3,931	$	6,210	$	1,395	$	4,090
Home equity	134		465		64		231		347
	4,727		4,396		6,274		1,626		4,437
Commercial loans
Commercial real estate	770		770		7,716		9,037		—
Construction/land development	4,625		5,042		5,845		9,370		17,929
Commercial business	—		—		22		29		360
	5,395		5,812		13,583		18,436		18,289
	$	10,122	$	10,208	$	19,857	$	20,062	$	22,726
Total
Consumer loans
Single family	$	74,385	$	71,414	$	73,857	$	75,138	$	75,067
Home equity	2,472		2,753		2,769		2,769		2,492
	76,857		74,167		76,626		77,907		77,559
Commercial loans
Commercial real estate	21,816		21,841		24,256		25,576		25,778
Multifamily	3,211		3,221		6,030		6,038		6,045
Construction/land development	9,112		11,407		19,647		17,245		25,907
Commercial business	137		147		176		191		647
	34,276		36,616		50,109		49,050		58,377
	$	111,133	$	110,783	$	126,735	$	126,957	$	135,936

HomeStreet, Inc. and Subsidiaries

Troubled Debt Restructurings (TDRs)

Troubled Debt Restructurings - Re-Defaults



	Quarter ended
(in thousands)	Mar. 31, 2013		Dec. 31, 2012		Sept. 30, 2012		June 30, 2012		Mar. 31, 2012

Recorded investment of re-defaults⁽¹⁾
Consumer loans
Single family	$	1,423	$	1,386	$	5,123	$	1,364	$	760
Home equity	22		—		—		—		34
	1,445		1,386		5,123		1,364		794
Commercial loans
Commercial real estate	770		—		7,716		—		—
Commercial business	—		—		—		29		—
	770		—		7,716		29		—
	$	2,215	$	1,386	$	12,839	$	1,393	$	794


(1)	Represents TDRs that have defaulted in the current period within 12 months of their modification date. Defaulted TDRs are reported in the table above based on a payment default definition of 60 days past due for the consumer loans portfolio segment and 90 days past due for the commercial loans portfolio segment.

HomeStreet, Inc. and Subsidiaries

Five Quarter Mortgage Banking Operations

Mortgage Servicing Income



	Quarter ended
(in thousands)	Mar. 31, 2013			Dec. 31, 2012			Sept. 30, 2012			Jun. 30, 2012			Mar. 31, 2012

Servicing income, net:
Servicing fees and other	$	7,607		$	7,523		$	7,168		$	6,705		$	6,436
Changes in fair value of single family MSRs due to modeled amortization ⁽¹⁾	(5,106		)	(6,280		)	(5,360		)	(4,052		)	(4,969		)
Amortization of multifamily MSRs	(490		)	(463		)	(598		)	(462		)	(491		)
	2,011			780			1,210			2,191			976
Risk management, single family MSRs:
Changes in fair value of MSR due to changes in model inputs and/or assumptions ⁽²⁾	3,579			2,489			(5,565		)	(15,354		)	7,411
Net gain (loss) from derivatives economically hedging MSR	(2,518		)	(2,618		)	4,861			20,254			(514		)
	1,061			(129		)	(704		)	4,900			6,897
Mortgage servicing income	$	3,072		$	651		$	506		$	7,091		$	7,873


(1)	Represents changes due to collection/realization of expected cash flows and curtailments over time.


(2)	Principally reflects changes in model assumptions and prepayment speed assumptions, which are primarily affected by changes in mortgage interest rates.

Loans Serviced for Others



(in thousands)	Mar. 31, 2013		Dec. 31, 2012		Sept. 30, 2012		Jun. 30, 2012		Mar. 31, 2012

Single family
U.S. government agency MBS	$	9,352,404	$	8,508,458	$	7,724,562	$	7,061,232	$	6,530,578
Other	348,992		362,230		385,107		407,750		416,700
	9,701,396		8,870,688		8,109,669		7,468,982		6,947,278
Commercial
Multifamily	737,007		727,118		760,820		772,473		766,433
Other	52,825		53,235		53,617		56,840		59,370
	789,832		780,353		814,437		829,313		825,803
Total loans serviced for others	$	10,491,228	$	9,651,041	$	8,924,106	$	8,298,295	$	7,773,081

HomeStreet, Inc. and Subsidiaries

Five Quarter Mortgage Banking Operations (continued)

Single Family Capitalized Mortgage Servicing Rights



	Quarter ended
(in thousands)	Mar. 31, 2013			Dec. 31, 2012			Sept. 30, 2012			Jun. 30, 2012			Mar. 31, 2012
Beginning balance	$	87,396		$	73,787		$	70,585		$	79,381		$	70,169
Additions and amortization:
Originations	16,806			17,397			14,121			10,598			6,723
Purchases	3			3			6			12			47
Changes due to modeled amortization ⁽¹⁾	(5,106		)	(6,280		)	(5,360		)	(4,052		)	(4,969		)
Net additions and amortization	11,703			11,120			8,767			6,558			1,801
Changes in fair value due to changes in model inputs and/or assumptions ⁽²⁾	3,579			2,489			(5,565		)	(15,354		)	7,411
Ending balance	$	102,678		$	87,396		$	73,787		$	70,585		$	79,381
Ratio of MSR carrying value to related loans serviced for others	1.03		%	0.99		%	0.91		%	0.95		%	1.14		%
MSR servicing fee multiple ⁽³⁾	3.36			3.13			2.81			2.82			3.30
Weighted-average note rate (loans serviced for others)	4.24		%	4.34		%	4.52		%	4.69		%	4.83		%
Weighted-average servicing fee (loans serviced for others)	0.31		%	0.31		%	0.33		%	0.34		%	0.35		%


(1)	Represents changes due to collection/realization of expected future cash flows.


(2)	Principally reflects changes in model assumptions and prepayment speed assumptions, which are primarily affected by changes in mortgage interest rates.


(3)	Represents the ratio of MSR carrying value to related loans serviced for others divided by the weighted-average servicing fee for loans serviced for others.

Commercial Multifamily Capitalized Mortgage Servicing Rights



	Quarter ended
(in thousands)	Mar. 31, 2013			Dec. 31, 2012			Sept. 30, 2012			Jun. 30, 2012			Mar. 31, 2012
Beginning balance	$	8,097		$	7,725		$	7,655		$	7,420		$	7,112
Originations	1,543			835			668			697			799
Amortization	(490		)	(463		)	(598		)	(462		)	(491		)
Ending balance	$	9,150		$	8,097		$	7,725		$	7,655		$	7,420
Ratio of MSR carrying value to related loans serviced for others	1.16		%	1.04		%	0.95		%	0.92		%	0.90		%
MSR servicing fee multiple ⁽¹⁾	2.89			2.70			2.47			2.45			2.41
Weighted-average note rate (loans serviced for others)	5.25		%	5.38		%	5.48		%	5.54		%	5.60		%
Weighted-average servicing fee (loans serviced for others)	0.40		%	0.38		%	0.38		%	0.38		%	0.37		%


(1)	Represents the ratio of MSR carrying value to related loans serviced for others divided by the weighted-average servicing fee for loans serviced for others.

HomeStreet, Inc. and Subsidiaries

Five Quarter Mortgage Banking Operations (continued)

Mortgage Banking Activity



	Quarter ended
(in thousands)	Mar. 31, 2013			Dec. 31, 2012				Sept. 30, 2012			Jun. 30, 2012			Mar. 31, 2012

Production volumes:
Single family mortgage closed loan volume ⁽¹⁾	$	1,192,156		$	1,518,971			$	1,368,238		$	1,068,656		$	712,302
Single family mortgage interest rate lock commitments	1,035,822			1,254,954				1,313,182			1,303,390			915,141
Single family mortgage loans sold	1,360,344			1,434,947				1,238,879			962,704			534,310

Multifamily mortgage originations	$	49,119		$	40,244			$	20,209		$	35,908		$	15,713
Multifamily mortgage loans sold	50,587			33,689				26,515			27,178			31,423

Net gain on mortgage loan origination and sale activities:
Single family:
Secondary marketing gains⁽²⁾	$	27,429		$	40,757			$	42,021		$	29,950		$	17,057
Provision for repurchase losses⁽³⁾	—			(123		)		(526		)	(1,930		)	(390		)
Net gain from secondary marketing activities	27,429			40,634				41,495			28,020			16,667
Mortgage servicing rights originated	16,806			17,397				14,121			10,598			6,723
Loan origination and funding fees	7,753			9,091				8,577			7,070			4,944
Total single family	51,988			67,122				64,193			45,688			28,334
Multifamily	1,925			1,631				1,040			1,039			1,162
Total net gain on mortgage loan origination and sale activities	$	53,913		$	68,753			$	65,233		$	46,727		$	29,496

Single family margins (in basis points):
Mortgage servicing rights originated / mortgage loans sold	124			121				114			110			126
Secondary marketing gains, net of repurchase provision / interest rate lock commitments	223		⁽⁴⁾	313			⁽⁵⁾	316			215			182
Loan origination and funding fees / mortgage originations⁽¹⁾	65			60				63			66			69
Composite Margin	412		⁽⁴⁾	494			⁽⁵⁾	493			391			377


(1)	Represents single family mortgage production volume designated for sale during each respective period.


(2)	Comprised of gains and losses on single family loans, interest rate lock commitments and forward sale commitments used to economically hedge loans held for sale, less premiums paid to Windermere Mortgage Services Series LLC on loans purchased or committed to be purchased and the estimated fair value of the repurchase or indemnity obligation recognized on new loan sales.


(3)	Represents changes in estimated probable future repurchase losses on previously sold loans.

(4)

Excludes the impact of a $4.3 million upward adjustment related to a change in accounting estimate that resulted from a change in the application of the valuation methodology used to value the Company's interest rate lock commitments. Including the impact of this cumulative effect adjustment, the secondary marketing gain margin and Composite Margin were 265 and 454 basis points, respectively, in the first quarter of 2013.

(5)

Excludes the impact of a $1.3 million correction that was recorded in secondary marketing gains in the fourth quarter of 2012 for the cumulative effect of an error in prior years related to the fair value measurement of loans held for sale. Including the impact of this correction, the secondary marketing gain margin and Composite Margin were 324 and 505 basis points, respectively, in the fourth quarter of 2012.

HomeStreet, Inc. and Subsidiaries

Five Quarter Deposits



(in thousands)	Mar. 31, 2013			Dec. 31, 2012			Sept. 30, 2012			Jun. 30, 2012			Mar. 31, 2012

Deposits by Product:
Noninterest-bearing accounts - checking and savings	$	83,202		$	83,563		$	77,149		$	64,404		$	68,245
Interest-bearing transaction and savings deposits:
NOW accounts	236,744			174,699			172,086			170,098			154,670
Statement savings accounts due on demand	108,627			103,932			104,239			88,104			79,438
Money market accounts due on demand	734,647			683,906			675,363			630,798			559,563
Total interest-bearing transaction and savings deposits	1,080,018			962,537			951,688			889,000			793,671
Total transaction and savings deposits	1,163,220			1,046,100			1,028,837			953,404			861,916
Certificates of deposit	523,208			655,467			684,604			755,646			890,694
Noninterest-bearing accounts - other	248,276			275,268			268,373			195,699			248,023
Total deposits	$	1,934,704		$	1,976,835		$	1,981,814		$	1,904,749		$	2,000,633


Percent of total deposits:
Noninterest-bearing accounts - checking and savings	4.3		%	4.2		%	3.9		%	3.4		%	3.4		%
Interest-bearing transaction and savings deposits:
NOW accounts	12.2			8.8			8.7			8.9			7.7
Statement savings accounts due on demand	5.6			5.3			5.3			4.6			4.0
Money market accounts due on demand	38.0			34.6			34.1			33.1			28.0
Total interest-bearing transaction and savings deposits	55.8			48.7			48.1			46.6			39.7
Total transaction and savings deposits	60.1			52.9			52.0			50.0			43.1
Certificates of deposit	27.0			33.2			34.5			39.7			44.5
Noninterest-bearing accounts - other	12.9			13.9			13.5			10.3			12.4
Total deposits	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%

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